<PAGE>
                               THIRD AMENDMENT TO
                           LOAN AND SECURITY AGREEMENT

     This Third Amendment to Loan and Security Agreement (this "Amendment"),
dated as of July 14, 1997, is entered into by and among AFP IMAGING CORPORATION,
a New York corporation, successor by merger to AFP Technologies Corporation,
formerly known as Kenro Corporation, a New Jersey corporation ("AFP"),
LOGETRONICS CORPORATION, a New York corporation ("LogE"), VISIPLEX INSTRUMENTS
CORPORATION, a New York corporation formerly known as Xenon Industries, Inc.
("Visiplex") and REGAM MEDICAL SYSTEMS INTERNATIONAL AB, a Swedish corporation
("Regam") (AFP, LogE, Visiplex and Regam are hereinafter jointly and severally,
referred to as "Borrower"), and FINOVA CAPITAL CORPORATION, a Delaware
corporation ("Lender") formerly known as Greyhound Financial Corporation,
successor-by-merger to Greyhound Financial Capital Corporation, an Oregon
corporation ("Original Lender").

                              W I T N E S S E T H:

     WHEREAS, Borrower, AFP Technologies Corporation, formerly known as Kenro
Corporation, a New Jersey corporation and Original Lender are parties to that
certain Loan and Security Agreement dated as of November 22, 1993, as the same
was amended by (i) that certain First Amendment to Loan and Security Agreement
dated as of December 7, 1993 and (ii) that certain Second Amendment to Loan and
Security Agreement dated as of July 14, 1995 (as so amended, the "Loan
Agreement") setting forth the terms and conditions under which Original Lender
would make loans and other advances to Borrower; and

     WHEREAS, effective as of December 31, 1994, Original Lender was merged with
and into Lender (then known as Greyhound Financial Corporation), with Lender
being the surviving corporation of such merger, and Lender succeeded to all the
rights and obligations of Original Lender under the Loan Agreement and the Loan
Documents; and

     WHEREAS, effective on April 17, 1997 AFP acquired all of the issued and
outstanding stock of Regam; and

     WHEREAS, Borrower has requested that Lender make certain amendments to the
Loan Agreement, which Lender is willing to do but only upon the terms and
subject to the conditions herein set forth;

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

<PAGE>
     1. Definitions. Unless otherwise defined in this Amendment, all capitalized
terms used herein shall have the same meaning as set forth in the Loan
Agreement.

     2. Amendments. The Loan Agreement is hereby amended as follows:

     (a) Paragraph 1(A) is hereby amended by adding or substituting, as the case
may be, the following definitions:

          "this Agreement' shall mean this Loan and Security Agreement dated as
     of November 22, 1993, as amended by the First Amendment, the Second
     Amendment and the Third Amendment, and as the same may hereafter be
     amended, restated, renewed, extended or modified from time to time."

          "'Borrower' means, individually and collectively, jointly and
     severally, each of AFP, LogE, Visiplex and Regam."

          "'Collateral' shall have the meaning given to it in Section 3 of the
     Third Amendment."

          "'Eligible Backed Foreign Receivable' shall mean an otherwise Eligible
     Receivable of an account debtor not located in the United States, where
     such Receivable is fully supported by a letter of credit or other form of
     guaranty or security, in each case in form and substance satisfactory to
     Lender."

          "'Eligible Named Foreign Receivable' shall mean an otherwise Eligible
     Receivable of any of Siemens AG, Phillips Medical Systems, GE Belgium or
     AGFA Gaevert."

          "'Eligible Foreign Receivable' shall mean an Eligible Receivable of an
     account debtor not located in the United States, but excluding (A) Eligible
     Backed Foreign Receivables and (B) Eligible Named Foreign Receivables."

          "'Loan Documents' means, collectively, this Agreement, the
     Intellectual Property Security Agreement, the Subordination Agreement, the
     Environmental Certificate, the Assignment of Contract, Term Note C, any
     other note or notes executed by Borrower and payable to Lender, and any
     other agreements entered into in connection with this Agreement, together
     with all alterations, amendments, changes, extensions, modifications,
     refinancings, refundings, renewals,

                                      -2-

<PAGE>
     replacements, restatements, or supplements, of or to any of the foregoing."

          "'Regam' means Regam Medical Systems International AB, a Swedish
     corporation."

          "'Subordinating Creditor' means ACG Nystromgruppen AB, a Swedish
     corporation."

          "'Subsidiary' means any of LogE, Visiplex or Regam."

          "'Term Note C' shall mean that certain promissory note of Borrower,
     payable to Lender's order, dated as of the Third Amendment Effective Date,
     in the original principal amount of $1,450,000, and attached as Exhibit A
     to the Third Amendment, as the same may hereafter be amended, restated,
     renewed, extended or modified, or any new note issued in substitution
     therefor, from time to time."

