**Exhibit
      10.5**


**Registration
      Rights Agreement by AFP Imaging Corporation,**





**REGISTRATION
      RIGHTS AGREEMENT**




This
      Registration Rights Agreement (this “ Agreement ”)
      is made
      as of April 13, 2007 by AFP Imaging Corporation, a New York corporation
      (the “ Company ”),
      for
      the benefit of the Holders (as such term is hereinafter defined). The Company
      hereby confirms that the rights granted under this Agreement constitute a
      material inducement to the Holders to enter into the Loan Agreement (as such
      term is hereinafter defined), make Loans from time to time thereunder, and/or
      acquire or hold Conversion Shares and/or Warrant Shares (as such terms are
      hereinafter defined). Each Holder, by its participation or request to
      participate in any Registration effected pursuant to this Agreement, shall
      be
      deemed to have confirmed such Holder’s agreement to comply with the applicable
      provisions of this Agreement.




NOW,
      THEREFORE, the Company hereby agrees, in favor of the Holders, as
      follows:




1.  Definitions .
      In
      addition to those terms defined elsewhere in this Agreement, the following
      terms
      shall have the following meanings wherever used in this Agreement:




“ Act ”
shall
      mean the Securities Act of 1933, as amended, and any successor statute from
      time
      to time.




“ Affiliate ”
shall
      mean, with respect to any person, any other person controlling, controlled
      by or
      under common control with the first person.




“ Board ”
shall
      mean the Board of Directors of the Company.




“ Common
      Stock ”
shall
      mean the authorized common stock of the Company.




“ Company ”
shall
      mean AFP Imaging Corporation, and shall include any successor
      thereto.




“ Conversion
      Shares ”
shall
      mean the Common Stock and/or other securities issued and/or issuable from time
      to time upon conversion of the Term Note (in whole or in part), and any
      additional or other Shares issued in respect of any of the foregoing Shares
      by
      reason of any stock split, stock dividend, merger, share exchange,
      recapitalization or other such event.




“ Costs
      and Expenses ”
shall
      mean all of the costs and expenses relating to any subject Registration
      Statement, including but not limited to registration, filing and qualification
      fees, blue sky expenses, costs of listing any Shares on any exchange or other
      trading media, and printing expenses, fees and disbursements of counsel and
      accountants to the Company, and reasonable fees and disbursements of a single
      counsel to the Holders; provided , however ,
      that
      underwriting discounts and commissions attributable solely to the securities
      registered for the benefit of Holders, fees and disbursements of any additional
      counsel to Holders, and all other expenses attributable solely to Holders shall
      be borne by each subject Holder.




“ Exchange
      Act ”
shall
      mean the Securities Exchange Act of 1934, as amended, and any successor statute
      from time to time.




“ Holders ”
shall
      mean, collectively, all Persons holding Registrable Shares from time to
      time.




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“ Loan
      Agreement ”
shall
      mean the Revolving Credit and Term Loan Agreement of even date herewith by
      and
      between ComVest Capital, LLC and the Company, as the same may be amended,
      modified, supplemented and/or restated from time to time in accordance with
      the
      provisions thereof.




“ Loans ”
shall
      mean the loans extended to the Company from time to time under and pursuant
      to
      the Loan Agreement.




“ Person ”
shall
      mean any individual, corporation, partnership, limited partnership, limited
      liability company, trust, or other entity of any kind ,and any government or
      department or agency thereof.




“ Registrable
      Shares ”
shall
      mean all Shares, excluding any Shares which may then be sold by the Holder
      thereof pursuant to Rule 144(k) promulgated under the Act.




“ Registration ”
shall
      mean any registration of Common Stock pursuant to a registration statement
      filed
      by the Company with the SEC in respect of any class of Common Stock, other  than a
      registration statement in respect of employee stock options or other employee
      benefit plans or in respect of any merger, consolidation, acquisition or like
      combination, whether on Form S-4, Form S-8 or any equivalent form of
      registration then in effect.




“ Registration
      Period ”
shall
      mean, with respect to a Registration Statement, the period of time from the
      effective date of such Registration Statement until such date as is the earlier
      of (a) the date on which all of the Registrable Securities covered by such
      Registration Statement shall have been sold to the public, or (b) the date
      on which the Conversion Shares and the Warrant Shares issued or issuable upon
      cashless exercise of the Warrant in accordance with Section 1.3 of the Warrant
      (in the opinion of counsel to the Company evidenced by a written opinion issued
      to the Holders in form reasonably acceptable to the Holders) may be immediately
      sold without restriction (including, without limitation, as to volume
      restrictions) by each Holder thereof without registration under the
      Act.




“ Registration
      Statement ”
shall
      mean any registration statement filed or to be filed by the Company in respect
      of any Registration.




“ SEC ”
shall
      mean the United States Securities and Exchange Commission, or any successor
      agency or agencies performing the functions thereof.




“ Shares ”
shall
      mean (a) the Conversion Shares issued and/or issuable from time to time, (b)
      the
      Warrant Shares issued and/or issuable from time to time, and (c) any additional
      or other shares of common stock of the Company issued in respect of any of
      the
      foregoing Shares by reason of any stock split, stock dividend, merger, share
      exchange, recapitalization or other such event.




“ Term
      Note ”
shall
      have the meaning ascribed thereto in the Loan Agreement, and shall include
      any
      replacement promissory note(s) therefor.




