<PAGE>

                                CONTRACT FOR SALE
                               OF BUSINESS ASSETS


         This Contract is made between AMERGRAPH CORPORATION, a New Jersey
corporation, having an address of 520 Lafayette Road, Sparta, New Jersey 07871
("Buyer"), and AFP IMAGING CORPORATION ("AFP") AND LOGETRONICS CORPORATION
("LOGE"), A WHOLLY OWNED SUBSIDIARY OF AFP, BOTH NEW YORK CORPORATIONS, having
an address of 250 Clearbrook Road, Elmsford, New York 10523 (collectively
referred to as "Seller").
         In consideration of the mutual promises contained in this Contract, and
subject to the terms, and conditions in this Contract, Seller agrees to sell and
Buyer agrees to buy certain business assets currently owned by Seller as
follows:

         1. BUSINESS ASSETS BEING TRANSFERRED. The assets being sold consist of
all of Seller's right, title and interest in and to Seller's LogEtronics
Corporation's assets, including but not limited to, inventory of parts or
finished goods and storage shelving, machinery, furniture and fixtures, tooling,
patents and trademarks, files, records, rights, goodwill, trade names including
but not limited to the LogE name and any other trade names & product model
numbers specifically utilized by Seller for the LogE business and products. Such
physical assets of the Seller are described in Schedule "A" and Intellectual
Property is described in Schedule "C".

         2. ITEMS EXCLUDED FROM THE ASSETS BEING PURCHASED:

            A. Seller's accounts receivable, accounts payable, bank accounts,
         cash and cash deposits with third parties for the benefit of
         LogEtronics or AFP:

                 Cary Building Rent Deposit         $4,460.00
                 G. Cosimano/Freight Forwarder      $2,500.00
                 UPS                                $  765.00


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                 Postage Meter                      $  400.00
                 Air Travel Card                    $  425.00
                 (All paid for by AFP or LogE for LogE benefit)

            B. Seller shall remain responsible for any and all claims of its
employees including but not limited to claims for accrued vacation time,
severance pay, pension, 401k, medical claims/insurance claims, and any and all
similar items. Amergraph may offer Seller's employees listed in Schedule "B"
employment with Amergraph as new employees subject to the terms and conditions
of employment as established by Amergraph. Amergraph is in no way assuming any
current or prior liabilities or obligations of Seller in regard to such
employees.

            C. Seller is responsible for any and all warranty claims of any
nature for any items manufactured or sold by Seller. This provision shall
survive the closing.

            D. Seller is responsible for any and all product liability or damage
claims of any nature for any items manufactured or sold by Seller, regardless of
when the claim(s) shall arise, except that the Seller does not waive any
defenses including statute of limitations. This provision survives the closing.
After the closing date, Buyer shall be responsible for all warranty, product
liability, or damage claims with respect to products sold by the Buyer.

            E. Shares of Stock of Seller's corporations.

            F. Any and all assets of AFP not associated directly with the
LogEtronics business including, but not limited to AFP's UNIX equipment
interface with Elmsford, NY.

            G. Assignment of lease between LogEtronics and Cary Building Limited
Partnership, LLC for space occupied at 8136 Old Keene Mill Road, Springfield,
Virginia 22152.

            H. Assignment of month to month arrangement between LogEtronics and
Charles Funkhouse for use of warehouse storage at Lost River, West Virginia
26801. Seller shall terminate such arrangements thirty (30) days after closing.


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            I. Underwriter's Laboratory procedure files for LogEtronics products
which are not the property of Seller. Seller will cooperate with Buyer for the
orderly transfer of such files within the Underwriter's Laboratory policy and
procedures.

            J. Seller's State and Federal Tax Returns or related workpapers for
the LogEtronics business.

            K. Commercial computer software, located on computers at
Springfield, Virginia, which was purchased and licensed by AFP Imaging or
LogEtronics which can not be legally transferred or sold to third parties
without appropriate renewal of license by Buyer from the manufacturer or
developer of the software.