          "'Third Amendment' shall mean that certain Third Amendment to Loan and
     Security Agreement dated as of July 14, 1997, between Lender and Borrower."

          "'Third Amendment Effective Date' shall mean July 14, 1997, the date
     upon which the Third Amendment became effective."

     (b) Clause (v) of the definition of "Eligible Receivables" is hereby
amended in its entirety to read as follows:

          "(v) [Reserved];"

     (c) Paragraph 2(B)(i)(b) is hereby amended in its entirety to read as
follows:

          "(b) an amount equal to (1) eighty percent (80%) of the net amount of
     Eligible Receivables other than Eligible Named Foreign Receivables or
     Eligible Foreign Receivables, plus (2) the lesser of (A) eighty percent
     (80%) of the net amount of Eligible Named Foreign Receivables or (B)
     $500,000, plus (3) the lesser of (A) fifty percent (50%) of the net amount
     of Eligible Foreign Receivables or (B) $500,000;"

                                      -3-

<PAGE>
     (d) Paragraph 2(B)(iii) is hereby amended in its entirety to read as
follows:

          "(iii) Fixed Asset Loan: a term loan in the outstanding principal
     amount of One Million Four Hundred and Fifty Thousand Dollars and No/100
     ($1,450,000.00) (the "Fixed Asset Loan"); provided, that the Fixed Asset
     Loan shall be subject to such terms and conditions as are set forth on Term
     Note C.

          Lender shall disburse the Fixed Asset Loan in a single advance in
     accordance with the terms and subject to the conditions set forth in the
     Loan Agreement."

     (e) The first sentence of Paragraph 3(A) is hereby amended in its entirety
to read as follows:

     "Borrower shall pay Lender interest on the daily outstanding balance of
     Borrower's loan account at a per annum rate of three-quarters of one
     percent (0.750%) in excess of the rate of interest announced publicly by
     Citibank, N.A., from time to time as its 'base rate' (or any successor
     thereto), which may not be such institution's lowest rate (the 'Base
     Rate')."

     (f) The final sentence of Paragraph 3(A) is hereby amended in its entirety
to read as follows:

     "The foregoing notwithstanding, the principal balance of the Fixed Asset
     Loan shall bear interest at a per annum rate as set forth in Term Note C."

     (g) Paragraph 3(B), providing for a Minimum Interest Charge, is hereby
deleted in its entirety.

     (h) Paragraph 3(G) is hereby amended in its entirety to read as follows:

          "(G) Examination Fees. Borrower agrees to pay to Lender an examination
     fee in the amount of Five Hundred and No/100 Dollars ($500.00) per day per
     auditor in connection with each audit or examination of Borrower performed
     by Lender prior to or after the date hereof, plus all costs and expenses
     incurred in connection therewith (the "Examination Fee"). Notwithstanding
     the foregoing, so long as there exists no Event of Default or any act or
     event which with notice, passage of time, or both would constitute an Event
     of Default, Borrower shall pay only Lender's actual fees and expenses
     incurred during Lender's field examinations and audits, based upon a cycle
     of

                                      -4-

<PAGE>
     one hundred and eighty (180) days between such field examinations/audits
     and a limit of five (5) business days per such field examination/audit;
     provided, however, that nothing herein shall be deemed to limit the
     frequency or the duration of Lender's field examinations/audits."

     (i) Paragraph 17(A) is hereby amended and restated in its entirety to read
as follows:

          "Term. The initial term of this Agreement shall be for three (3) years
     from the Third Amendment Effective Date (the 'Initial Term') and shall be
     automatically renewed for successive periods of one (1) year (each, a
     'Renewal Term'), at the discretion of Lender, unless earlier terminated as
     provided herein. All loans and all credit facilities shall be coterminous."

     (j) Paragraph 17(D) is hereby amended in its entirety to read as follows:

          "(D) Early Termination; Termination Fee. In addition to the procedure
     set forth in Paragraph 17(B), Borrower may terminate this Agreement at any
     time upon sixty (60) days' prior written notice and prepay the Obligations.
     Upon any such early termination by Borrower or any termination of this
     Agreement by Lender upon the occurrence of an Event of Default under
     Paragraph 18(A) hereof, then, and in any such event, Borrower shall pay to
     Lender upon the effective date of such termination a fee (the 'Termination
     Fee') in an amount equal to: (i) three percent (3%) of the average daily
     outstanding balance of the Obligations for the 180 day period (or lesser
     period if applicable) preceding the date of termination, if such early
     termination occurs on or prior to the first anniversary of the Third
     Amendment Effective Date; (i) two percent (2%) of the average daily
     outstanding balance of the Obligations for the 180 day period (or lesser
     period if applicable) preceding the date of termination, if such early
     termination occurs after the first anniversary of the Third Amendment
     Effective Date but on or prior to the second anniversary of the Third
     Amendment Effective Date; or (ii) one percent (1%) of the average daily
     outstanding balance of the Obligations for the 180-day period preceding the
     date of termination, if such early termination occurs after the second
     anniversary of the Third Amendment Effective Date. The Termination Fee
     shall be presumed to be the amount of damages sustained by Lender as a
     result of the early termination, and Borrower agrees that because it is
     difficult to calculate such damages, the Termination Fee provided for
     herein is reasonable under the circumstances."