“ Warrants ”
shall
      mean the warrants to purchase Shares, issued by the Company pursuant to the
      Loan
      Agreement, including any and all warrants issued in replacement of the original
      such warrants.




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“ Warrant
      Shares ”
shall
      mean the Common Stock and/or other securities issued and/or issuable from time
      to time upon exercise of any of the Warrants, and any additional or other Shares
      issued in respect of any of the foregoing Shares by reason of any stock split,
      stock dividend, merger, share exchange, recapitalization or other such
      event.




2.  Shelf
      Registration .




(a)  The
      Company shall prepare and file with the SEC, not later than one hundred fifty
      (150) days after the date of this Agreement, a Registration Statement or
      Registration Statements (as necessary) on a form that is appropriate under
      the
      Act (and, if available, pursuant to Rule 415 promulgated under the Act),
      covering the resale of all of the Registrable Securities, in an amount
      sufficient to cover the resale of all Conversion Shares, Warrant Shares and
      additional shares of Common Stock issuable pursuant to the anti-dilution
      provisions of the Term Note and the Warrants.




(b)  The
      Company shall use its best efforts to cause the Registration Statement(s)
      required by this Section 2 to be declared effective under the Act as promptly
      as
      possible after the filing thereof, but in any event not later than two hundred
      seventy (270) days after the date of this Agreement.




(c)  If
      (i) the Registration Statement required by this Section 2 is not filed
      within one hundred fifty (150) days after the date of this Agreement, or is
      not
      declared effective under the Act within two hundred seventy (270) days after
      the
      date of this Agreement, or (ii) the Registration Statement required by this
      Section 2 shall cease to be available for use by the Holders as selling
      stockholders (A) as provided under Section 2(f) below where such
      unavailability continues for a period in excess of five (5) days beyond the
      allowed time period, or (B) for any other reason including, without
      limitation, by reason of a stop order, a material misstatement or omission
      in
      such Registration Statement or the information contained in such Registration
      Statement having become outdated and continues to be unavailable for a period
      in
      excess of thirty (30) days (which need not be consecutive days) in any twelve
      (12) month period, then the Company shall pay to the Holders, ratably in
      proportion to the number of Registrable Shares held by the respective Holders,
      a
      cash fee equal to the product of $1,000 multiplied by the number of calendar
      days during which any of the events described in clauses (i) or (ii) above
      occurs and is continuing (the “ Blackout
      Period ”); provided , however ,
      that the
      aggregate of such fees payable under this Section 2(c) shall not exceed
      $500,000; and  further  provided ,
      that the
      Company shall not be liable to pay any fees under this Section 2(c) to the
      extent that the occurrence of the events described in clauses (i) or (ii) above
      arises out of or is based upon any untrue statement or alleged untrue statement
      or omission or alleged omission made in reliance upon and in conformity with
      information furnished to the Company by a Holder for inclusion in the
      Registration Statement. Each such payment shall be due within five (5) days
      after the end of each 30-day period of the Blackout Period until the termination
      of the Blackout Period and within five (5) days after such termination. The
      Blackout Period shall terminate upon the filing or effectiveness (as the case
      may be) of the Registration Statement in the case of clause (i) above and upon
      notice from the Company that the Registration Statement is again available
      in
      the case of clause (ii) above.




(d)  The
      Company shall use its best efforts to keep each Registration Statement under
      this Section 2 effective at all times during the applicable Registration
      Period.




(e)  If
      any
      offering pursuant to a Registration Statement pursuant to this Section 2
      involves an underwritten offering (which may only be with the consent of the
      Company, which shall not be unreasonably withheld or delayed), the Holders
      (acting by a majority in interest) shall have the right to select legal counsel
      and an investment banker or bankers and manager or managers to administer to
      the
      offering, which investment banker or bankers or manager or managers shall be
      reasonably satisfactory to the Company.




(f)  If
      the
      Registrable Securities are registered for resale under an effective Registration
      Statement, the Holders shall cease any distribution of such Shares under such
      Registration Statement:




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(i)  for
      a
      period of up to six (6) months if (A) such distribution would require the public
      disclosure of material non-public information concerning any transaction or
      negotiations involving the Company or any of its Affiliates that, in the
      reasonable judgment of the Company’s Board of Directors, would materially
      interfere with such transaction or negotiations, or (B) such distribution would
      otherwise require premature disclosure of information that, in the reasonable
      judgment of the Company’s Board of Directors, would adversely affect or
      otherwise be detrimental to the Company; provided that the
      Company shall not invoke this clause (i) more than once in any twelve (12)
      month
      period or for more than six (6) months in any such twelve (12) month period;




(ii)  not
      more
      than once in any twelve (12) month period, for up to 60 days, upon the request
      of the Company if the Company proposes to file a Registration Statement under
      the Act for the offering and sale of securities for its own account in an
      underwritten offering and the managing underwriter therefor shall advise the
      Company in writing that in its opinion the continued distribution of the
      Registrable Securities would adversely affect the offering of the securities
      proposed to be registered for the account of the Company; and




(iii)  for
      a
      period of up to sixty (60) days after the filing of the Company’s annual report
      on Form 10-K or other event that requires the filing of a post-effective
      amendment to any Registration Statement hereunder, so long as the Company has
      filed and is during such period actively pursuing effectiveness of such
      post-effective amendment with the staff of the SEC.