         3. PURCHASE PRICE. The total purchase price for the business is THREE
HUNDRED FIFTY THOUSAND DOLLARS ($350,000) payable in the following manner:

           A.     Payment at closing to be made to Seller's
                  Secured lender as described in paragraph 5B
                  and Schedule D                                      $300,000

           B.     Buyer signing and delivering to Seller at
                  closing a promissory note payable to AFP
                  for three (3) years payable in 36 equal
                  monthly installments with no interest.
                  See Promissory Note attached.               $50,000

         1st payment due the 1st of the month following 90 days
         after closing date and shall continue until paid in full.

                                        TOTAL                          $350,000
                                                                       ========

           C.     Allocation of purchase price. The $350,000 purchase price
                  shall be allocated among inventory, storage, shelving and
                  machinery, furniture, fixtures and tooling.

           D.     Virginia office rent of $4,731.61. Buyer shall pay to Seller
                  rent for one month after closing date. This rent figure shall
                  be the sole payment made by Buyer for rent and shall include
                  any and all costs for insurance, taxes, utilities and any
                  other charge related to the leased space. Buyer shall not be
                  assigned nor assume the lease. Buyer shall vacate the
                  LogEtronics premises no later than thirty (30) days after
                  closing.


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         4. CLOSING. The parties agree to close this sale on or about August 1,
2001, or such other date as agreed to by the parties, at the offices of LADDEY,
CLARK & RYAN, 60 Blue Heron Road, Sparta, New Jersey.

         5. CLOSING DOCUMENTS.

            A. Seller shall prepare and deliver at closing to Buyer the
following documents: (a) Bill of Sale transferring the business assets free and
clear from all liens, claims or encumbrances, (b) assignment of any license or
equipment leases (excluding any real estate leases), (c) assignment of any
contracts, (d) tax clearance from the New Jersey Bulk Sales Tax Division, as
well as proof of compliance with any bulk sales requirements of the State of New
York, (e) releases, (f) corporate resolution authorizing sale, (g) assignment of
trademarks or patents in form suitable to transfer all rights to the trademarks
and patents under the laws of the various countries that have issued patents and
trademarks to Seller, (h) UCC-3 releases (including but not limited to Financial
Capital Corp. and AFP Imaging), (i) letter from Seller to Seller's current
vendors and/or consignees of the products of the items being sold to Buyer
advising that Buyer is now the owner of such items, and (j) the letter form
suitable to Underwriter's Laboratories allowing for the transfer of the files
within the Underwriter's Laboratories policies and procedures as referred to in
paragraph 2.I. of this agreement.

            B. Buyer shall deliver to Seller at closing: (a) payment of $300,000
to Seller's secured lender's bank account #40688348 at CitiBank, ABA #021000089,
(b) Promissory Note, and (c) IRS Form 8594 regarding allocation of purchase
price.

            C. Both parties agree to sign any other instruments and documents
which may be reasonably requested by the other party in order to close this
transaction or thereafter.


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         6. TRANSFER OF PHYSICAL ASSETS - At the time of closing, Seller shall
transfer title to all physical assets to Buyer. Seller shall make the assets
available to Buyer at Seller's facility located at Elmsford, New York,
Springfield, Virginia and any other facility. Buyer shall be responsible for
insurance and transportation of the assets to Buyer's facility from wherever
located.

         7. TRANSFER OF FILES FROM ELECTRONIC DATA. At the time of closing,
Seller shall transfer its LogEtronics data files including but not limited to
computer discs and any and all means of electronic data storage to Seller within
seven (7) days of the closing. Seller shall also assist to the best of its
ability in the conversion or storage of any electronic files to the extent
required by Buyer. Seller shall supply the data in a generally accepted industry
standard format.

         8. BROKER. Each party represents to the other that there were no
brokers involved in this transaction. Each party shall indemnify and hold
harmless the other against any liability, cost or expense, including reasonable
attorneys' fees, resulting from or arising out or a misrepresentation by the
indemnifying party. The provisions of this paragraph shall survive closing.