                                      -5-

<PAGE>
     (k) Notwithstanding anything to the contrary contained in the Loan
Agreement, as long as (i) Borrower shall maintain excess borrowing availability
of at least Five Hundred Thousand Dollars ($500,000), after giving effect to any
requested but unfunded advance and payment in full of Borrower's suppliers to
within sixty (60) days of such suppliers' respective written or agreed-upon
terms, and (ii) there shall not then exist an Event of Default or any act or
event which with notice, passage of time, or both would constitute an Event of
Default, (1) Borrower shall report to Lender Collateral information on a monthly
basis (in the form of a Borrowing Base Certificate to be prescribed by Lender),
and (2) Borrower shall maintain dominion over its cash.

     (l) Lender's address for notice purposes in Exhibit B to the Loan Agreement
is hereby amended in its entirety to read as follows:

          Lender's address for notices: FINOVA Capital Corporation
                                        311 South Wacker Drive
                                        Suite 4400
                                        Chicago, Illinois 60606
                                        Att'n: Brian G. Rujawitz
                                        Fax: (312) 322-7250

          with a copy to:               FINOVA Capital Corporation
                                        1850 North Central Avenue
                                        Phoenix, Arizona 85002
                                        Attention: Joseph R. D'Amore, Esq.
                                        Fax: (602) 207-5036

          with a copy to:               Gammage & Burnham
                                        Two North Central Avenue
                                        Eighteenth Floor
                                        Phoenix, Arizona 85004
                                        Att'n: Randall S. Dalton, Esq.
                                        Fax: (602) 256-4475

     (m) The Validity and Support Agreement is hereby terminated and deemed to
be of no further force or effect.

     (n) Within sixty (60) days after the Third Amendment Effective Date,
Borrower shall cause to be delivered to Lender a Subordination Agreement from
ACG Nystromgruppen AB (the Subordinating Creditor) with respect to that certain
US$1,000,000 promissory note of AFP dated April 17, 1997.

     (o) Notwithstanding anything to the contrary contained in the Loan
Agreement, "Eligible Receivables" shall exclude Receivables of Regam unless and

                                      -6-

<PAGE>
until Lender shall have satisfied itself in its sole determination that Lender
has a first priority perfected security interest in such Receivables of Regam.

     (p) Notwithstanding anything to the contrary contained in the Loan
Agreement, "Eligible Inventory" shall exclude Inventory of Regam unless and
until Lender shall have satisfied itself in its sole determination that Lender
has a first priority perfected security interest in such Inventory.

     (q) The following new Section 13(A)(v) is hereby added to read as follows:

          "(v) Regam is a corporation duly organized, validly existing and in
     good standing under the laws of the Country of Sweden, is qualified and
     authorized to do business and is in good standing in all jurisdictions in
     which such qualification and good standing are necessary in order for it to
     conduct its business and own its property (other than to the extent that
     such failure to qualify would not have a material adverse effect on the
     business or financial condition of Regam), and has all requisite power and
     authority to conduct its business as presently conducted, to own its
     property and to execute and deliver each of the Loan Documents to which it
     is a party and perform all of its Obligations thereunder;"

     (r) Section 15(L), which presently reads as follows:

          "(L) Affiliate Transactions. Except as set forth below, sell,
     transfer, distribute or pay any money or property to any Affiliate, or
     invest in (by capital contribution or otherwise) or purchase or repurchase
     any stock or Indebtedness, or any property, of any Affiliate, or become
     liable on any guaranty of the indebtedness, dividends or other obligations
     of any Affiliate. Notwithstanding the foregoing, Borrower may pay
     compensation permitted by Paragraph 15(J) to employees who are Affiliates,
     make loans or other advances permitted by Paragraph 15(B) to executives who
     are Affiliates and make payments to E-Ticket to the extent permitted under
     the Subordination Agreement between Lender and E-Ticket and, if no Event of
     Default has occurred, Borrower may engage in transactions with Affiliates
     in the normal course of business, in amounts and upon terms which are fully
     disclosed to Lender and which are no less favorable to Borrower than would
     be obtainable in a comparable arm's length transaction with a Person who is
     not an Affiliate;"

is hereby amended in its entirety to read as follows:

                                      -7-

<PAGE>
          "(L) Affiliate Transactions.

