Document:

<TABLE>
<CAPTION>
Name                                       Dated           Amount         Maturity Date     Deb. No.
---------------------------------------    ------------    ----------     ---------------   ---------------
<S>                                        <C>             <C>            <C>
Atlantis Capital fund, Ltd.                Mar.  , 1998    $    26,000    Mar. 16, 2000     MARCH-1998-104A
Canadian Advantage Limited Partnership *   Mar.  , 1998    $   124,200    Mar. 16, 2000     MARCH-1998-103A
Dominion Capital Fund Ltd.                 Mar.  , 1998    $   315,400    Mar. 16, 2000     MARCH-1998-102A
Sovereign Partners LP.                     Mar.  , 1998    $   534,400    Mar. 16, 2000     MARCH-1998-101A

Atlantis Capital fund, Ltd.                Aug.  , 1998    $   191,642    Aug. 31, 2000     AUG-1998-104
Canadian Advantage Limited Partnership     Aug.  , 1998    $   421,613    Aug. 31, 2000     AUG-1998-103
Dominion Capital Fund Ltd.                 Aug.  , 1998    $ 1,226,512    Aug. 31, 2000     AUG-1998-102
Dominion Capital Fund Ltd.                 Aug.  , 1998    $ 1,155,500    Aug. 31, 2000     AUG-1998-106
Sovereign Partners LP.                     Aug.  , 1998    $ 1,993,082    Aug. 31, 2000     AUG-1998-101
Sovereign Partners LP.                     Aug.  , 1998    $ 1,155,500    Aug. 31, 2000     AUG-1998-105
</TABLE>
*    This document has been filed.
<PAGE>

                                FORM OF DEBENTURE

THE SECURITIES  OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD
IN RELIANCE ON EXEMPTIONS FROM THE  REGISTRATION  REQUIREMENTS OF SUCH LAWS. THE
SECURITIES ARE SUBJECT TO RESTRICTIONS OF TRANSFERABILITY AND RESALE AND MAY NOT
BE  TRANSFERRED  OR RESOLD  EXCEPT AS  PERMITTED  UNDER  SUCH LAWS  PURSUANT  TO
REGISTRATION OR AN EXEMPTION THEREFROM. THE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES  AND EXCHANGE  COMMISSION OR ANY OTHER  REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS OF THIS  OFFERING OR THE ACCURACY OR ADEQUACY OF THE OFFERING  MATERIALS.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

CONVERTIBLE DEBENTURE DUE                                  August 31 , 1998
                                                           August 31 , 2000
$1,993,082
Number            AUG-1998-101

                    FOR VALUE RECEIVED, SWISSRAY INTERNATIONAL, INC., a New York
                    corporation (the "Company"), hereby promises to pay Canadian
                    Advantage  Limited  Partnership  or registered  assigns (the
                    "Holder") on September  2000,  (the  "Maturity  Date"),  the
                    principal  amount of One Million Nine  HUNDRED  NINETY-three
                    THOUSAND  Eighty-two  Dollars  ($1,993,082) U.S., and to pay
                    interest on the principal amount hereof, in such amounts, at
                    such times and on such terms and conditions as are specified
                    herein.

Article 1. Interest

         The Company shall pay interest on the unpaid  principal  amount of this
Debenture (the "Debenture") at the rate of Five Percent (5.0%) per year, payable
at the time of each conversion until the principal amount hereof is paid in full
or has been converted. Interest shall be computed on the basis of a 360 day year
of 12, 30 day months.  Each payment  shall be paid in cash or in freely  trading
Common Stock of the Company,  at the Company's  option. If paid in Common Stock,
the  number of shares of the  Company's  Common  Stock to be  received  shall be
determined by dividing the dollar amount of the interest by the then  applicable
Market Price as of the interest payment date.  "Market Price" shall mean (a) the
lesser of 82% of the average of the 10 day  closing  bid prices,  as reported by
Bloomberg,  LP for the ten (10) consecutive  trading days immediately  preceding
the date of conversion or (b) $1.00.  If the interest is to be paid in cash, the
Company  shall  make  such  payment  within  5  business  days  of the  date  of
conversion.  If the  interest is to be paid in Common  Stock,  said Common Stock
shall  be  delivered  to the  Holder,  or per  Holder's  instructions,  within 5
business days of the date of conversion. The Debentures are subject to automatic
conversion  at the end of two years from the date of  issuance at which time all
Debentures  outstanding will be  automatically  converted based upon the formula
set forth in Section  3.2. The closing  shall be deemed to have  occurred on the
date the funds are received by the Company or its Counsel (the "Closing Date").