The
      Company shall promptly notify the Holders in writing at such time as (x) such
      transactions or negotiations have been otherwise publicly disclosed or
      terminated, or (y) such non-public information has been publicly disclosed
      or
      counsel to the Company has determined that such disclosure is not required
      due
      to subsequent events.




(g)  The
      Company shall (i) permit the Holders’ counsel to review (A) such
      Registration Statement, and all amendments and supplements thereto, in each
      case
      to the extent of any information with respect to the Holders, their and their
      Affiliates’ beneficial ownership of securities of the Company, and their
      intended method of disposition of Registrable Securities, and (B) all requests
      for acceleration or effectiveness thereof and any correspondence between the
      Company and the SEC relating to the Registration Statement (collectively, the
      “ Registration
      Documents ”),
      for a
      reasonable period of time prior to their filing with the SEC, (ii) not file
      (or send) any Registration Documents in a form to which such counsel reasonably
      objects, and (iii) not request acceleration of such Registration Statement
      without prior notice to such counsel. The sections of such Registration
      Statement covering information with respect to the Holders, their and their
      Affiliates’ beneficial ownership of securities of the Company, and their
      intended method of disposition of Registrable Securities shall conform to the
      information provided to the Company by the Holders.




(h)  The
      Registration Statement pursuant to this Section 2 shall not include any
      securities other than Registrable Shares.




(i)  The
      Company shall bear all of the Costs and Expenses of the Registration pursuant
      to
      this Section 2.




3.  Piggyback
      Registration .
      In the
      event that the Company shall propose a Registration at any time when a
      Registration Statement is not effective pursuant to Section 2 above, then the
      Company shall give to each Holder written notice (the “ Registration
      Notice ”)
      of such
      proposed Registration (which notice shall include a statement of the proposed
      filing date thereof, the underwriters and/or managing underwriters of the
      subject offering, and any other known material information relating to the
      proposed Registration) not less than twenty (20) or more than sixty (60) days
      prior to the filing of the subject Registration Statement, and shall, subject
      to
      the limitations provided in this Section 3, include in such Registration
      Statement all or a portion of the Registrable Shares owned by and/or issuable
      to
      each Holder, as and to the extent that such Holder may request same to be so
      included by means of written notice given to the Company within ten (10) days
      after the Company’s giving of the Registration Notice. Each Holder shall be
      permitted to withdraw all or any part of its Registrable Shares from a
      Registration Statement by written notice to the Company given at any time prior
      to the effective date of the Registration Statement. The Company shall bear
      all
      of the Costs and Expenses of any Registration described in this Section 3; provided , however ,
      that
      each Holder shall pay, pro  rata based
      upon the number of its Registrable Shares included therein, the underwriters’
discounts, commissions and compensation attributable solely to the inclusion
      of
      such Registrable Shares in the overall public offering. Notwithstanding anything
      to the contrary contained herein, the Company’s obligation to include a Holder’s
      Registrable Shares in any such Registration Statement shall be subject, at
      the
      option of the Company, to the following further conditions:




4


(a)  The
      distribution for the account of such Holder shall be underwritten by the same
      underwriters (if any) who are underwriting the distribution of the securities
      for the account of the Company and/or any other persons whose securities are
      covered by such Registration Statement, and shall be made at the same
      underwriter discount or commission applicable to the distribution of the
      securities for the account of the Company and/or any other persons whose
      securities are covered by such Registration Statement; and such Holder shall
      enter into an agreement with such underwriters containing customary
      indemnification and other provisions;




(b)  If
      at any
      time after giving the Registration Notice, and prior to the effective date
      of
      the Registration Statement filed in connection with such Registration Notice,
      the Company shall determine for any reason not to proceed with the subject
      Registration, the Company may, at its election, give written notice of such
      determination to the Holders and, thereupon, shall be relieved of its obligation
      to register any of the Holders’ Registrable Shares in connection with such
      Registration;




(c)  In
      connection with an underwritten public offering pursuant to a Registration
      Statement under this Section 3, if and only if the managing underwriter(s)
      thereof shall advise the Company in writing that, due to adverse market
      conditions or the potential adverse impact on the offering to be made for the
      account of the Company, the securities to be included in such Registration
      will
      not include all of the Registrable Shares requested to be so included by the
      Holders, then the Company will promptly furnish each such Holder with a copy
      of
      such written statement and may require, by written notice to each such Holder
      accompanying such written statement, that the distribution of all or a specified
      portion of such Registrable Shares be excluded from such distribution (with
      any
      such “cutback” to be allocated among the subject Holders (and, if applicable,
      any other holders of Common Stock to be included in such Registration) in
      proportion to the relative number of shares of Common Stock requested by such
      Persons to be included in such Registration); and




(d)  The
      Company shall not be obligated to effect any registration of Shares incidental
      to the registration of any of its securities in connection with mergers,
      acquisitions, exchange offers, dividend reinvestment plans or stock option
      or
      other employee benefit plans.