               (i) sell, transfer, distribute or pay any money or property to
          any Affiliate other than Regam, or invest in (by capital contribution
          or otherwise) or purchase or repurchase any stock or Indebtedness, or
          any property, of any Affiliate other than Regam, or become liable on
          any guaranty of the indebtedness, dividends or other obligations of
          any Affiliate other than Regam; provided, however, that if (A) no
          Event of Default exists and (B) no act or event has occurred which,
          with the passing of time or the giving of notice, or both, would
          constitute an Event of Default, then Borrower may engage in
          transactions with any Affiliate other than Regam in the normal course
          of business, in amounts and upon terms which are fully disclosed to
          Lender and which are no less favorable to Borrower than would be
          obtainable in a comparable arm's length transaction with a Person who
          is not an Affiliate;

               (ii) sell, transfer, distribute or pay any money or property to
          Regam, except on the following terms and subject to the following
          conditions: (A) both before and after having given effect to such
          sale, transfer, distribution or payment , no Event of Default exists
          and no act or event has occurred which, with the passing of time or
          the giving of notice, or both, would constitute an Event of Default
          and (B) either (1) Lender shall continue to have a first priority
          perfected security interest in such money or property, or (2) both
          before and after having given effect to such sale, transfer,
          distribution or payment, Borrower shall have excess borrowing
          availability of at least One Million Five Hundred Thousand Dollars
          ($1,500,000) after giving effect to any requested but unfunded advance
          and payment in full of Borrower's suppliers to within sixty (60) days
          of such suppliers' respective written or agreed-upon terms, or (3)
          FINOVA shall have given its prior written approval for such sale,
          transfer, distribution or payment;

               (iii) notwithstanding the provisions of Section 15(L)(i) or
          Section 15(L)(ii), Borrower may pay compensation permitted by
          Paragraph 15(J) to employees who are Affiliates, make loans or other
          advances permitted by Paragraph 15(B) to executives who are Affiliates
          and make payments to Subordinated Creditor to the extent permitted
          under the Subordination Agreement between Lender and Subordinated
          Creditor;".

                                      -8-

<PAGE>
     3. Reaffirmation and Grant of Security Interest. Without in any way
limiting the provisions of Section 4(A) of the Loan Agreement, and to secure the
prompt payment and performance of the Obligations (other than those Obligations
arising out of the Environmental Certificate), and notwithstanding which entity
constituting Borrower receives a particular advance of the Total Facility, each
entity constituting Borrower hereby reaffirms the grant to Lender of or grants
to Lender, as the case may be, a security interest in all of such Borrower's now
owned or hereafter acquired or arising Inventory, Equipment, Receivables, the
Life Insurance Policies and the proceeds thereof, Trademarks, Licenses and
Patents, and General Intangibles, including, without limitation, all of such
Borrower's Deposit Accounts, money, any and all property now or at any time
hereafter in Lender's possession (including claims and credit balances), and all
proceeds (including proceeds of any insurance policies, proceeds of proceeds and
claims against third parties), all products and all books and records related to
any of the foregoing (all of the foregoing, together with all other property in
which Lender may be granted a lien or security interest, is referred to herein,
collectively, as the "Collateral"; provided, however, that, with respect solely
to Collateral of Regam, such Collateral of Regam shall in all events include
only property of Regam located in the United States of America as of the Third
Amendment Effective Date together with such Collateral of Regam as thereafter
may be located therein from time to time.

     4. Conditions Precedent. The amendments described in this Amendment and the
obligations of Lender set forth in this Amendment will not be effective unless
and until each of the following conditions precedent have been satisfied, in
form, manner and substance satisfactory to Lender:

     (a) Borrower shall have delivered or caused to be delivered to Lender the
following documents, all of which shall be properly completed, executed and
otherwise satisfactory to Lender:

          (i) this Third Amendment;

          (ii) Term Note C (as described in Section 2(a) hereof), in form and
     substance set forth in Exhibit A attached hereto and incorporated herein by
     this reference, which Term Note C shall be issued in substitution for, but
     not in payment of or satisfaction of, (A) that certain First Amended
     Secured Promissory Note (Term Note A) in the original principal amount of
     $550,000 and (B) that certain Secured Promissory Note (Term Note B);

          (iii) Any other consents deemed necessary by Lender;

          (iv) A corporate resolution from the Board of Directors of each entity
     constituting Borrower (and from the Shareholders, if

                                      -9-

<PAGE>
     necessary) approving the transactions contemplated hereby and the execution
     and delivery of this Amendment and Term Note C;

          (v) A certificate of Borrower's president and corporate assistant
     secretary attesting to the facts that (A) the corporate resolutions set
     forth in Section 3(a)(vi) above have not been modified or revoked and
     remain in full force and effect; and (B) the by-laws of such Borrower have
     not changed from the date of the last such certification, or attaching any
     amendments thereto.