         9. NOTICES. All notices and other communications required to be given
by this contract or actually given shall be in writing and shall either be
personally given, faxed or mailed by certified mail, return receipt requested,
to the party to whom directed at that party's address as set forth at the head
of this Contract, or to such other address as may be specified by either party
upon notice to the other in accordance with this Contract. Notice shall be
effective as of the date of delivery or fax or three days following, as the case
may be, the date of mailing, except that any notice given for the purpose of
changing a party's address for notice purposes shall be effective upon receipt.
In the case of any notice or other communications to Buyer, a copy shall be sent
by facsimile transmission and/or by regular mail to Richard I. Clark, Esq.,
Laddey, Clark & Ryan, 60 Blue Heron Road, Sparta, New Jersey 07871-2600 Fax
(973) 729-1224. In the case of any notice or other communications to Seller, a
copy shall be sent by facsimile transmission and/or by regular


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mail to AFP Imaging Corporation, 250 Clearbrook Road, Elmsburg, New York 10523,
Attention Mr. David Vozick, Fax 914-592-6148.

         10. BINDING NATURE OF AGREEMENT. This Contract shall be binding upon
and inure to the benefit of the parties and their successors, transfers or
assigns.

         11. REPRESENTATION AND WARRANTIES. All obligations of Buyer hereunder
are subject to the fulfillment of each of the following conditions at or prior
to the closing.

             A. All representations and warranties of Seller contained in this
contract or in any document delivered pursuant to this contract shall be true
and correct in all material respects when made and shall be deemed to have been
made again at and as of the date of the closing, and shall then be true and
correct in all material respects except for changes in the ordinary course of
business after the date this contract is signed in conformity with the covenants
and agreements contained in this document.

             B. All covenants, agreements and obligations required by the terms
of this Contract to be performed by Seller at or before the closing shall have
been duly and properly performed in all material respects.

             C. Since the date of this Contract there shall not have occurred
any material adverse change in the condition (financial or otherwise), business,
properties, assets of seller. The purchase price is based on the inventory
evaluation of the June 6th Inventory Supply Analysis Report provided by AFP
Imaging to Amergraph. The usable inventory and the total value of the inventory
as of the date of closing shall be materially consistent with that June 6th
Report. In the event the inventory is two percent (2%) or less than as reported
in the June 6th Inventory Supply Analysis Report provided by AFP Imaging,
Amergraph shall be entitled to a corresponding reduction in the purchase price
provided for in paragraph 3 of this agreement.


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<PAGE>

             D. To the best of the Seller's knowledge, all trademarks and/or
patents as listed in Schedule "C" applicable to the assets being transferred to
Buyer are valid and all maintenance fees have been paid through the time of
closing and no party has made a claim or challenge to Seller's rights to any of
the patents and/or trademarks. The intellectual property being conveyed is all
of the intellectual property actually used by the Seller in operating the
LogEtronics business in the year 2001, except as specifically identified in this
agreement. Seller agrees that it will execute any additional documents
reasonably required to transfer any of its interest in its trademark and/or
patents to the Seller subsequent to closing.

             E. All documents required to be delivered to Buyer at or prior to
the closing shall have been so delivered.

             F. Seller represents that LogEtronics has no creditors other than
its secured lender or other third parties identified on Schedule "D" and there
are no liens, encumbrances or other claims against the assets being transferred.
Seller to the best of its knowledge does not owe any taxes to any taxing
authority and there shall be no balances owed to either creditors or the state,
local or Federal taxing authorities at the time of closing. If there are liens,
encumbrances or claims against the LogEtronics assets or balances owed to its
secured or unsecured creditors or taxes outstanding, these items shall be paid
by Seller at closing or escrowed if requested by the taxing authority.The
parties agree in lieu of compliance with the bulk sales requirements for any
jurisdictions in which Seller is currently conducting business, Seller shall
indemnify and hold harmless Buyer from, against any and all losses, demands,
causes of action, judgments, claims, liabilities, assessment damages
(collectively referred to as "claims") suffered or incurred by any creditor as
the result of noncompliance with any State, Federal or local bulk sales
requirements. The indemnifications shall be construed as broad as possible in
favor of Buyer and shall cover the costs of defending as well as providing for
any recovery or settlement of any claim pursuant to or


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arising out of any bulk sales related claims, tax claims or creditor claims.
Further, Buyer has the right to offset any claim against any payment owed to
Seller under the Promissory Note referred to in paragraph 3B of this Agreement.