4.  Registration
      Procedures .
      In the
      case of each Registration effected by the Company in which Registrable Shares
      are to be sold for the account of any Holder, the Company, at its sole cost
      and
      expense (exclusive of items excluded in the proviso to the definition of “Costs
      and Expenses” above), will use its best efforts to:




5


(a)  prepare
      and file with the SEC such amendments and supplements to such Registration
      Statement and the prospectus included therein as may be necessary to effect
      and
      maintain the effectiveness of such Registration Statement, until the completion
      of the distribution of the Registrable Shares included therein, as may be
      required by the applicable rules and regulations of the SEC and the instructions
      applicable to the form of such Registration Statement, and furnish to the
      Holders of the Registrable Shares covered thereby copies of any such supplement
      or amendment not less than three (3) Business Days prior to the date first
      used
      and/or filed with the SEC; and comply with the provisions of the Act with
      respect to the disposition of all the Shares to be included in such Registration
      Statement;




(b)  provide
      (i) the Holders of the Registrable Shares to be included in such Registration
      Statement, (ii) the underwriters (which term, for purposes of this Agreement,
      shall include a person deemed to be an underwriter within the meaning of Section
      2(11) of the Act, if any, thereof, (iii) the sales or placement agent, if any,
      therefor, (iv) one counsel for such underwriters or agent, and (v) not more
      than
      one counsel for all the Holders of such Registrable Shares, the reasonable
      opportunity review such Registration Statement, each prospectus included therein
      or filed with the SEC, and each amendment or supplement thereto, in each case
      to
      the extent of any disclosures regarding the Holders, their and their Affiliates’
beneficial ownership of securities of the Company, and their intended method
      of
      disposition of the Registrable Shares included in such Registration Statement
      (or any amendment to any such information previously included in such
      Registration Statement (including any amendment or supplement thereto) or any
      prospectus included therein);




(c)  for
      a
      reasonable period prior to the filing of such Registration Statement, and not
      more than once in any calendar quarter throughout the period specified above,
      make available for inspection by the Persons referred to in Section 4(b) above
      such financial and other information and books and records of the Company,
      and
      cause the officers, directors, employees, counsel and independent certified
      public accountants of the Company to respond to such inquiries, as shall be
      reasonably necessary, in the judgment of the respective counsel referred to
      in
      such Section 4(b), to conduct a reasonable investigation within the meaning
      of
      the Act; provided , however ,
      that
      each such party shall be required to maintain in confidence and not disclose
      to
      any other person or entity any information or records reasonably designated
      by
      the Company in writing as being confidential, until such time as and to the
      extent that (i) such information becomes a matter of public record or generally
      available to the public (whether by virtue of its inclusion in such Registration
      Statement or otherwise, other than by reason of a breach hereof), (ii) such
      party shall be required to disclose such information pursuant to the subpoena
      or
      order of any court or other governmental agency or body having jurisdiction
      over
      the matter, or (iii) such information is required to be set forth in such
      Registration Statement or the prospectus included therein or in an amendment
      to
      such Registration Statement or an amendment or supplement to such prospectus
      in
      order that such Registration Statement, prospectus, amendment or supplement,
      as
      the case may be, does not include an untrue statement of a material fact or
      omit
      to state therein a material fact required to be stated therein or necessary
      to
      make the statements therein not misleading; and
      further provided ,
      that the
      Company need not make such information available, nor need it cause any officer,
      director or employee to respond to such inquiry, unless each such Holder of
      Registrable Shares to be included in a Registration Statement hereunder, upon
      the Company’s request, executes and delivers to the Company a specific
      undertaking to substantially the same effect contained in the preceding
      proviso;




(d)  promptly
      notify in writing the Holders of Registrable Shares to be included in a
      Registration Statement hereunder, the sales or placement agent, if any, therefor
      and the managing underwriter of the securities being sold, (i) when such
      Registration Statement or the prospectus included therein or any prospectus
      amendment or supplement or post-effective amendment has been filed, and, with
      respect to such registration statement or any post-effective amendment, when
      the
      same has become effective, (ii) of any comments by the SEC and by the blue
      sky
      or securities commission or regulator of any state with respect thereto or
      any
      request by the SEC for amendments or supplements to such Registration Statement
      or the prospectus or for additional information, (iii) of the issuance by the
      SEC of any stop order suspending the effectiveness of such registration
      statement or the initiation of any proceedings for that purpose, (iv) of the
      receipt by the Company of any notification with respect to the suspension of
      the
      qualification of any Shares for sale in any jurisdiction or the initiation
      or
      threatening of any proceeding for such purpose, or (v) if it shall be the case,
      at any time when a prospectus is required to be delivered under the Act, that
      such Registration Statement, prospectus, or any document incorporated by
      reference in any of the foregoing contains an untrue statement of a material
      fact or omits to state any material fact required to be stated therein or
      necessary to make the statements therein not misleading in light of the
      circumstances then existing;




6


(e)  obtain
      the
      withdrawal of any order suspending the effectiveness of such Registration
      Statement or any post-effective amendment thereto at the earliest practicable
      date;




(f)  if
      requested by any managing underwriter or underwriter, any placement or sales
      agent or any Holder of Registrable Shares to be included in a Registration
      Statement, promptly incorporate in a prospectus, prospectus supplement or
      post-effective amendment such information as is required by the applicable
      rules
      and regulations of the SEC and as such managing underwriter or underwriters,
      such agent or such Holder may reasonably specify should be included therein
      relating to the terms of the sale of the Registrable Shares included thereunder,
      including, without limitation, information with respect to the number of
      Registrable Shares being sold by such Holder or agent or to such underwriters,
      the name and description of such Holder, the offering price of such Registrable
      Shares and any discount, commission or other compensation payable in respect
      thereof, the purchase price being paid therefor by such underwriters and with
      respect to any other terms of the offering of the Registrable Shares to be
      sold
      in such offering; and make all required filings of such prospectus, prospectus
      supplement or post-effective amendment promptly after notification of the
      matters to be incorporated in such prospectus, prospectus supplement or
      post-effective amendment;