Article 2. Method of Payment

         This  Debenture  must be  surrendered  to the  Company in order for the
Holder to receive payment of the principal amount hereof. The Company shall have
the option of paying the interest on this  Debenture in United States dollars or
in common stock upon  conversion  pursuant to Article 1 hereof.  The Company may
draw a check for the  payment  of  interest  to the order of the  Holder of this
Debenture  and mail it to the  Holder's  address  as shown on the  Register  (as
defined in Section 7.2 below).  Interest and principal payments shall be subject
to withholding  under applicable  United States Federal Internal Revenue Service
Regulations.

Article 3.  Conversion

         Section 3.1.  Conversion Privilege

         (a) The Holder of this Debenture  shall have the right,  at its option,
to convert it into shares of common  stock,  par value  $0.01 per share,  of the
Company  ("Common  Stock") at any time six (6) months following the Closing Date
and which is before the close of business on the  Maturity  Date,  except as set
forth in Section  3.1(c)  below.  The number of shares of Common Stock  issuable
upon the conversion of this Debenture is determined  pursuant to Section 3.2 and
rounding the result to the nearest whole share.

         (b) Less  than all of the  principal  amount of this  Debenture  may be
converted  into  Common  Stock if the  portion  converted  is  $5,000 or a whole
multiple  of $5,000  and the  provisions  of this  Article  3 that  apply to the
conversion  of all of the  Debenture  shall  also apply to the  conversion  of a
portion of it. This Debenture may not be converted, whether in whole or in part,
except in accordance with Article 3.

         (c)  In the event all or any portion of this Debenture remains
outstanding on the second anniversary of the date hereof, the unconverted
portion of such Debenture will automatically be converted into shares of Common
Stock on such date in the manner set forth in Section 3.2.

         (d)  During the remainder of 1998, the Holder agrees to make up to an
additional $3,000,000 in financing available to the Company upon mutually
agreeable terms.  In the event the Company receives any additional financing
from the Holder or other investor(s) the six (6) month period restricting
conversions shall terminate and the Holder shall be entitled to convert any or
all of the Debentures,  even though the  Registration Statement covering those
Debentures may not have been declared effective at that time,  in which case the
Holder shall  receive  legended  Common Stock until the Registration  Statement
is declared effective or in the written opinion of legal counsel the legend may
be removed.

         Section 3.2.  Conversion Procedure.

                  (a) Debentures.  Upon receipt by the Company or its designated
attorney of a facsimile or original of Holder's  signed Notice of Conversion and
the receipt of the original Debenture to be converted in whole or in part in the
manner set forth in 3.2(b) below,  the Company shall instruct its transfer agent
to issue one or more  Certificates  representing that number of shares of Common
Stock into which the Debenture is convertible in accordance  with the provisions
regarding  conversion set forth in Exhibit A hereto. The Seller's transfer agent
or attorney  shall act as Registrar  and shall  maintain an  appropriate  ledger
containing the necessary information with respect to each Debenture.

                  (b) Conversion  Procedures.  The face amount of this Debenture
may be  converted  anytime  six (6) months  following  the  Closing  Date.  Such
conversion shall be effectuated by surrendering to the Company, or its attorney,
this  Debenture  to be  converted  together  with a facsimile or original of the
signed Notice of Conversion  which evidences  Holder's  intention to convert the
Debenture  indicated.  The date on which the Notice of  Conversion  is effective
("Conversion  Date")  shall be  deemed to be the date on which  the  Holder  has
delivered to the Company or its  designated  attorney a facsimile or original of
the signed  Notice of  Conversion,  as long as the original  Debenture(s)  to be
converted  are  received  by the  Company or its  designated  attorney  within 5
business days thereafter.  Unless  otherwise  notified by the Company in writing
via facsimile  the Company's  designated  attorney is Gary B. Wolff,  Esq.,  474
Third  Avenue,  25th Floor,  New York,  New York 10017,  (P)  212-644-6446,  (F)
212-644-6498.

