Document:

<PAGE>

                                                                    EXHIBIT 10.5

                              COMMUTATION AGREEMENT

                  COMMUTATION AGREEMENT, dated as of August 31, 2000 (this
"Commutation Agreement"), is entered into by and between RELIANCE REINSURANCE
COMPANY, a stock insurance company domiciled in Delaware ("Reinsurer") and
Reliance Insurance Company, a stock insurance company domiciled in Pennsylvania
("Cedent").

                  WHEREAS, the parties hereto (the "Parties") entered into the
Reinsurance Agreement, effective as of January 1, 1995, relating to certain
insurance and reinsurance issued by Cedent (the "Reinsurance Agreement"); and

                  WHEREAS, Reliance Insurance Company, a Pennsylvania
corporation ("Reliance") and Overseas Partners, Ltd., a Bermuda company ("OPL"),
have entered into a Stock Purchase Agreement, dated as of June 30, 2000,
pursuant to which (i) this Commutation Agreement is being entered into by the
Parties, and (ii) Reliance has agreed to sell all of the issued and outstanding
capital stock of the Reinsurer to OPL;

                  WHEREAS, the Parties desire to settle and commute their
obligations and liabilities under the Reinsurance Agreement, on the terms and
subject to the conditions set forth herein;

                  NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants and agreements herein contained, and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the Parties
hereto agree as follows:

                  1. Definitions. Capitalized terms used herein and not defined
herein, unless otherwise indicated, have the respective meanings assigned to
them in the Stock Purchase Agreement.

                  2. Commutation of Reinsurance Agreement. On the terms and
subject to the conditions set forth herein, the Reinsurance Agreement shall be
commuted, effective as of 12:01 a.m., New York City time, on August 31, 2000
(the "Commutation Date").

                  3. Commutation Amount. Within fifteen days of the execution of
this Commutation Agreement, Reinsurer shall pay Cedent the then current value of
the ceded unearned premium reserves and loss and loss expense reserves,
including any reserves for incurred but not reported losses, less any amount of
ceding commission allowed thereon, (the "Settlement Amount"), the payment of
such amount to be a full and final settlement of any and all amounts due from
Reinsurer under the Reinsurance Agreement.

                  4. Release by the Parties. Effective as of the Commutation
Date, but subject to the receipt in full by Cedent of the Settlement Amount, the
Parties hereby release and discharge each other, their respective predecessors,
parents, affiliates, agents, officers, directors and shareholders and assigns
from any and all and present and future payment obligations, adjustments,
executions, offsets, actions, causes of action, suits, debts, sums of money,
accounts, reckonings, bonds, bills, covenants, contracts, controversies,
agreements, promises, damages, judgments, claims, demands, liabilities and/or
losses whatsoever, whether known or unknown, which they, and their respective
successors and assigns ever had, now have, or hereafter may have, whether
grounded in law or equity, in contract or in tort, against the other Party by
reason of any matter whatsoever arising out of the Reinsurance Agreement, it
being the intention of the Parties that this release operate as a full and final
settlement of each of the current and future liabilities of the Parties to each
other under the Reinsurance Agreement.

<PAGE>

                  5. Execution of Instruments. The Parties hereby agree to
execute promptly any and all supplemental agreements, releases, affidavits,
waivers and other documents of any nature or kind which the other Party may
reasonably require in order to implement the provisions or objectives of this
Commutation Agreement.

                  6. Miscellaneous.

                  6.1. Waivers and Amendments; Non-Contractual Remedies;
Preservation of Remedies. This Commutation Agreement may be amended, superseded,
canceled, renewed or extended, and the terms hereof may be waived, only by a
written instrument signed by each of the Parties or, in the case of a waiver, by
the Party waiving compliance. No delay on the part of any Party on exercising
any right, power or privilege hereunder shall operate as a waiver thereof. Nor
shall any waiver on the part of any Party of any right, power or privilege, nor
any single or partial exercise of any such right, power or privilege, preclude
any further exercise thereof or the exercise of any other such right, power or
privilege. The rights and remedies herein provided are cumulative and are not
exclusive of any rights or remedies that any Party may otherwise have at law or
in equity.

                  6.2. Governing Law. THIS COMMUTATION AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF PENNSYLVANIA (REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW.)

                  6.3. Counterparts. This Commutation Agreement may be executed
by the parties hereto in separate counterparts, each of which shall be deemed to
be an original, but all such counterparts shall together constitute one and the
same instrument.