(g)  furnish
      to
      each Holder of Registrable Shares to be included in such Registration Statement
      hereunder, each placement or sales agent, if any, therefor, each underwriter,
      if
      any, thereof and the counsel referred to in Section 4(b) an executed copy of
      such Registration Statement, each such amendment and supplement thereto (in
      each
      case excluding all exhibits and documents incorporated by reference) and such
      number of copies of the Registration Statement (excluding exhibits thereto
      and
      documents incorporated by reference therein unless specifically so requested
      by
      such Holder, agent or underwriter, as the case may be) and the prospectus
      included in such Registration Statement (including each preliminary prospectus
      and any summary prospectus), in conformity with the requirements of the Act,
      as
      such Holder, agent, if any, and underwriter, if any, may reasonably request
      in
      order to facilitate the disposition of the Shares owned by such Holder, sold
      by
      such agent or underwritten by such underwriter and to permit such Holder, agent
      and underwriter to satisfy the prospectus delivery requirements of the Act;
      and
      the Company hereby consents to the use of such prospectus and any amendment
      or
      supplement thereto by each such Holder and by any such agent and underwriter,
      in
      each case in the form most recently provided to such person by the Company,
      in
      connection with the offering and sale of the Shares covered by the prospectus
      (including such preliminary and summary prospectus) or any supplement or
      amendment thereto;




(h)  timely
      (i)
      register or qualify (to the extent legally required) the Shares to be included
      in such registration statement under such other securities laws or blue sky
      laws
      of such jurisdictions to be designated by the Holders of a majority of such
      Shares participating in such registration and each placement or sales agent,
      if
      any, therefor and underwriter, if any, thereof, as any Holder and each
      underwriter, if any, of the securities being sold shall reasonably request,
      (ii)
      keep such registrations or qualifications in effect and comply with such laws
      so
      as to permit the continuance of offers, sales and dealings therein in such
      jurisdictions for so long as may be necessary to enable such Holder, agent
      or
      underwriter to complete its distribution of the Registrable Shares pursuant
      to
      such Registration Statement, and (iii) take any and all such actions as may
      be
      reasonably necessary or advisable to enable such Holder, agent, if any, and
      underwriter to consummate the disposition in such jurisdictions of such Shares; provided , however ,
      that the
      Company shall not be required for any such purpose to (A) qualify generally
      to
      do business as a foreign corporation or a broker-dealer in any jurisdiction
      wherein it would not otherwise be required to qualify but for the requirements
      of this Section 4(h), (B) subject itself to taxation in any such jurisdiction,
      or (C) consent to general service of process in any such
      jurisdiction;




7


(i)  cooperate
      with the Holders of the Registrable Shares to be included in a Registration
      Statement hereunder and the managing underwriter(s) to facilitate the timely
      preparation and delivery of certificates representing Registrable Shares to
      be
      sold, which certificates shall be printed, lithographed or engraved, or produced
      by any combination of such methods, in customary form to permit the transfer
      thereof through the Company’s transfer agent; and enable such Registrable Shares
      to be in such denominations and registered in such names as the managing
      underwriter(s) may request at least two (2) business days prior to any sale
      of
      the Registrable Shares;




(j)  provide
      a
      CUSIP number for all Shares, not later than the effective date of the
      Registration Statement;




(k)  in
      the
      event that Registrable Securities included in any Registration Statement are
      to
      be sold to or through any underwriter or placement or sales agent, (i) make
      such
      representations and warranties to the Holders of such Registrable Shares and
      the
      placement or sales agent, if any, therefor and the underwriters, if any, thereof
      in form, substance and scope as are customarily made in connection with any
      offering of equity securities pursuant to any appropriate agreement and/or
      in a
      registration statement filed on the form applicable to such Registration
      Statement; (ii) if so requested by any such underwriter or placement or sales
      agent, obtain an opinion of counsel to the Company in customary form and
      covering such matters, of the type customarily covered by such an opinion,
      as
      the managing underwriters, if any, and/or the placement or sales agent may
      reasonably request, addressed to such Holders and the placement or sales agent,
      if any, therefor and the underwriters, if any, thereof and dated the effective
      date of such Registration Statement (and if such Registration Statement
      contemplates an underwritten offering of a part or of all of the Shares included
      in such Registration Statement, dated the date of the closing under the
      underwriting agreement relating thereto) (it being agreed that the matters
      to be
      covered by such opinion shall include, without limitation, the due organization
      of the Company and its subsidiaries, if any; the qualification of the Company
      and its subsidiaries, if any, to transact business as foreign entities; the
      due
      authorization, execution and delivery of this Agreement and of any underwriting
      agreement; the absence, to such counsel’s knowledge, of pending or threatened
      material legal or governmental proceedings involving the Company or any
      subsidiary; the absence of a known breach by the Company or its subsidiaries
      of,
      or a default under, agreements binding the Company or any subsidiary; the
      absence of governmental approvals required to be obtained in connection with
      the
      Registration Statement, the offering and sale of the Shares, this Agreement
      or
      any underwriting agreement; the compliance as to form of such Registration
      Statement and any documents incorporated by reference therein with the
      requirements of the Act; and the effectiveness of such Registration Statement
      under the Act); (iii) if so requested by any such underwriter or placement
      or
      sales agent, obtain a “cold comfort” letter or letters from the independent
      certified public accountants of the Company addressed to the Holders and the
      placement or sales agent, if any, therefor and the underwriters, if any,
      thereof, dated (A) the effective date of such Registration Statement, and (B)
      the effective date of the most recent (or, if so stated in the request therefor,
      the next) prospectus supplement to the prospectus included in such Registration
      Statement or post-effective amendment to such Registration Statement which
      includes unaudited or audited financial statements as of a date or for a period
      subsequent to that of the latest such statements included in such prospectus
      (and, if such Registration Statement contemplates an underwritten offering
      pursuant to any prospectus supplement to the prospectus included in such
      Registration Statement or post-effective amendment to such Registration
      Statement which includes unaudited or audited financial statements as of a
      date
      or for a period subsequent to that of the latest such statements included in
      such prospectus, dated the date of the closing under the underwriting agreement
      relating thereto), such letter or letters to be in customary form and covering
      such matters of the type customarily covered by letters of such type; (iv)
      deliver such documents and certificates, including officers’ certificates, as
      may be customary and reasonably requested by Holders of at least a majority
      of
      the Registrable Shares being sold and the placement or sales agent, if any,
      therefor and the managing underwriters, if any, thereof to evidence the accuracy
      of the representations and warranties made pursuant to clause (i) above and
      the
      compliance with or satisfaction of any agreements or conditions contained in
      the
      underwriting agreement or other agreement entered into by the Company; and
      (v)
      undertake such obligations relating to expense reimbursement, indemnification
      and contribution as are provided in Sections 2, 3 and 5 hereof;