          (vi) Such amendments to Lender's existing financing statements and
     such new financing statements in Lender's favor as Lender deems necessary;
     and

          (vii) Such other items as Lender may require;

     (b) Lender shall have received a certificate of corporate status with
respect to each Borrower, dated within ten (10) days of the date hereof, from
the Secretary of State or other appropriate governmental authority of the state
or country of incorporation of each Borrower, which certificate shall indicate
that each Borrower is in good standing in such jurisdiction, together in each
case with a certified copy of the articles of incorporation of each Borrower
from such governmental authority;

     (c) There shall not then exist an Event of Default or any act or event
which with notice, passage of time, or both would constitute an Event of
Default;

     (d) All the representations and warranties of the Loan Parties in the Loan
Documents (as defined in Section 2(a) hereof) as amended hereby shall be true
and correct, in all material respects, before and after giving effect to the
making of this Amendment;

     (e) Lender shall have reviewed and approved a current UCC search on
Borrower; and

     (f) Borrower shall have paid all closing costs, recording fees and taxes,
appraisal fees and expenses, travel expenses, fees and expenses of Lender's
counsel, and all other costs and expenses incurred by Lender in connection with
the preparation of, closing of and disbursement of the advances pursuant to this
Amendment, which costs, fees and expenses may be payable from the first advance
made pursuant to this Amendment.

     5. Indebtedness Acknowledged. Borrower acknowledges that the indebtedness
evidenced by the Loan Documents is just and owing and agrees to pay the
indebtedness in accordance with the terms of the Loan Documents. Borrower

                                      -10-

<PAGE>
further acknowledges and represents that no event has occurred and no condition
presently exists that would constitute a default or event of default by Lender
under the Loan Agreement as amended hereby or any of the other Loan Documents,
with or without notice or lapse of time.

     6. Validity of Documents. Borrower hereby ratifies, reaffirms, acknowledges
and agrees that the Loan Agreement as amended hereby and the other Loan
Documents represent valid, enforceable and collectable obligations of Borrower,
and that Borrower presently has no existing claims, defenses (personal or
otherwise) or rights of setoff whatsoever with respect to the Obligations of
Borrower under the Loan Agreement as amended hereby or any of the other Loan
Documents. Borrower furthermore agrees that it has no defense, counterclaim,
offset, cross-complaint, claim or demand of any nature whatsoever which can be
asserted as a basis to seek affirmative relief or damages from Lender.

     7. Reaffirmation of Warranties. Borrower hereby reaffirms to Lender each of
the representations, warranties, covenants and agreements of Borrower as set
forth in each of the Loan Documents as amended hereby with the same force and
effect as if each were separately stated herein and made as of the date hereof.
Borrower represents and warrants to Lender that with respect to the financing
transaction herein contemplated, no Person is entitled to any brokerage fee or
other commission and Borrower agrees to indemnify and hold Lender harmless
against any and all such claims.

     8. Ratification of Terms and Conditions. All terms, conditions and
provisions of the Loan Agreement as amended hereby, and of each of the other
Loan Documents shall continue in full force and effect and shall remain
unaffected and unchanged except as specifically amended hereby. In the event of
any conflict between the terms and conditions of this Amendment and any of the
other Loan Documents, the provisions of this Amendment shall control.

     9. Other Writings. Lender and Borrower will execute such other writings as
may be necessary to confirm or carry out the intentions of Lender and Borrower
evidenced by this Amendment.

     10. Benefit of this Amendment. The terms and provisions of this Amendment
and the other Loan Documents shall be binding upon and inure to the benefit of
Lender and Borrower and their respective successors and assigns, except that
Borrower shall not have any right to assign its rights under this Amendment or
any of the Loan Documents or any interest therein without the prior written
consent of Lender.

     11. Choice of Law. The Loan Documents and this Amendment shall be performed
and construed in accordance with the laws of the State of Arizona.

                                      -11-

<PAGE>
     12. Entire Agreement. Except as modified by this Amendment, the Loan
Documents remain in full force and effect. The Loan Documents as modified by
this Amendment embody the entire agreement and understanding between Borrower
and Lender, and supersede all prior agreements and understandings between said
parties relating to the subject matter thereof.