                  6.4. Assignment; Binding Effect; No Third-Party Beneficiaries.
Neither this Commutation Agreement, nor any of the rights, interests and
obligations hereunder, shall be assigned by either party hereto without the
prior written consent of the other party. This Commutation Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties and their respective successors and permitted assigns. Except as
otherwise specifically provided for herein, nothing contained in this Agreement
is intended or shall be construed to give any Person other than the parties
hereto, their successors and permitted assigns, any legal or equitable right,
remedy or claim under or in respect of this Commutation Agreement or any
provision contained herein.

                  6.5. Interpretation. The Section headings contained in this
Commutation Agreement are solely for the purpose of reference and do not
constitute a part of this Commutation Agreement.

                                       2

<PAGE>

                  6.6. Severability. If any provisions hereof shall be held
invalid or unenforceable by any court of competent jurisdiction or as a result
of future legislative action, such holding or action shall be strictly construed
and shall not affect the validity or effect of any other provision hereof;
provided, however, that the Parties shall use reasonable efforts, including, but
not limited to, the amendment of this Commutation Agreement, to ensure that this
Commutation Agreement shall reflect as closely as practicable the intent of the
Parties.

                  6.7. Entire Agreement. This Commutation Agreement and the
agreements and other documents referred to herein and therein shall constitute
the entire agreement between the parties hereto with respect to the subject
matter hereof and shall supersede all previous negotiations, commitments and
writings with respect to such subject matter.

                  6.8. Notices. All notices, requests, claims, demands and other
communications required to be in writing must be delivered by hand or mailed by
registered or certified mail (return receipt requested) or sent by any means of
electronic message transmission with delivery confirmed (by voice or otherwise)
to the parties at the following addresses (or at such other address specified by
like nature) and will be deemed given on the date such communication is
received:

                  If to Reinsurer to:

                  Reliance Reinsurance Company
                  3 Parkway
                  Philadelphia, Pennsylvania  19102-1376
                  Attention:  General Counsel
                  Facsimile:  (215) 864-6499

                  If to Cedent to:

                  Reliance Insurance Company
                  3 Parkway
                  Philadelphia, Pennsylvania  19102-1376
                  Attention:  General Counsel
                  Facsimile:  (215) 864-4141

or to such other address as either party hereto may have furnished to the other
party by a notice in writing in accordance with this Section 6.8.

                                       3

<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this
Commutation Agreement to be duly executed as of the date first above written.

                              RELIANCE REINSURANCE COMPANY

                              By: /s/ Edward Joseph Stanco
                                 -----------------------------------------------
                                 Name:  Edward Joseph Stanco
                                 Title: Executive Vice President

                              RELIANCE INSURANCE COMPANY

                              By: /s/ Michael Paul Blivess
                                 -----------------------------------------------
                                 Name:  Michael Paul Blivess
                                 Title: Senior Vice President

                                       4<PAGE>

                                                                 EXHIBIT 10(k)

                              SEVENTH AMENDMENT TO
                           LOAN AND SECURITY AGREEMENT

         This Seventh Amendment to Loan and Security Agreement (this
"Amendment"), dated as of October 12, 2000, 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"); DENT-X INTERNATIONAL, INC., a New York
corporation ("DXI") (AFP, LogE, Visplex, Regam and DXI are hereinafter jointly
and severally, referred to as the "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.

                              W I T N E S S E T H:

         WHEREAS, Borrowers and 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; (ii) that certain Second Amendment to Loan and Security Agreement dated
as of July 14, 1995; (iii) that certain Third Amendment to Loan and Security
Agreement dated as of July 14, 1997, (iv) that certain Fourth Amendment to Loan
and Security Agreement dated as of August 10, 1999; (v) that certain Fifth
Amendment to Loan and Security Agreement dated as of September 14, 1999, and,
(vi) that certain Sixth Amendment to Loan and Security Agreement dated as of
November 30, 1999 (as so amended, the "Original Loan Agreement") setting forth
the terms and conditions under which Lender would make loans and other advances
to Borrower; and

         WHEREAS, Borrowers have 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:

         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. On the Effective Date of this Amendment the Original
Loan Agreement is hereby amended as follows:

<PAGE>

            (a) Paragraph 2(A) of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:

                (A) Total Facility. Upon the terms and conditions set
         forth herein and provided that no Event of Default or event which, with
         the giving of notice or the passage of time, or both, would constitute
         an Event of Default, shall have occurred and be continuing, Lender
         shall, upon Borrower's request, make advances to Borrower from time to
         time in an aggregate outstanding principal amount not to exceed Five
         Million Four Hundred Thirty Six Thousand Five Hundred Sixty Two and
         13/100 Dollars ($5,436,562.13) (the "Total Facility"), subject to
         deduction of reserves for accrued interest and such other reserves as
         Lender deems proper from time to time, and less amounts Lender may be
         obligated to pay in the future on behalf of Borrower.