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(l)  notify
      in
      writing each Holder of Registrable Shares of any proposal by the Company to
      amend or waive any provision of this Agreement and of any amendment or waiver
      effected pursuant thereto, each of which notices shall contain the text of
      the
      amendment or waiver proposed or effected, as the case may be;




(m)  engage
      to
      act on behalf of the Company, with respect to the Registrable Shares to be
      so
      registered, a registrar and transfer agent having such duties and
      responsibilities (including, without limitation, registration of transfers
      and
      maintenance of stock registers) as are customarily discharged by such an agent,
      and to enter into such agreements and to offer such indemnities as are customary
      in respect thereof; and




(n)  otherwise
      comply with all applicable rules and regulations of the SEC, and make available
      to the Holders, as soon as practicable, but in any event not later than 18
      months after the effective date of such Registration Statement, an earnings
      statement covering a period of at least twelve months which shall satisfy the
      provisions of Section 6(a) of the Act (including, at the option of the Company,
      pursuant to Rule 158 thereunder).




5.  Indemnification
      by the Company .




(a)  The
      Company shall indemnify each Holder and its Affiliates from and against any
      claim, loss, cost, charge or liability of any kind, including amounts paid
      in
      settlement and reasonable attorneys’ fees, which may be incurred by the Holder
      or Affiliate as a result of any breach of any representation or warranty or
      covenant of the Company contained in this Agreement or in any certificate
      delivered on the closing date of any public offering of Shares.




(b)  The
      Company shall indemnify and hold harmless each Holder and its Affiliates, any
      underwriter (as defined in the Act) for any Holder, each officer and director
      of
      a Holder, legal counsel and accountants for a Holder, and each person, if any,
      who controls a Holder or such underwriter within the meaning of the Act, against
      any losses, expenses, claims, damages or liabilities, joint or several, to
      which
      such Holder or any such Affiliate, underwriter, officer, director or controlling
      person becomes subject, under the Act or any rule or regulation thereunder
      or
      otherwise, insofar as such losses, expenses, claims, damages or liabilities
      (or
      actions in respect thereof) (i) are caused by any untrue statement or alleged
      untrue statement of any material fact contained in any preliminary prospectus
      (if used prior to the effective date of the Registration Statement), or
      contained, on the effective date thereof, in any Registration Statement in
      which
      Registrable Shares were included, the prospectus contained therein, any
      amendment or supplement thereto, or any other document related to such
      Registration Statement, or (ii) arise out of or are based upon the omission
      or
      alleged omission to state therein a material fact required to be stated therein
      or necessary to make the statements therein not misleading, or (iii) arise
      out
      of any violation by the Company of the Act or any rule or regulation thereunder
      applicable to the Company and relating to actions or omissions otherwise
      required of the Company in connection with such registration. The Company shall
      reimburse each Holder and any such Affiliate, underwriter, officer, director
      or
      controlling person for any legal or other expenses reasonably incurred by such
      Holder, or any such officer, director, underwriter or controlling person in
      connection with investigating, defending or settling any such loss, claim,
      damage, liability or action; provided , however ,
      that the
      Company shall not be liable to any such persons in any such case to the extent
      that any such loss, claim, damage, liability or action arises out of or is
      based
      upon any untrue statement or alleged untrue statement or omission or alleged
      omission made in reliance upon and in conformity with information furnished
      to
      the Company in writing by such Person expressly for inclusion in any of the
      foregoing documents. This indemnity shall not apply to amounts paid in
      settlement of any such loss, claim, damage, liability or action if such
      settlement is effected without the consent of the Company, which consent shall
      not be unreasonably withheld or delayed.