     13. Counterparts; Telecopy Execution. This Amendment may be executed in any
number of separate counterparts, all of which when taken together shall
constitute one and the same instrument, admissible into evidence,
notwithstanding the fact that all parties have not signed the same counterpart.
Delivery of an executed counterpart of this Amendment by telefacsimile shall be
equally as effective as delivery of a manually executed counterpart of this
Amendment. Any party delivering an executed counterpart of this Amendment by
telefacsimile shall also deliver a manually executed counterpart of this
Amendment, but the failure to deliver a manually executed counterpart shall not
affect the validity, enforceability, and binding affect of this Amendment.

     14. Effectiveness of Amendment. This Amendment shall not be effective until
the same is executed and delivered by the parties hereto and all conditions set
forth in Section 4 hereof have been satisfied.

     15. Reaffirmation. All of the terms and provisions of the Loan Agreement
are hereby confirmed and ratified. However, in the event of a conflict between
the Loan Agreement and this Amendment, the provisions of this Amendment shall
prevail.

                            [SIGNATURE PAGE FOLLOWS]

                                      -12-

<PAGE>
     IN WITNESS WHEREOF, the parties have executed this Amendment on the date
and year first written above.

AFP IMAGING CORPORATION, a New York     LOGETRONICS CORPORATION, a New
corporation, successor by merger to     York corporation
AFP Technologies Corporation,
formerly known as Kenro
Corporation, a New Jersey
corporation

By: _______________________________     By: _______________________________
    Name:                                   Name:
    Title:                                  Title:

VISIPLEX INSTRUMENTS CORPORATION, a     REGAM MEDICAL SYSTEMS INTERNATIONAL
New York Corporation formerly known     AB, a Swedish corporation
as Xenon Industries, Inc.

By: _______________________________     By: _______________________________
    Name:                                   Name:
    Title:                                  Title:

                                      FINOVA CAPITAL CORPORATION, a Delaware
                                      corporation formerly known as
                                      Greyhound Financial Corporation,
                                      successor-by-merger to Greyhound
                                      Financial Capital Corporation, an
                                      Oregon corporation

                                      By: __________________________________
                                          Name:
                                          Title:

                                      -13-

<PAGE>
                          EXHIBIT A TO FIRST AMENDMENT

                               Form of Term Note C

                                (to be attached)

<PAGE>
                       REPLACEMENT SECURED PROMISSORY NOTE
                                  (TERM NOTE C)

$1,450,000                                                      Phoenix, Arizona
                                                                   July 14, 1997

     FOR VALUE RECEIVED, AFP IMAGING CORPORATION, a New York corporation,
successor by merger to AFP Technologies Corporation, formerly known as Kenro
Corporation, a New Jersey corporation, LOGETRONICS CORPORATION, a New York
corporation, VISIPLEX INSTRUMENTS CORPORATION, a New York corporation formerly
known as Xenon Industries, Inc. and REGAM MEDICAL SYSTEMS INTERNATIONAL AB, a
Swedish corporation ("Regam") (all of the foregoing, individually and
collectively "Debtor"), jointly and severally promise to pay to the order of
FINOVA CAPITAL CORPORATION ("Secured Party"), formerly known as Greyhound
Financial Corporation and successor-by-merger to Greyhound Financial Capital
Corporation, an Oregon corporation, at its offices at 355 South Grand Avenue,
Suite 2400, Los Angeles, California 90071, or at such other place or places as
Secured Party may from time to time designate in writing, the principal sum of
One Million Four Hundred Fifty Thousand Dollars ($1,450,000), payable as
follows:

          a. Thirty-Six (36) equal successive monthly installments of principal
     of Twelve Thousand Eighty-Three and 33/100 Dollars ($12,083.33) each on the
     first day of each month, beginning August 1, 1997, and continuing through
     and including July 1, 2000; and

          b. A final installment of One Million Fifteen Thousand and 12/100
     Dollars ($1,015,000.12) on the 14th day of July, 2000,

together with accrued interest on the principal balance from time to time
remaining unpaid, payable monthly on the first day of each and every month,
beginning August 1, 1997. Notwithstanding anything herein to the contrary, in
the event that certain Loan and Security Agreement, dated as of November 22,
1993 by and among Debtor (other than Regam), AFP Technologies Corporation,
formerly known as Kenro Corporation, a New Jersey corporation and Secured Party
(the "Original Agreement"), as amended by that certain First Amendment to Loan
and Security Agreement dated as of December 7, 1993 (the "First Amendment") that
certain Second Amendment to Loan and Security Agreement dated as of July 14,
1995 (the "Second Amendment") and that certain Third Amendment to Loan and
Security Agreement of even date herewith (the "Third Amendment"; and
collectively with the Second Amendment, the First Amendment and the Original
Agreement, and as the same may hereafter be amended, restated, renewed, extended
or modified from time to time, the "Loan Agreement") is terminated by Debtor, by
Secured Party or by any other person at any time, then the entire unpaid
principal balance of this Note,

<PAGE>
together with all accrued and unpaid interest hereon, shall become immediately
due and payable in full on the effective date of such termination, without
presentment, notice or demand of any kind.