            (b) Paragraph 2(B) of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:

                (B) Loans. Advances under the Total Facility shall be
         comprised of the following:

                (i) Receivable Loans: a revolving line of credit in an aggregate
         outstanding principal amount not to exceed Four Million Five Hundred
         Thousand and no/100 Dollars ($4,500,000.00) (the "Revolving Line of
         Credit Facility" or the "Revolving Credit Limit") consisting of loans
         against Borrower's Eligible Receivables ("Receivable Loans") in an
         aggregate outstanding principal amount not to exceed the lesser of:

                    (a) an amount equal to (I) Four Million Five Hundred
         Thousand and no/100 Dollars ($4,500,000.00), less (II) the aggregate
         outstanding principal amount of all Inventory Loans (as defined below),
         less (III) the aggregate undrawn face outstanding amount of all Letters
         of Credit issued under paragraph 2(D) of this Agreement, or

                    (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 or
         (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;

                (ii) Inventory Loans: As a sub-line of the Receivable Loans, a
         revolving line of credit consisting of loans against Borrower's
         Eligible Inventory (Inventory Loans") in an aggregate outstanding
         principal amount not to exceed the lesser of

                                        2
<PAGE>

                    (a) fifty percent (50%) of the value of Borrower's Eligible
         Inventory, calculated at the lower of cost or market value and
         determined on a first in, first out basis, or

                    (b) Two Million Five Hundred Thousand and no/100 Dollars
         ($2,500,000.00); and

                (iii) Fixed Asset Loan: a term loan ("Fixed Asset Loan") in
         an aggregate outstanding principal amount not to exceed Nine Hundred
         Thirty Six Thousand Five Hundred Sixty Two and 13/100 Dollars
         ($936,562.13) provided, that the Fixed Asset Loan, if any, shall be in
         such amounts and on such terms as are set forth on separate promissory
         notes of Borrower from time to time, each in form and substance
         satisfactory to Lender in its sole discretion.

         (c) Paragraph 2(D)(i) of the Loan Agreement is hereby
amended and restated in its entirety to read as follows:

                (D) Letters of Credit.
                    -----------------

                 (i) At the request of Borrower, Lender may, in its sole
         discretion, arrange for the issuance of letters of credit for the
         account of Borrower and guarantees of payment of such letters of
         credit, in each case in form and substance satisfactory to Lender in
         its sole discretion (collectively, "Letters of Credit"). The aggregate
         face amount of all outstanding Letters of Credit from time to time
         shall not exceed Four Hundred Thousand and No/100 Dollars
         ($400,000.00), and shall be reserved against the availability of
         Receivable Loans pursuant to Paragraph 2(B) hereof. Borrower shall pay
         all bank charges for the issuance of Letters of Credit, together with
         an additional fee to Lender equal to two percent (2%) per annum of the
         aggregate face amount of each Letter of Credit outstanding from time to
         time during the term of this Agreement (the "L/C Fee"). The L/C Fee
         shall be deemed to be fully earned upon the issuance of each Letter of
         Credit and shall be due and payable on the first Business Day of each
         month following a month during which any Letter of Credit is
         outstanding. Any advance by Lender under or in connection with a Letter
         of Credit shall constitute an Obligation hereunder and an advance of
         the Receivables Loans.

         (d) Paragraph 3(A) of the Loan Agreement is amended and restated in
its entirety to read as follows:

                 (A) Interest. Borrower shall pay Lender interest on the daily
         outstanding balance of Borrower's loan account at a per annum rate of
         one and one-half percent (1.5%) 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"). The interest rate chargeable hereunder
         shall be increased or decreased, as the case may be, without notice or
         demand of any kind, upon the announcement of any change in the Base
         Rate. Each change in the Base Rate shall be effective hereunder on the
         first day following the announcement of such change. Interest charges
         and all other fees and charges herein shall be computed on the basis of
         a year of 360 days and actual days elapsed and will be payable to
         Lender in arrears on the first day of each month hereafter at its
         address set forth in Exhibit B hereto.