                  (c) Common  Stock to be  Issued.  Upon the  conversion  of any
Debentures  and upon  receipt by the Company or its  attorney of a facsimile  or
original of Holder's signed Notice of Conversion  Seller shall instruct Seller's
transfer agent to issue Stock  Certificates  without  restrictive legend or stop
transfer  instructions,  if at that  time the  Registration  Statement  has been
deemed  effective  (or  with  proper  restrictive  legend  if  the  Registration
Statement has not as yet been declared effective), in the name of Holder (or its
nominee) and in such  denominations  to be specified at conversion  representing
the  number of  shares  of  Common  Stock  issuable  upon  such  conversion,  as
applicable. Seller warrants that no instructions, other than these instructions,
have been given or will be given to the transfer agent and that the Common Stock
shall  otherwise  be freely  transferable  on the books and  records  of Seller,
except as may be set forth herein.

                  (d) (i) Conversion Rate. Holder is entitled,  at its option to
convert the face amount of this Debenture,  plus accrued  interest,  anytime six
(6) months  following  the Closing  Date, at the lesser of (a) 82% of the 10 day
average  closing  bid  price,  as  reported  by  Bloomberg  LP, for the ten (10)
consecutive trading days immediately preceding the applicable Conversion Date or
(b) $1.00 (each being  referred to as the  "Conversion  Price").  No  fractional
shares or scrip  representing  fractions of shares will be issued on conversion,
but the number of shares  issuable  shall be rounded up or down, as the case may
be, to the nearest whole share.

                  (ii)  Most Favored Financing.  If after the Closing Date, but
prior to the Holder's conversion of all the Debentures, the Company raises money
under either Regulation D or Regulation S on terms that are more favorable than
those terms set forth in this Debenture, then in such event, the Holder at its
sole option shall be entitled to completely replace the terms of this Debenture
with the terms of the more beneficial Debenture as to that balance, including
accrued interest and any accumulated liquidated damages, remaining on Holder's
original investment.  The Debentures are subject to a mandatory,  24 month
conversion feature at the end of which all Debentures outstanding will be
automatically converted, upon the terms set forth in this section ("Mandatory
Conversion Date").

                  (e) Nothing  contained  in this  Debenture  shall be deemed to
establish  or require  the payment of interest to the Holder at a rate in excess
of the maximum rate  permitted  by governing  law. In the event that the rate of
interest  required to be paid  exceeds the maximum  rate  permitted by governing
law, the rate of interest  required to be paid thereunder shall be automatically
reduced to the maximum rate  permitted  under the  governing law and such excess
shall be returned with reasonable promptness by the Holder to the Company.

                  (f) It  shall  be the  Company's  responsibility  to take  all
necessary  actions and to bear all such costs to issue the Certificate of Common
Stock as provided herein,  including the responsibility and cost for delivery of
an opinion  letter to the transfer  agent,  if so required.  The person in whose
name the  certificate of Common Stock is to be registered  shall be treated as a
shareholder  of record on and after the conversion  date.  Upon surrender of any
Debentures  that are to be  converted  in part,  the Company  shall issue to the
Holder a new  Debenture  equal to the  unconverted  amount,  if so  requested in
writing by Holder.

                  (g)  Within  five  (5)  business  days  after  receipt  of the
documentation  referred to above in Section 3.2(b),  the Company shall deliver a
certificate,  in accordance with Section 3(c) for the number of shares of Common
Stock issuable upon the conversion.  It shall be the Company's responsibility to
take all necessary  actions and to bear all such costs to issue the Common Stock
as provided herein,  including the cost for delivery of an opinion letter to the
transfer  agent,  if so required.  The person in whose name the  certificate  of
Common Stock is to be registered  shall be treated as a shareholder of record on
and after the conversion  date.  Upon surrender of any Debentures that are to be
converted in part,  the Company shall issue to the Holder a new Debenture  equal
to the unconverted amount, if so requested in writing by Holder.
         In the event the Company does not make delivery of the Common Stock, as
instructed  by Holder,  within 8 business  days after  delivery of this original
Debenture, then in such event the Company shall pay to Holder an amount, in cash
in accordance with the following  schedule,  wherein "No. Business Days Late" is
defined as the number of  business  days  beyond  the 8 business  days  delivery
period.
                            Late Payment for Each  $10,000 of Debenture
No. Business Days Late                          Amount Being Converted
----------------------                          ----------------------
         1                                             $100
         2                                             $200
         3                                             $300
         4                                             $400
         5                                             $500
         6                                             $600
         7                                             $700
         8                                             $800
         9                                             $900
         10                                            $1,000
         >10                                           $1,000 + $200 for each
                                                       Business Day Beyond 10