         12. CREDITORS. Seller agrees to furnish Buyer with a list of Seller's
existing LogEtronics creditors, if any, including the names and business
addresses of all such creditors, the amounts owed to each and also the name and
address of all persons who are known by Seller to assert claims against Seller
whether disputed or not. This list must be provided within five (5) days after
signing this Contract. In the event Seller fails to provide a list, Buyer may
cancel this Contract in his Buyers' sole discretion. Those creditors will be
paid or otherwise satisfied by Seller at or prior to closing.

         13. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS. All obligations of
Seller at the closing are subject, at the option of Seller, to the fulfillment
of each of the following conditions at or prior to the closing, and Buyer shall
exert its best efforts to cause each such condition to be so fulfilled:

             A. All representations and warranties of Buyer contained in this
contract or in any document delivered pursuant to this contract shall be true
and correct in all material respects when made and as of the closing.

             B. All obligations required by the terms of this Contract to be
performed by Buyer at or before the closing shall have been duly and properly
performed in all material respects.

             C. A UCC and patent/trademark search with respect to LogEtronics
Corporation will have been completed to the Buyer's satisfaction prior to
closing.

         14. INDEMNIFICATION.

             A. Seller hereby indemnifies and agrees to hold Buyer harmless
from, against and in respect of:


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             (1) any and all losses, liabilities or damages suffered or incurred
                 by Buyer (a) by reason of any untrue representation, breach of
                 warranty or nonfulfillment of any covenant by Seller contained
                 in this contract or in any certificate, document or instrument
                 delivered to Buyer pursuant to this contract or in connection
                 with this contract or (b) which would have not been suffered or
                 incurred if such representation were true;

             (2) any and all losses, liabilities or damages suffered or incurred
                 by Buyer in respect of or in connection with any liabilities of
                 Seller not expressly assumed by Buyer;

             (3) any and all losses, damages, debts, liabilities or obligations
                 of Seller, direct or indirect, fixed, contingent or otherwise,
                 which exist at or as of the date of the closing hereunder or
                 which arise after the closing but which are based upon or arise
                 from any act, omission, transaction, circumstance, state of
                 facts or other condition which occurred or existed on or before
                 the date of the closing, whether or not then known, due or
                 payable;

             (4) any and all losses, liabilities or damages suffered or incurred
                 by Buyer by reason of or in connection with any claim for a
                 finders fee or brokerage or other commission arising by reason
                 of any services alleged to have been rendered to or at the
                 instance of Seller with respect to this Contract or any of the
                 transactions contemplated hereby;

             (5) any and all losses, liabilities or damages suffered or incurred
                 by Buyer (a) by reason of any claim for severance or vacation
                 pay accruing or incurred or triggered by a discharge at any
                 time on or after the date hereof by an employee of Seller on or
                 prior to closing date or (b) relating to employee benefits
                 attributable to services performed prior to the closing; and

             (6) any and all actions, suits, proceedings, claims, demands,
                 assessments, judgments, costs and expenses, including without
                 limitation, legal fees and expenses, incident to any of the
                 foregoing or incurred in investigating or attempting to avoid
                 the same or to oppose the imposition thereof, or in enforcing
                 this indemnity.

             B.  Buyer hereby agrees to indemnify and hold Seller  harmless
from, against and in respect of:

             (1) any and all losses, liabilities or damages suffered or incurred
                 by Seller (a) by reason of any untrue representation, breach of
                 warranty, nonfulfillment of any covenant by Buyer contained in
                 this contract or any certificate, document or instrument
                 delivered to Seller pursuant to this Contract or in connection
                 with this Contract or (b) which would have not been suffered or
                 incurred if such representation were true.


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             (2) any and all losses, liabilities or damages suffered or incurred
                 by Seller by reason of or in connection with any claim for a
                 finders fee or brokerage or other commission arising by reason
                 of any services alleged to have been rendered to or at the
                 instance of Buyer with respect to this Contract or any of the
                 transactions contemplated hereby;

         15. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
statements, representations, warranties, , covenants and agreements being madeby
each of the parties hereto shall survive the closing for a period of three (3)
years, after which they shall expire. This expiration period shall not apply to
any claims provided for in Section 2B, 2C and 2D of this Agreement, the
expiration period shall not apply to any creditors' claims provided for in
Section 11F.