                                        3
<PAGE>

         (e) Paragraph 3 of the Loan Agreement is amended and restated with the
addition of the following language in its entirety to read as follows:

                 Unused Line Fee. With respect to each calendar month, or
         portion thereof during the term of this Agreement, commencing with the
         month of October, 2000, Borrower shall unconditionally pay to Lender a
         fee equal to one-fourth of one percent (.25%) per annum of the
         difference between the Revolving Credit Limit and the average daily
         outstanding balance of the Receivables Loans during such month, or
         portion thereof ("Unused Line Fee"), which fee shall be calculated and
         payable monthly, in arrears, and shall be due and payable commencing on
         November 1, 2000, and continuing on the first Business Day of each
         calendar month thereafter.

         (f) Paragraph 14(J) of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:

                 "Capital Expenditures" Promptly notify Lender in writing of the
         making of the making of any single Capital Expenditure which exceed
         $50,000 or any group of Capital Expenditures expended in connection
         with the purchase of a particular asset which cumulatively exceeds
         $450,000 per fiscal year, however, for the 2001 fiscal year only, the
         cumulative cap shall be $550,000.

         (g) Paragraph 14 (O) of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:

                 "Net Worth" Maintain, on a consolidated basis, Net Worth of not
         less than Four Million and No/100 Dollars ($4,000,000.00)

         (h) Paragraph 14 (Q) of the Loan Agreement, as amended by the Sixth
Amendment to Loan and Security Agreement, is hereby further amended to add the
following at the end of the subparagraph:

                 Notwithstanding the foregoing, the parties agrees that (1) for
         only the testing periods ending on September 30, 2000 and December 31,
         2000, the Borrower will be required to maintain, on a consolidated
         basis, a ratio of Operating Cash Flow to (i) Senior Contractual Debt
         Service of no less than .30 to 1.0, and (ii) Total Contractual Debt
         Service of no less than .25 to 1.0; (for all testing period thereafter,
         the ratios will be as set forth above); and (2) the covenants set forth
         in this Paragraph 14(Q) shall be tested commencing on a rolling
         quarterly basis from July 1, 2000 through the testing period ending
         March 31, 2001 and, thereafter, on a rolling four quarter basis."

                                        4
<PAGE>

                 (i) Paragraph 17 (A) of the Loan Agreement is amended and
         restated in its entirety to read as follows:

                 "Term" Notwithstanding the provisions of that certain Side
         Letter between Borrower and Lender dated August 21, 2000, the initial
         term of this Agreement shall expire on November 17, 2000 (the "Initial
         Term") and shall be automatically extended for an additional term (the
         "Renewal Term") which shall expire on October 31, 2001, unless sooner
         terminated as provided herein. All loans and all credit facilities
         shall be coterminous.

                 3. Waiver.
                    ------

                 (a) Based on the financial statements the Borrower has supplied
         for the calendar quarters ending March 31, 2000 and June 30, 2000, the
         Borrower is in default of the covenants of Borrower contained in
         Section 14(Q) of the Original Loan Agreement. For so long as there is
         no other Event of Default by Borrower, the Lender agrees that the
         failure of the Borrower to conform, for the calendar quarters ending
         March 31, 2000 and June 30, 2000, with the covenants contained in
         Section 14(Q) of the Loan Agreement shall not constitute an Event of
         Default.

                 (b) The Lender has become aware of the fact that the Borrower
         has entered into a security agreement with Den-a-lez, Inc. related to
         contract SP0200-00-D-8501 (the "Contract"). In connection with the
         Contract, the Borrower granted to Den-a-lez a security interest in
         inventory described in the Contract. The foregoing security has
         subsequently been terminated and released on record. Relying on the
         foregoing releases, the Lender agrees that the foregoing shall not
         constitute an Event of Default.

                 (c) The Borrower acknowledges that the foregoing waivers by
         Lender are limited to the specific periods, matters, and circumstances
         set forth in this Section. Nothing in this Section should be construed
         as a waiver by Lender of the Borrower's compliance with all other
         provisions of the Original Loan Agreement (as amended hereby) nor as a
         waiver of the requirement that the Borrower observe all other financial
         covenants contained in the Original Loan Agreement and to conform with
         Section 14(Q) of the Original Loan Agreement for all other periods
         other than those specifically set forth in this Section.