6.  Further
      Obligations of Holders .
      The
      obligations of the Company with respect to any particular Holder are subject
      to
      such Holder’s agreement to the following (which such Holder shall specifically
      confirm in writing to the Company upon the Company’s request in connection with
      any Registration Statement):




(a)  Such
      Holder shall furnish in writing to the Company all information concerning such
      Holder and its and its Affiliates’ holdings of securities of the Company and its
      Affiliates, and the intended method of disposition of the Registrable Securities
      included in such Registration Statement, as shall be reasonably required in
      connection with the preparation and filing of any Registration Statement
      covering any of such Holder’s Registrable Shares.




(b)  Such
      Holder shall indemnify and hold harmless the Company, each of its directors,
      each of its officers who has signed a Registration Statement, each person (if
      any) who controls the Company within the meaning of the Act, and any underwriter
      (as defined in the Act) for the Company, against any losses, claims, damages
      or
      liabilities to which the Company or any such director, officer, controlling
      person or underwriter may become subject under the Act or any rule or regulation
      thereunder or otherwise, insofar as such losses, claims, damages or liabilities
      (or actions in respect thereof) (i) are caused by any untrue statement or
      alleged untrue statement of any material fact contained in any preliminary
      prospectus (if used prior to the effective date of the Registration Statement),
      or contained, on the effective date thereof, in any Registration Statement
      in
      which such Holder’s Registrable Shares were included, the prospectus contained
      therein, any amendment or supplement thereto, or any other document related
      to
      such Registration Statement, or (ii) arise out of or are based upon the omission
      or alleged omission to state therein a material fact required to be stated
      therein or necessary to make the statements therein not misleading, in each
      case
      to the extent, but only to the extent, that such untrue statement or alleged
      untrue statement or omission or alleged omission was made in reliance upon
      and
      in conformity with information furnished to the Company by such Holder in
      writing expressly for inclusion in any of the foregoing documents. In no event
      shall any Holder be required to pay indemnification hereunder (or contribution
      under Section 7(d) below) in an aggregate amount in excess of the net proceeds
      received by such Holder in the subject offering. This indemnity shall not apply
      to amounts paid in settlement of any such loss, claim, damage, liability or
      action if such settlement is effected without the consent of the subject Holder,
      which consent shall not be unreasonably withheld or delayed.




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7.  Additional
      Provisions .




(a)  Each
      Holder and each other Person indemnified pursuant to Section 5 above shall,
      in
      the event that it receives notice of the commencement of any action against
      it
      which is based upon an alleged act or omission which, if proven, would result
      in
      the Company’s having to indemnify it pursuant to Section 5 above, promptly
      notify the Company, in writing, of the commencement of such action and permit
      the Company, if the Company so notifies such Holder within twenty (20) days
      after receipt by the Company of notice of the commencement of the action, to
      participate in and to assume the defense of such action with counsel reasonably
      satisfactory to such Holder; provided , however ,
      that
      such Holder or other indemnified person shall be entitled to retain its own
      counsel at its own expense (except that the indemnifying party shall bear the
      expense of such separate counsel if representation of both parties by the same
      counsel would be inappropriate due to actual or potential conflicts of
      interest). The failure to notify the Company promptly of the commencement of
      any
      such action shall not relieve the Company of any liability to indemnify such
      Holder or such other indemnified person, as the case may be, under Section
      5
      above, except to the extent that the Company shall be actually prejudiced or
      shall suffer any loss by reason of such failure to give notice, and shall not
      relieve the Company of any other liabilities which it may have under this or
      any
      other agreement.




(b)  The
      Company and each other Person indemnified pursuant to Section 6 above shall,
      in
      the event that it receives notice of the commencement of any action against
      it
      which is based upon an alleged act or omission which, if proven, would result
      in
      any Holder having to indemnify it pursuant to Section 6 above, promptly notify
      such Holder, in writing, of the commencement of such action and permit such
      Holder, if such Holder so notifies the Company within twenty (20) days after
      receipt by such Holder of notice of the commencement of the action, to
      participate in and to assume the defense of such action with counsel reasonably
      satisfactory to the Company; provided , however ,
      that the
      Company or other indemnified person shall be entitled to retain its own counsel
      at the Company’s expense. The failure to notify any Holder promptly of the
      commencement of any such action shall not relieve such Holder of liability
      to
      indemnify the Company or such other indemnified person, as the case may be,
      under Section 6 above, except to the extent that the subject Holder shall be
      actually prejudiced or shall suffer any loss by reason of such failure to give
      notice, and shall not relieve such Holder of any other liabilities which it
      may
      have under this or any other agreement.




(c)  No
      indemnifying party, in the defense of any such claim or litigation, shall,
      except with the consent of each indemnified person who is party to such claim
      or
      litigation, consent to entry of any judgment or enter into any settlement that
      does not include as an unconditional term thereof the giving by the claimant
      or
      plaintiff to such indemnified person of a release from all liability in respect
      to such claim or litigation. Each such indemnified person shall furnish such
      information regarding itself or the claim in question as an indemnifying party
      may reasonably request in writing and as shall be reasonably required in
      connection with defense of such claim and litigation resulting
      therefrom.