         The Company  acknowledges  that its failure to deliver the Common Stock
within 8 business days after the Conversion Date will cause the Holder to suffer
damages in an amount  that will be  difficult  to  ascertain.  Accordingly,  the
parties agree that it is  appropriate  to include in this  Debenture a provision
for liquidated  damages.  The parties  acknowledge and agree that the liquidated
damages  provision set forth in this section  represents the parties' good faith
effort to qualify such  damages and, as such,  agree that the form and amount of
such  liquidated  damages are reasonable and will not constitute a penalty.  The
payment of liquidated damages shall not relieve the Company from its obligations
to deliver the Common Stock pursuant to the terms of this Debenture.

         To the extent that the failure of the Company to issue the Common Stock
pursuant to this Section 3.2(g) is due to the unavailability of authorized but
unissued shares of Common Stock, the provisions of this Section 3.2(g) shall not
apply but instead the provisions of Section 3.2(h) shall apply.

         The Company shall make any payments incurred under this Section 3.2(g)
in immediately available funds within five (5) business days from the Conversion
Date if late.  Nothing herein shall limit a Holder's right to pursue actual
damages or cancel the conversion for the Company's failure to issue and deliver
Common Stock to the Holder within 8 business days after the Conversion Date.

                  (h)  The  Company   shall  at  all  times   reserve  (or  make
alternative  written  arrangements  for reservation or contribution of shares or
stockholder  approval to authorize  additional  shares as described in the proxy
statement for the August 31, 1998,  meeting) and have available all Common Stock
necessary  to meet  conversion  of the  Debentures  by all Holders of the entire
amount of Debentures then  outstanding.  If, at any time Holder submits a Notice
of Conversion and the Company does not have  sufficient  authorized but unissued
shares  of  Common  Stock  (or  alternative  shares  of  Common  Stock as may be
contributed by Stockholders)  available to effect,  in full, a conversion of the
Debentures (a "Conversion  Default",  the date of such default being referred to
herein as the "Conversion  Default Date"), the Company shall issue to the Holder
all of the  shares  of  Common  Stock  which are  available,  and the  Notice of
Conversion as to any Debentures requested to be converted but not converted (the
"Unconverted  Debentures"),  upon Holder's  sole option,  may be deemed null and
void. The Company shall provide notice of such  Conversion  Default  ("Notice of
Conversion  Default")  to all existing  Holders of  outstanding  Debentures,  by
facsimile,  within three (3)  business  day of such  default  (with the original
delivered by overnight or two day courier),  and the Holder shall give notice to
the Company by facsimile  within five  business  days of receipt of the original
Notice of Conversion  Default  (with the original  delivered by overnight or two
day  courier)  of its  election  to either  nullify  or  confirm  the  Notice of
Conversion.
         The  Company  agrees to pay to all  Holders of  outstanding  Debentures
payments for a Conversion Default  ("Conversion Default Payments") in the amount
of  (N/365)  x (.24) x the  initial  issuance  price of the  outstanding  and/or
tendered but not converted  Debentures  held by each Holder where N = the number
of days from the Conversion Default Date to the date (the "Authorization  Date")
that the Company  authorizes  a  sufficient  number of shares of Common Stock to
effect  conversion  of all remaining  Debentures.  The Company shall send notice
("Authorization   Notice")  to  each  Holder  of  outstanding   Debentures  that
additional shares of Common Stock have been authorized,  the Authorization  Date
and the amount of Holder's  accrued  Conversion  Default  Payments.  The accrued
Conversion  Default  shall be paid in cash or shall be  convertible  into Common
Stock at the Conversion Rate, at the Holder's option, payable as follows: (i) in
the event Holder  elects to take such payment in cash,  cash  payments  shall be
made to such Holder of outstanding  Debentures by the fifth day of the following
calendar  month,  or (ii) in the event  Holder  elects to take such  payment  in
stock,  the Holder may convert  such  payment  amount  into Common  Stock at the
conversion  rate set forth in section  4(d) at anytime  after the 5th day of the
calendar  month  following  the  month in which  the  Authorization  Notice  was
received, until the expiration of the mandatory 24 month conversion period.