     Interest shall be computed on the basis of a 360-day year for the actual
number of days elapsed, and shall be at the rate of three-quarters of one
percent (0.750%) in excess of the Base Rate (as hereinafter defined), computed
on the basis of a 360-day year; provided, however, upon the occurrence and
during the continuance of an event of default (as hereinafter defined), interest
shall accrue on the outstanding principal balance of this Note at a default rate
(the "Default Rate") of two and three-quarters percent (2.750%) in excess of the
Base Rate, and shall be payable on demand. "Base Rate" means, for any day, the
rate of interest per annum (over a year of 360 days) announced by Citibank, N.A.
(the "Bank"), from time to time, as its "base rate" (or any successor thereto)
in effect on such day. The Base Rate is not necessarily the lowest rate charged
by the Bank. The applicable rate of interest assessed hereunder will be
increased or decreased from time to time hereafter in an amount equal to any
increase or decrease hereafter made by the Bank in the Base Rate. A change in
the Base Rate shall be effective on the first day following such change,
provided that a cumulative change of less than one fourth of one percent (0.25%)
shall not be considered.

     Debtor warrants and represents to Secured Party that Debtor has used and
will continue to use the loans and advances represented by this Note solely for
proper business purposes, and consistent with all applicable laws and statutes.
Debtor further warrants and represents to Secured Party and covenants with
Secured Party that Debtor is not in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of Regulation
G issued by the Board of Governors of the Federal Reserve System), and no part
of the loan represented by this Note has been or will be used to purchase or
carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock.

     This Note is secured by the Collateral described in the Loan Agreement.

     The occurrence of any one of the following events shall constitute a
default by Debtor under this Note (hereinafter an "Event of Default"): (a) if
Debtor fails to pay to Secured Party an installment of principal or interest
hereunder when due; (b) if Debtor fails to pay any of its Obligations (as
defined in the Loan Agreement) to Secured Party when due and payable or declared
due and payable; (c) if Debtor fails or neglects to perform, keep or observe any
term, provision, covenant, warranty or representation contained in this Note or
the Loan Agreement (other than as referred to in (a) or (b) of this paragraph),
which is required to be performed, kept or observed by Debtor or if a default
occurs under the Loan Agreement; (d) an Event of Default under and as defined in
the Loan Agreement shall exist; or (e) the

                                      -2-

<PAGE>
occurrence of a default or an event of default under any agreement, instrument
or document heretofore, now or at any time or times hereafter delivered to
Secured Party by Debtor or by any guarantor of part or all of Debtor's
obligations to Secured Party.

     Upon the occurrence of any Event of Default hereunder, in addition to
Secured Party's right to charge interest on the Obligations at the Default Rate:
(a) at the option of Secured Party, the entire unpaid amount of all of the
Obligations shall become immediately due and payable without demand, notice or
legal process of any kind; (b) Secured Party may, at its option, without demand,
notice or legal process of any kind, exercise any and all rights and remedies
granted to it by the Loan Agreement or by any other agreement now or hereafter
existing between Secured Party and Debtor or between Secured Party and any
guarantor of part or all of Debtor's liabilities to Secured Party; and (c)
Secured Party may at its option exercise from time to time any other rights and
remedies available to it under the Uniform Commercial Code or other law of the
State of Arizona.

     The remedies of Secured Party as provided herein and in the Loan Agreement
shall be cumulative and concurrent, and may be pursued singularly, successively,
or together, at the sole discretion of Secured Party. No act of omission or
commission of Secured Party, including specifically any failure to exercise any
right, remedy or recourse, shall be deemed to be a waiver or release of the
same, such waiver or release to be effected only through a written document
executed by Secured Party and then only to the extent specifically recited
therein. A waiver or release with reference to any one event shall not be
construed as continuing, as a bar to, or as a waiver or release of, any
subsequent right, remedy or recourse as to a subsequent event.

     Debtor waives presentment, demand and protest, notice of protest, notice of
presentment and all other notices and demands in connection with the enforcement
of Secured Party's rights hereunder, except as specifically provided and called
for by this Note, and hereby consents to, and waives notice of, the release,
addition, or substitution, with or without consideration, of any collateral or
of any person liable for payment of this Note. Any failure of Secured Party to
exercise any right available hereunder or otherwise shall not be construed as a
waiver of the right to exercise the same or as a waiver of any other right at
any other time.

     If legal action is necessary to enforce any provision of this Note, the
prevailing party to such action shall be entitled to recover payment of its
costs and attorneys' fees, paralegals' fees and expert witnesses' fees from the
losing party.