(d)  If
      the
      indemnification provided for in Section 5 and 6 is unavailable or insufficient
      to hold harmless an indemnified party, then, subject to the limits set forth
      in
      Section 6(b) above, each indemnifying party shall contribute to the amount
      paid
      or payable by such indemnified party as a result of the expenses, claims,
      losses, damages or liabilities (or actions or proceedings in respect thereof)
      referred to in Sections 5 and 6, in such proportion as is appropriate to reflect
      the relative fault of the Company on the one hand and the sellers of Shares
      on
      the other hand in connection with statements or omissions which resulted in
      such
      losses, claims, damages or liabilities (or actions or proceedings in respect
      thereof) or expenses, as well as any other relevant equitable considerations.
      The relative fault shall be determined by reference to, among other things,
      whether the untrue or alleged untrue statement of a material fact or the
      omission or alleged omission to state a material fact relates to information
      supplied by the Company or the sellers of Shares and the parties’ relative
      intent, knowledge, access to information and opportunity to correct or prevent
      such untrue statement or omission. The Company and the Holders agree that it
      would not be just and equitable if contributions pursuant to this Section 7(d)
      were to be determined by pro rata allocation (even if all sellers of Shares
      were
      treated as one entity for such purpose) or by another method of allocation
      which
      does not take account of the equitable considerations referred to in the first
      sentence of this Section 7(d). The amount paid by an indemnified person as
      a
      result of the expenses, claims, losses, damages or liabilities (or actions
      or
      proceedings in respect thereof) referred to in the first sentence of this
      Section 7(d) shall be deemed to include any legal or other expenses reasonably
      incurred by such indemnified person in connection with investigating or
      defending any claim, action or proceeding which is the subject of this Section
      7(d). No person guilty of fraudulent misrepresentation (within the meaning
      of
      Section 11(f) of the Act) shall be entitled to contribution from any person
      who
      was not guilty of such fraudulent misrepresentation. The obligations of sellers
      of Shares to contribute pursuant to this Section 7(d) shall be several in
      proportion to the respective amounts of Shares sold by them pursuant to a
      Registration Statement.




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8.  Rule
      144 Information .
      For so
      long as the Company shall remain a reporting company under the Exchange Act,
      the
      Company will at all times use its best efforts to keep publicly available
      adequate current public information with respect to the Company of the type
      and
      in the manner specified in Rule 144(c) promulgated under the Act.




9.  Limitations
      on Subsequent Registration Rights .




From
      and after the date of this Agreement, the Company shall not, without the prior
      written consent of the Holders of a majority of the Registrable Shares then
      outstanding and/or issuable, enter into any agreement with any holder or
      prospective holder of any securities of the Company which would require the
      Company to include such securities in any Registration filed under Section
      2
      above, or would grant to such holder or prospective holder priority over the
      Holders in the event of any “cutback” described in Section 3(c)
      above.




10.  Notices .
      All
      notices, requests, demands and other communications required or permitted under
      this Agreement shall be in writing and shall be given by personal delivery,
      by
      telecopier (with confirmation of receipt), by recognized overnight courier
      service (with all charges prepaid or billed to the account of the sender),
      or by
      certified or registered mail, return receipt requested, and with postage
      prepaid, addressed (a) if to the Company, at its office at 250 Clearbrook
      Road, Elmsford, New York 10523, Attention: Chief Financial Officer, Telecopier:
      (914) 592-6148, or such other address or telecopier number as shall have been
      specified by the Company to the Holders by written notice, or (b) if to any
      Holder, at his, her or its address or telecopier number as same appears on
      the
      records of the Company. All notices shall be deemed to have been given either
      at
      the time of the delivery or telecopy (with confirmation of receipt) thereof,
      or,
      if sent by overnight courier, on the next business day following delivery
      thereof to the overnight courier service, or, if mailed, at the completion
      of
      the third business day following the time of such mailing.




11.  Waiver
      and Amendment .
      No
      waiver, amendment or modification of this Agreement or of any provision hereof
      shall be valid unless evidenced by a writing duly executed by the Company and
      Holders holding, in the aggregate, a majority of the Registrable Shares then
      outstanding and/or issuable. No waiver of any default hereunder shall be deemed
      a waiver of any other, prior or subsequent default hereunder.




12.  Governing
      Law .
      This
      Agreement shall (irrespective of the place where it is executed and delivered)
      be governed, construed and controlled by and under the substantive laws of
      the
      State of New York, without regard to conflicts of law principles.




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13.  Binding
      Effect .
      This
      Agreement shall binding upon and shall inure to benefit of the Company and
      the
      Holders and their respective successors in interest from time to
      time.




14.  Captions .
      The
      captions and Section headings used in this Agreement are for convenience only,
      and shall not affect the construction or interpretation of this Agreement or
      any
      of the provisions hereof.




15.  Gender .
      All
      pronouns used in this Agreement in the masculine, feminine or neuter gender
      shall, as the context may allow, also refer to each other gender.




16.  Entire
      Agreement .
      This
      Agreement constitutes the sole and entire agreement and understanding between
      the parties hereto as to the subject matter hereof, and supersedes all prior
      discussions, agreements and understandings of every kind and nature between
      them
      as to such subject matter.




17.  Reliance
      and Benefit .
      This
      Agreement is intended to benefit, and may be relied upon by, all Holders from
      time to time, as if such Holders were expressly named herein, party hereto
      and
      signatory hereon.




[The
      remainder of this page is intentionally blank]





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**IN
      WITNESS WHEREOF** ,
      the
      Company has executed this Agreement as of the date first set forth
      above.




**AFP
      IMAGING CORPORATION**




By:  /s/
      David Vozick


Name:
      David Vozick


Title:
      Chairman of the Board




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