         The Company  acknowledges  that its  failure to  maintain a  sufficient
number of  authorized  but  unissued  shares of Common Stock to effect in full a
conversion  of the  Debentures  will  cause the  Holder to suffer  damages in an
amount that will be difficult to ascertain.  Accordingly, the parties agree that
it is  appropriate  to include in this  Agreement  a  provision  for  liquidated
damages. The parties acknowledge and agree that the liquidated damages provision
set forth in this section  represents the parties' good faith effort to quantify
such  damages  and, as such,  agree that the form and amount of such  liquidated
damages  are  reasonable  and will not  constitute  a  penalty.  The  payment of
liquidated damages shall not relieve the Company from its obligations to deliver
the Common Stock pursuant to the terms of this Debenture.

         Nothing herein shall limit the Holder's right to pursue actual damages
for the Company's failure to maintain a sufficient number of authorized shares
of  Common Stock.

                  (i)      The Company shall furnish to Holder such number of
prospectuses and other documents incidental to the registration of the shares of
Common Stock underlying the Debentures, including any amendment of or
supplements thereto.

                  (j) The Holder is limited in the amount of this  Debenture  it
may convert and own. Other than the Mandatory Conversion provisions contained in
this Debenture  which are not limited by the following,  in no other event shall
the Holder be  entitled to convert  any amount of  Debentures  in excess of that
amount  upon  conversion  of which the sum of (1) the number of shares of Common
Stock  beneficially owned by the Holder and its affiliates (other than shares of
Common Stock which may be deemed beneficially owned through the ownership of the
unconverted  portion  of the  Debenture,  and (2) the number of shares of Common
Stock issuable upon the  conversion of the Debentures  with respect to which the
determination  of this  provision  is being  made,  would  result in  beneficial
ownership by the Holder and its affiliates of more than 4.9% of the  outstanding
shares of Common  Stock of the Company.  For  purposes of this  provision to the
immediately  preceding  sentence,  beneficial  ownership  shall be determined in
accordance  with  Section  13(d) of the  Securities  Exchange  Act of  1934,  as
amended,  and  Regulation  13 D-G  thereunder,  except as otherwise  provided in
clause (1) of such provision.

                     (k) Redemption.  Company reserves the right, at its sole
option, to call a mandatory redemption of any percentage of the balance on the
Debentures during the two year period following the Closing Date.  In the event
the Company exercises such right of redemption up to and including the last day
of the fourth (4th) month following the Closing Date it shall pay the Holder, in
U.S. currency One Hundred Fifteen (115%) of the face amount of the  Debentures
to be redeemed,  plus accrued  interest.  In the event the Company exercises
such right of redemption at anytime during the fifth (5th) or sixth (6th) months
following the Closing Date it shall pay the Holder, in U.S. currency One Hundred
Twenty (120%) of the face amount of the Debentures to be redeemed,  plus accrued
interest. In the event the Company exercises such right of redemption at anytime
after the last day of the sixth  (6th) month following the Closing Date it shall
pay the Holder, in U.S. currency One Hundred Twenty-five  (125%) of the face
amount of the  Debentures  to be redeemed,  plus accrued  interest.  The date by
which the  Debentures  must be  delivered to the Escrow  Agent  shall not be
later than 5 business  days  following  the date the Company  notifies the
Holder by facsimile of the  redemption.  The Company shall give the Holder at
least 5 business day's notice of its intent to redeem.

         Section 3.3.  Fractional Shares.  The Company shall not issue
fractional shares of Common Stock, or scrip representing fractions of such
shares, upon the conversion of this Debenture.  Instead, the Company shall round
up or down, as the case may be, to the nearest whole share.

         Section 3.4.  Taxes on Conversion.  The Company shall pay any
documentary, stamp or similar issue or transfer tax due on the issue of shares
of Common Stock upon the conversion of this Debenture.  However, the Holder
shall pay any such tax which is due because the shares are issued in a name
other than its name.

         Section 3.5.  Company to Reserve  Stock.  The Company shall reserve the
number of shares of Common  Stock  required  pursuant  to and upon the terms set
forth in Section 3(a) of the Subscription  Agreement dated September of 1998, to
permit the conversion of this Debenture  subject to certain  options  granted to
the Company and referred to in Section 3(a) of the Subscription  Agreement.  All
shares of Common Stock which may be issued upon the conversion hereof shall upon
issuance  be  validly  issued,  fully paid and  nonassessable  and free from all
taxes, liens and charges with respect to the issuance thereof.