     Secured Party may at any time transfer this Note and Secured Party's rights
in any or all collateral securing this Note, and Secured Party thereafter shall
be relieved from all liability with respect to such collateral arising after the
date of such transfer.

                                      -3-

<PAGE>
     This Note shall be binding upon Debtor and its legal representatives,
successors and assigns. Wherever possible, each provision of this Note shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of the Note shall be prohibited by or invalid under such
law, such provision shall be severable, and be ineffective to the extent of such
prohibition or invalidity, without invalidating the remaining provision of this
Note. The representations, warranties, covenants, liabilities and obligations of
Debtor contained herein constitute the joint and several representations,
warranties, covenants, liabilities and obligations of each of the parties
constituting Debtor.

     This Note is issued in substitution for, but not in payment for or
satisfaction of (i) that certain First Amended Secured Promissory Note (Term
Loan A) dated July 14, 1995 in the original principal amount of $550,000, which
itself was issued in amendment and restatement of, but not in payment for or
satisfaction of, that certain Secured Promissory Note dated as of November 22,
1993 in the original principal amount of $250,000.00 and (ii) that certain
Secured Promissory Note (Term Loan B) dated as of July 14, 1995 in the original
principal amount of $900,000.00 (collectively, the "Original Note"). Upon
execution and delivery hereof and satisfaction of the conditions precedent set
forth in the Third Amendment, the terms and provisions of this Note shall govern
and control all matters formerly governed by the Original Note. This Note is
Term Note C as defined in the Loan Agreement.

     THIS NOTE HAS BEEN DELIVERED FOR ACCEPTANCE BY SECURED PARTY IN PHOENIX,
ARIZONA AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS) OF THE STATE OF ARIZONA, AS
THE SAME MAY FROM TIME TO TIME BE IN EFFECT, INCLUDING, WITHOUT LIMITATION, THE
UNIFORM COMMERCIAL CODE AS ADOPTED IN ARIZONA. DEBTOR HEREBY (i) IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN MARICOPA
COUNTY, ARIZONA OVER ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY MATTER
ARISING FROM OR RELATED TO THIS NOTE; (ii) WAIVES PERSONAL SERVICE OF ANY AND
ALL PROCESS UPON DEBTOR, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE
BY MESSENGER, CERTIFIED MAIL OR REGISTERED MAIL DIRECTED TO DEBTOR AT THE
ADDRESS SET FORTH BELOW AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON
THE EARLIER OF ACTUAL RECEIPT OR THREE (3) DAYS AFTER THE SAME SHALL HAVE BEEN
POSTED TO DEBTOR'S ADDRESS; (iii) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
DEBTOR MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING; (iv) AGREES THAT A FINAL JUDGMENT
IN ANY SUCH ACTION OR PROCEEDING SHALL BE

                                      -4-

<PAGE>
CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION BY SUIT ON THE JUDGMENT
OR IN ANY OTHER MANNER PROVIDED BY LAW; (v) AGREES NOT TO INSTITUTE ANY LEGAL
ACTION OR PROCEEDING AGAINST SECURED PARTY OR ANY OF SECURED PARTY'S DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS OR PROPERTY, CONCERNING ANY MATTER ARISING OUT OF OR
RELATING TO THIS NOTE IN ANY COURT OTHER THAN ONE LOCATED IN MARICOPA COUNTY,
ARIZONA; AND (vi) IRREVOCABLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION
ARISING UNDER OR IN CONNECTION WITH THIS NOTE. NOTHING IN THIS PARAGRAPH SHALL
AFFECT OR IMPAIR SECURED PARTY'S RIGHT TO SERVE LEGAL PROCESS IN ANY MANNER
PERMITTED BY LAW OR SECURED PARTY'S RIGHT TO BRING ANY ACTION OR PROCEEDING
AGAINST DEBTOR OR DEBTOR'S PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.


AFP IMAGING CORPORATION, a New York     LOGETRONICS CORPORATION, a New
corporation, successor by merger to     York corporation
AFP Technologies Corporation,
formerly known as Kenro
Corporation, a New Jersey
corporation

By: _______________________________     By: _______________________________
    Name:                                   Name:
    Title:                                  Title:

Employer ID No.: 13-2956272             Employer ID No.: 22-2825090


VISIPLEX INSTRUMENTS CORPORATION, a     REGAM MEDICAL SYSTEMS INTERNATIONAL
New York corporation formerly known     AB, a Swedish corporation
as Xenon Industries, Inc.

By: _______________________________     By: _______________________________
    Name:                                   Name:
    Title:                                  Title:

Employer ID No.: 11-2557539             Employer ID No.: ___________


Debtor's address: 250 Clearbrook Road
                  Elmsford, New York 10523
                  Att'n: David Vozick

                                      -5-