         16. SELLER'S REPRESENTATIONS. As an inducement to Buyer to enter into
this Contract, Seller represents:

             A. Ownership of Business. Seller represents that it is the sole
owner of the business assets with full right to sell or dispose of it as Seller
may choose. No other person whatsoever has any claim, right, title, interest or
lien in, to or on the business other than Seller's secured lender.

             B. Licenses and Permits. Seller has all the necessary licenses and
other permits required for the conduct and operation of the business required
under local, State and Federal law.

             C. Compliance. The business and operations of Seller have at all
times been conducted in compliance in all material respects with all applicable
federal, state and local laws, ordinances, regulations, orders and other
requirements or governmental authorities concerning matters relating to the
environment.

             D. Execution, Delivery and Performance of Contract; Authority.
Neither the execution, delivery nor performance of this Contract by Seller will,
with or without the giving



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of notice or the passage of time, or both, conflict with, result in a default,
right to accelerate or loss of rights under, or result in, cause or create any
liability, lien, charge or encumbrance pursuant to any provision of any
franchise, mortgage, deed of trust, lease, license, regulation, order, judgment,
decree or other legal or contractual requirement to which Seller is a party.

             E. Litigation. There is no claim, legal action, suit, arbitration,
governmental investigation or other legal or administrative proceeding, nor any
order, decree or judgment in progress, pending or in effect, or, to the
knowledge of Seller, threatened, against or relating to Seller its properties,
assets or business or the transactions contemplated by this Contract.

             F. Compliance with Laws and Other Instruments. Seller has complied
with all existing laws, rules, regulations, ordinances, orders, judgments and
decrees now applicable to its business, properties or operations as presently
conducted. Neither the ownership nor use of Seller's properties nor the conduct
of its business conflicts with any mortgage, deed of trust, lease, license,
agreement, understanding, law, ordinance, rule or regulation, or any order,
judgment, or decree to which seller is a party or by which it may be bound or
affected. Seller is aware of no proposed laws, rules, regulations, ordinances,
orders, judgments, decrees, governmental takings, condemnations or other
proceedings which would be applicable to its business, operations or properties
and which might adversely affect its properties, assets, liabilities, operations
or prospects, either before or after the closing.

             G. Title to Properties. Seller has good and marketable title to all
assets it owns or uses in the business or purports to own without limitation,
including but not limited to those contained in Schedule "A" as well as
discussed in subsection I below, reflected in its books and records and in the
balance sheet (except inventory sold after the balance sheet date in the
ordinary course of business). None of such assets are subject to any mortgage,
pledge, lien, charge, security interest, encumbrance, restriction, lease,
license, easement, liability of any nature


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whatsoever, except (i) mortgages or security interests held by the Seller's
secured lender as securing specific liabilities or obligations or (ii) those
imperfections of title and encumbrances, if any, which, individually or in the
aggregate, (a) are not substantial in character, amount or extent and do not
materially detract from the value of the properties subject thereto, (b) do not
interfere with either the present or continued use of such property or the
conduct of Seller's normal operations. All mortgages, security interests or
other encumbrances shall be fully disclosed to Buyer prior to the closing. All
of the properties and assets owned, leased or used by Seller are in good
operating condition and repair, are suitable for the purposes used, and are
adequate and sufficient for all current operations of Seller.

             H. Schedules. Attached Schedule "A" is a separate schedule
containing a complete list of machinery, tools, equipment and other tangible
property being transferred to Buyer under this Contract. However, Buyer shall
have the right to inspect all assets being conveyed on the day of closing to
insure that all items associated with the business are in good working order and
are being transferred to Buyer.

             I. Records. The customer lists, inventory data and other records of
Seller are complete and correct in all material respects and have been
maintained in accordance with sound business practices, and there have been no
transactions involving the business of seller which properly should have been
set forth therein and which have not been accurately so set forth.