         Section 3.6.  Restrictions on Transfer.  This Debenture has not been
registered under the Securities Act of 1933, as amended, (the "Act") and is
being issued under Section 4(2) of the Act and Rule 506 of Regulation D
promulgated under the Act.  This Debenture and the Common Stock issuable
upon the conversion thereof may only be offered or sold pursuant to registration
under or an exemption from the Act.

         Section 3.7.  Mergers, Etc.  If the Company merges or consolidates with
another corporation or sells or transfers all or substantially all of its assets
to another person and the holders of the Common Stock are entitled to receive
stock, securities or property in respect of or in exchange

for Common  Stock,  then as a condition of such merger,  consolidation,  sale or
transfer,  the Company and any such  successor,  purchaser or  transferee  shall
amend this Debenture to provide that it may thereafter be converted on the terms
and subject to the conditions set forth above into the kind and amount of stock,
securities  or property  receivable  upon such  merger,  consolidation,  sale or
transfer  by a holder of the  number of shares of Common  Stock  into which this
Debenture   might  have  been   converted   immediately   before  such   merger,
consolidation, sale or transfer, subject to adjustments which shall be as nearly
equivalent as may be practicable to adjustments provided for in this Article 3.

Article 4.  Mergers

         The Company shall not consolidate or merge into, or transfer all or
substantially all of its assets to, any person, unless such person assumes in
writing the obligations of the Company under this Debenture and immediately
after such transaction no Event of Default exists.  Any reference herein to the
Company shall refer to such surviving or transferee corporation and the
obligations of the Company shall terminate upon such written assumption.

Article 5.  Reports

         The Company  will mail to the Holder  hereof at its address as shown on
the  Register a copy of any annual,  quarterly  or current  report that it files
with the  Securities and Exchange  Commission  promptly after the filing thereof
and a copy of any annual,  quarterly or other report or proxy  statement that it
gives to its shareholders generally at the time such report or statement is sent
to shareholders.

Article 6.  Defaults and Remedies

         Section 6.1. Events of Default. An "Event of Default" occurs if (a) the
Company does not make the payment of the  principal of this  Debenture  when the
same becomes due and payable at maturity, upon redemption or otherwise,  (b) the
Company does not make a payment, other than a payment of principal, for a period
of 5 business days  thereafter,  (c) the Company fails to comply with any of its
other agreements in this Debenture and such failure continues for the period and
after the notice  specified  below,  (d) the  Company  pursuant to or within the
meaning  of any  Bankruptcy  Law  (as  hereinafter  defined):  (i)  commences  a
voluntary  case; (ii) consents to the entry of an order for relief against it in
an  involuntary  case;  (iii)  consents to the  appointment  of a Custodian  (as
hereinafter  defined) of it or for all or  substantially  all of its property or
(iv) makes a general  assignment for the benefit of its creditors or (v) a court
of competent  jurisdiction  enters an order or decree under any  Bankruptcy  Law
that: (A) is for relief against the Company in an involuntary case; (B) appoints
a Custodian  of the Company or for all or  substantially  all of its property or
(C) orders  the  liquidation  of the  Company,  and the order or decree  remains
unstayed and in effect for 60 days, (e) the Company's  Common Stock is no longer
listed on any recognized exchange including electronic over-the-counter bulletin
board. As used in this Section 6.1, the term  "Bankruptcy Law" means Title 11 of
the United  States  Code or any  similar  federal or state law for the relief of
debtors. The term "Custodian" means any receiver, trustee, assignee,  liquidator
or similar  official under any Bankruptcy  Law. A default under clause (c) above
is not an Event of Default  until the  holders of at least 25% of the  aggregate
principal  amount of the  Debentures  outstanding  notify  the  Company  of such
default and the Company does not cure it within five (5) business days after the
receipt of such  notice,  which must  specify  the  default,  demand  that it be
remedied and state that it is a "Notice of Default".

         Section 6.2.  Acceleration.  If an Event of Default occurs and is
continuing, the Holder hereof by notice to the Company, may declare the
remaining principal amount of this Debenture to be due and payable.  Upon such
declaration, the remaining principal amount shall be due and payable
immediately.

Article 7.  Registered Debentures

         Section 7.1.  Series.  This  Debenture  is one of a numbered  series of
Debentures  which are identical  except as to the  principal  amount and date of
issuance  thereof and as to any restriction on the transfer  thereof in order to
comply with the Securities Act of 1933 and the regulations of the Securities and
Exchange  Commission  promulgated  thereunder.  Such  Debentures are referred to
herein collectively as the "Debentures". The Debentures shall be issued in whole
multiples of $5,000.