                 4. Sale of LogE. The Lender will consent to the sale by the
         Borrower of certain assets of LogE provided that such sale is effected
         pursuant to the terms of a Sale Agreement in form and substance
         satisfactory to Lender. Upon (a) the closing of the sale contemplated
         by the foregoing Sale Agreement and (b) the payment to Lender of the
         greater of (i) the proceeds of the sale or (ii) the unpaid amount of
         any Inventory Loans advances made against the assets which are the
         subject matter of such sale, then the Lender shall release any lien or
         claim that it may have on the assets of LogE which are

                                         5
<PAGE>

         the subject matter of such sale. Until the closing of the foregoing
         sale, the Lender is authorized to reserve $100,000 (in addition to the
         other reserves set forth in the Original Loan Agreement) from the
         Receivables Loan availability amount. Furthermore in the event
         following the closing of such sale and the application of the proceeds
         of such sale pursuant to the following sentence, there are insufficient
         proceeds to make a $100,000 principal reduction under the Fixed Asset
         Loan, Lender is authorized to reserve any shortfall from the
         Receivables Loan availability amount (in addition to the other reserves
         set forth in the Original Loan Agreement). The proceeds paid to Lender
         pursuant to clause (b) above shall be applied in the following order:
         (i) first, an amount equal to the unpaid amount of any Inventory Loans
         advances made against any assets which are the subject matter of such
         sale shall be applied as a principal payment under the Receivable
         Loans; (ii) second, $100,000 shall be applied as a principal payment
         under the Fixed Asset Loan; and (iii) third, the balance shall be
         available to Borrower for working capital.

                 5. Amendment Fee. In consideration of, among other things,
         Lender's consent to this Amendment, Borrower agrees to pay to Lender,
         upon Borrower's execution of this Amendment, the amount of Twenty Seven
         Thousand One Hundred Eighty Three Dollars ($27,183) (the "Amendment
         Fee"). The Amendment Fee has been fully earned by Lender and is
         nonrefundable and may be disbursed by Lender from the Total Facility.

                 6. 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.

                 7. 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:

                                        6
<PAGE>

                 (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 Amendment;

                    (ii) the Replacement Note Term Loan C in the form attached
               as Exhibit A.

                    (iii) A corporate resolution from the Board of Directors of
               each entity constituting Borrower (and from the Shareholders, if
               necessary) approving the transactions contemplated hereby and the
               execution and delivery of this Amendment;

                    (iv) A certificate of Borrower's president and corporate
               assistant secretary attesting to the facts that the corporate
               resolutions set forth in Section 7(ii) above have not been
               modified or revoked and remain in full force and effect;

                    (v) A recently issued good standing certificate from the
               state of organization for each Borrower evidencing that the
               entity is in good standing and validly existing; and

                    (vi) Such other items as Lender may require;

                 (b) After giving effect to this Amendment, there shall not
         then exist an Event of Default;

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

                 (d) Borrower has paid to Lender the Amendment Fee or in lieu
         thereof the fee has been paid to Lender by an advance by Lender
         against the Total Facility; and

                 (e) Borrower shall have paid all reasonable 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
         this Amendment, which costs, fees and expenses may be paid to Lender by
         an advance by Lender against the Total Facility.

         8. Conditions Subsequent. Borrower acknowledges that following
the effective date of this Amendment, Lender will be obtaining UCC, tax lien,
judgment and litigation searches on each Borrower and Lender's continued
obligations under this Amendment are subject to and conditioned upon Lender's
approval of the results of such searches.

                                     7
<PAGE>

         9. 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
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.

         10. 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.

         11. 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.

         12. 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.

         13. 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.

         14. 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.

                                  8
<PAGE>

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

         16. 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.

         17. 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.

         18. 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 7 hereof have been satisfied. The date that all
of the conditions set forth in Section 7 hereof have been satisfied is called
the "Effective Date."

         19. No Waiver. Except as specifically set forth herein, this Amendment
in no way acts as a waiver by Lender of any breach, default, Event of Default or
condition which, with the giving of notice or passing of time or both, would
constitute an Event of Default, of Borrower (whether known or unknown to Lender)
or as a release or relinquishment of any of the liens, security interests,
rights or remedies securing payment and performance of the Obligations or the
enforcement thereof. Nothing contained in this Amendment is intended to or shall
be construed as relieving any person or entity, whether a party to this
Amendment or not, of any of such person's or entity's obligations to Lender.