             J. Non-Compete. As part of the inducement for entering into this
Contract, Seller agrees that it will not compete against Buyer either directly
or indirectly, locally, nationally or internationally, in the same line of
graphic arts film and plate processing business for a period of ten (10) years.
This provision shall survive closing.


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         17. CHOICE OF LAWS/JURISDICTION. The parties agree that this contract
shall be interpreted under New Jersey law, and that
any dispute will be resolved in the State Courts of New Jersey.

         18. NON-ASSUMPTION OF SELLER'S LIABILITY. Buyer is not assuming any
liabilities of Seller.

         Buyer, at its sole discretion, shall assume the responsibility for
paying to the appropriate domestic or foreign authorities any domestic or
foreign maintenance fees, as they may arise after closing date, for current
patents or trademarks owned by LogEtronics as contained in Schedule "C". Seller
has selected, maintained and paid such fees for usable patents and trademarks,
at its discretion, through closing date.

         Buyer agrees to assist and cooperate with Seller, post closing date, in
a usual and customary manner, to collect any unpaid LogEtronics Account
Receivable due Seller; however, Buyer is not assuming any responsibility for
payment of all or a portion of the Accounts Receivable and Buyer is in no way
guaranteeing the collection of any of the Accounts Receivable.

         Seller agrees to reasonably cooperate and assist Buyer with requests
for information concerning any undocumented data with regard to the LogEtronics
business after closing date.

         19. SELLER'S CREDITORS. The Seller represents that it will satisfy the
bona fide claims of its secured creditors simultaneous with closing. Seller will
provide UCC-3 releases from its secured creditor simultaneous with closing.

         20. HEADINGS. Section and subsection headings are not intended to be
full or accurate descriptions of the content.

         21. NO ASSUMPTION OF LIABILITY TO SELLER'S EMPLOYEES. Seller agrees
that Buyer is not assuming any liability for back pay, back wages, vacation time
or severance pay, or any other obligation to Seller's existing employees,
subject to paragraph 2 B above. The parties


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<PAGE>


agree that any accrued vacation time owing to existing employees shall not be an
obligation transferred to Buyer for such employees if and when they are hired by
Buyer. Prior to closing Seller shall bring current its obligations to its
employees, including its obligations, if any, for wages, vacation time or any
withholding obligations owed to governmental agencies or other third parties by
Seller by virtue of Seller being an employer of such employees. Seller shall
provide all LogEtronics employees with W-2 wage reports for employment during
2001 as per IRS rules and regulations.

         22. INSPECTION OF BUSINESS ASSETS. Buyer has the right to inspect all
assets and financial records of the LogEtronics business on the day of closing
to determine if the assets and income of the business is substantially the same
as they were at the time it inspected them prior to the closing.

         23. ATTORNEY'S FEES. Should any litigation be commenced between the
parties to this Contract concerning the rights and duties of either party in
relation to the business or this Contract, the prevailing party in the
litigation shall be entitled to (in addition to any other relief that may be
granted), a reasonable sum for attorney's fees and costs, which sum shall be
determined by the Court or other person presiding in the arbitration or
litigation or any separate action brought for that purpose.

         24. ENTIRE AGREEMENT. This Contract and any documents referred to in
this Contract constitute the sole and only agreement between Buyer and Seller
respecting the business or the sale and purchase of it. This Contract correctly
sets forth the obligations of Buyer and Seller to each other as of this date.

         25. DISPUTES. Any disputes concerning this Contract or the transaction
contemplated by this Contract shall be resolved in an action filed in a court of
competent jurisdiction in the State of New Jersey.



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<PAGE>

                         AMERGRAPH CORPORATION, a New Jersey corporation, Buyer

                         By:_____/s/ Robert Lesko____________________________
                                          ROBERT J. LESKO, President
                         Dated:  ________________


                         AFP IMAGING

                         By:______/s/ David Vozick___________________________
                                                     DAVID VOZICK, Chairman
                         Dated:  _______________

                         LOGETRONICS CORPORATION

                         By:________/s/ David Vozick_________________________
                                                     DAVID VOZICK, Chairman
                         Dated:  _______________



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