         Section 7.2.  Record  Ownership.  The Company,  or its attorney,  shall
maintain a register of the holders of the Debentures  (the  "Register")  showing
their  names and  addresses  and the serial  numbers  and  principal  amounts of
Debentures  issued to or  transferred  of record by them from time to time.  The
Register may be maintained in electronic,  magnetic or other  computerized form.
The Company may treat the person  named as the Holder of this  Debenture  in the
Register as the sole owner of this  Debenture.  The Holder of this  Debenture is
the  person  exclusively  entitled  to  receive  payments  of  interest  on this
Debenture, receive notifications with respect to this Debenture, convert it into
Common Stock and otherwise exercise all of the rights and powers as the absolute
owner hereof.

         Section 7.3. Registration of Transfer.  Transfers of this Debenture may
be registered on the books of the Company  maintained for such purpose  pursuant
to Section 7.2 above (i.e.,  the Register).  Transfers  shall be registered when
this  Debenture  is  presented  to the Company  with a request to  register  the
transfer  hereof and the Debenture is duly endorsed by the  appropriate  person,
reasonable assurances are given that the endorsements are genuine and effective,
and the Company has received  evidence  satisfactory to it that such transfer is
rightful and in  compliance  with all  applicable  laws,  including tax laws and
state and federal securities laws. When this Debenture is presented for transfer
and duly transferred hereunder, it shall be canceled and a new Debenture showing
the name of the  transferee as the record holder thereof shall be issued in lieu
hereof.  When this  Debenture  is  presented  to the Company  with a  reasonable
request to  exchange it for an equal  principal  amount of  Debentures  of other
denominations,  the  Company  shall make such  exchange  and shall  cancel  this
Debenture and issue in lieu thereof  Debentures  having a total principal amount
equal to this  Debenture in such  denominations  as agreed to by the Company and
Holder.

         Section 7.4. Worn or Lost Debentures.  If this Debenture  becomes worn,
defaced or mutilated but is still  substantially  intact and  recognizable,  the
Company  or its  agent  may  issue a new  Debenture  in  lieu  hereof  upon  its
surrender. Where the Holder of this Debenture claims that the Debenture has been
lost,  destroyed or wrongfully taken, the Company shall issue a new Debenture in
place of the original  Debenture if the Holder so requests by written  notice to
the Company  actually  received by the  Company  before it is notified  that the
Debenture  has  been  acquired  by a bona  fide  purchaser  and the  Holder  has
delivered  to the  Company an  indemnity  bond in such amount and issued by such
surety as the Company  deems  satisfactory  together  with an  affidavit  of the
Holder  setting forth the facts  concerning  such loss,  destruction or wrongful
taking and such other  information in such form with such proof or  verification
as the Company may request.

Article 8.  Notices

         Any notice  which is  required  or  convenient  under the terms of this
Debenture  shall be duly given if it is in writing  and  delivered  in person or
mailed by first class mail,  postage  prepaid and  directed to the Holder of the
Debenture  at its address as it appears on the  Register or if to the Company to
its principal  executive offices,  with a copy by fax to Gary B. Wolff, Esq. 747
Third Avenue, New York, NY 10017. The time when such notice is sent shall be the
time of the giving of the notice.

Article 9.  Time

         Where this Debenture authorizes or requires the payment of money or the
performance  of a condition  or  obligation  on a Saturday or Sunday or a public
holiday,  or authorizes or requires the payment of money or the performance of a
condition or obligation within, before or after a period of time computed from a
certain date, and such period of time ends on a Saturday or a Sunday or a public
holiday,  such payment may be made or condition or  obligation  performed on the
next  succeeding  business day, and if the period ends at a specified hour, such
payment may be made or condition  performed,  at or before the same hour of such
next  succeeding  business  day,  with the same  force and  effect as if made or
performed in accordance with the terms of this Debenture. A "business day" shall
mean a day on which  the banks in New York are not  required  or  allowed  to be
closed.

Article 10.  Waivers

         The holders of a majority in  principal  amount of the  Debentures  may
waive a default  or  rescind  the  declaration  of an Event of  Default  and its
consequences except for a default in the payment of principal or conversion into
Common Stock.