                            [SIGNATURE PAGE FOLLOWS]

                                        9
<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
corporation, successor by merger to         New York corporation
AFP Technologies Corporation, formerly
known as Kenro Corporation, a
New Jersey corporation

By:____________________________________    By:__________________________________
   Name:                                       Name:
        --------------------------------            ----------------------------
   Title:                                      Title:
         -------------------------------             ---------------------------

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

By:____________________________________    By:__________________________________
   Name:                                       Name:
        --------------------------------            ----------------------------
   Title:                                      Title:
         -------------------------------             ---------------------------

DENT-X INTERNATIONAL, INC. a New York       FINOVA CAPITAL CORPORATION, a
corporation                                 Delaware corporation formerly known
                                            as Greyhound Financial Corporation,
                                            successor-by-merger to Greyhound
                                            Financial Capital Corporation,
                                            an Oregon corporation

By:____________________________________    By:__________________________________
   Name:                                       Name:
        --------------------------------            ----------------------------
   Title:                                      Title:
         -------------------------------             ---------------------------

                                       10
<PAGE>

                       REPLACEMENT SECURED PROMISSORY NOTE
                       -----------------------------------
                                  (TERM NOTE C)
                                  -------------

$936,562.13                                                     Phoenix, Arizona
                                                                October 12, 2000

         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., REGAM MEDICAL SYSTEMS INTERNATIONAL AB, a
Swedish corporation ("Regam") and DENT-X INTERNATIONAL, INC., a New York
corporation ("DXI") (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 Nine Hundred Thirty Six
Thousand Five Hundred Sixty Two and 13/100 Dollars ($936,562.13), payable as
follows:

              a. Twelve (12) equal successive monthly installments of principal
         of Fifteen Thousand Six Hundred Nine and 36/100 Dollars ($15,609.36)
         each on the first day of each month, beginning November 1, 2000, and
         continuing through and including October 1, 2001; and

              b. A final installment of the outstanding principal balance on
         October 31, 2001,

together with accrued interest on the principal balance from time to time
remaining unpaid. 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 , as amended by
(i) that certain First Amendment to Loan and Security Agreement dated as of
December 7, 1993; (ii) that certain Second Amendment to Loan and Security
Agreement dated as of July 14, 1995; (iii) that certain Third Amendment to Loan
and Security Agreement of even date herewith; (iv) that certain Fourth Amendment
to Loan and Security Agreement dated as of August 10, 1999; (v) that certain
Fifth Amendment to Loan and Security Agreement dated as of September 14, 1999;
(vi) that certain Sixth Amendment to Loan and Security Agreement dated as of
November 30, 1999 and (vii) that certain Seventh Amendment to Loan Security
Agreement of even date herewith (as so amended and 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, 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.

<PAGE>

         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 one and one half
percent (1.5%) 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 three and one half percent (3.50%) 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 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.

                                       2
<PAGE>

         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 (ii) that certain Secured
Promissory Note (Term Loan B) dated as of July 14, 1995 in the original
principal amount of $900,000.00 and (iii) that certain Replacement Secured
Promissory Note (Term Note C) dated as of July 14, 1997 in the original
principal amount of $1,450,000 (collectively, the "Original Note"). Upon
execution and delivery hereof and satisfaction of the conditions precedent set
forth in the Seventh 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

                                    4
<PAGE>

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 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 York
corporation successor by merger to           corporation
AFP Technologies Corporation, formerly
known as Kenro Corporation, a New Jersey
corporation                                  By:
                                                --------------------------------
                                                Name:
                                                Title:
By:
   --------------------------------------
   Name:                                     Employer ID No.: 22-2825090
   Title:

Employer ID No.: 13-2956272

--------------------------------------------------------------------------------

                                      5
<PAGE>

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

By:                                          By:
   -----------------------------------          --------------------------------
   Name:                                        Name:
   Title:                                       Title:

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

--------------------------------------------------------------------------------
DENT-X INTERNATIONAL, INC. a
New York corporation

By:
   -----------------------------------
   Name:
   Title:

Employer ID No.: 13-3989113
                ----------------------
--------------------------------------------------------------------------------

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

                                     6

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