Article 11.  Rules of Construction

         In this Debenture,  unless the context otherwise requires, words in the
singular number include the plural, and in the plural include the singular,  and
words of the masculine gender include the feminine and the neuter,  and when the
sense so  indicates,  words of the neuter  gender may refer to any  gender.  The
numbers and titles of sections  contained  in the  Debenture  are  inserted  for
convenience  of reference  only,  and they neither form a part of this Debenture
nor are they to be used in the construction or interpretation hereof.  Wherever,
in this Debenture,  a determination of the Company is required or allowed,  such
determination  shall be made by a  majority  of the  Board of  Directors  of the
Company and if it is made in good faith, it shall be conclusive and binding upon
the Company and the Holder of this Debenture.

Article 12.  Governing Law

         The validity, terms, performance and enforcement of this Debenture
shall be governed and construed by the provisions hereof and in accordance with
the laws of the State of New York applicable to agreements that are negotiated,
executed, delivered and performed solely in the State of New York.

Article 13.                Litigation

         (a) Forum Selection and Consent to  Jurisdiction.  Any litigation based
thereon,  or arising out of, under, or in connection with, this agreement or any
course of conduct,  course of dealing,  statements  (whether oral or written) or
actions of the Company or Holder shall be brought and maintained  exclusively in
the  courts  of  the  State  of New  York.  The  Company  hereby  expressly  and
irrevocably  submits to the  jurisdiction of the state and federal courts of the
State of New York for the purpose of any such  litigation as set forth above and
irrevocably  agrees  to be bound  by any  final  judgment  rendered  thereby  in
connection with such litigation. The Company further irrevocably consents to the
service of process by registered mail,  postage prepaid,  or by personal service
within or  without  the State of New York.  The  Company  hereby  expressly  and
irrevocably  waives, to the fullest extent permitted by law, any objection which
it may have or hereafter may have to the laying of venue of any such  litigation
brought  in any  such  court  referred  to  above  and any  claim  that any such
litigation has been brought in any  inconvenient  forum.  To the extent that the
Company has or hereafter may acquire any immunity from jurisdiction of any court
or from any legal process (whether  through service or notice,  attachment prior
to judgment, attachment in aid of execution or otherwise) with respect to itself
or its property,  the Company hereby irrevocably waives such immunity in respect
of its obligations under this agreement and the other loan documents.

         (b) Waiver of Jury Trial. The Holder and the Company hereby  knowingly,
voluntarily and intentionally  waive any rights they may have to a trial by jury
in respect of any  litigation  based  hereon,  or arising out of,  under,  or in
connection  with, this agreement,  or any course of conduct,  course of dealing,
statements  (whether  oral or written) or actions of the Holder or the  Company.
The Company  acknowledges  and agrees that it has received  full and  sufficient
consideration  for  this  provision  and  that  this  provision  is  a  material
inducement for the Holder entering into this agreement.

         (c)  Submission  To  Jurisdiction  . Any legal action or  proceeding in
connection with this Agreement or the  performance  hereof may be brought in the
state and federal courts located in the State of New York and the parties hereby
irrevocably  submit to the  non-exclusive  jurisdiction  of such  courts for the
purpose of any such action or proceeding.

         IN WITNESS WHEREOF,  the Company has duly executed this Debenture as of
the date first written above.

                                                   SWISSRAY INTERNATIONAL, INC.

                                                     By/s/Ruedi G. Laupper
                                                  Name:  Ruedi G. Laupper
                                                Title: Chairman and President

<PAGE>

                                    Exhibit A

                              NOTICE OF CONVERSION

              (To be Executed by the  Registered  Holder in order to Convert the
Debentures.)

         The undersigned hereby irrevocably  elects, as of ______________,  199_
to convert $_________________ of the Debentures into Shares of Common Stock (the
"Shares")  of SWISSRAY  INTERNATIONAL,  INC.  (the  "Company")  according to the
conditions set forth in the Subscription Agreement dated _________________,1998.

Date of Conversion_________________________________________

Applicable Conversion Price_________________________________

Number of Shares Issuable upon this conversion______________

Signature___________________________________________________
                           [Name]

Address_____________________________________________________

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

Phone______________________   Fax___________________________

<PAGE>

                             Assignment of Debenture

        The undersigned hereby sell(s) and assign(s) and transfer(s) unto

                   (name, address and SSN or EIN of assignee)

                                        Dollars ($                         )
--------------------------------------------------------------------------------
(principal amount of Debenture, $5,000 or integral multiples of $5,000)

of  principal  amount of this  Debenture  together  with all  accrued and unpaid
interest hereon.

Date:                               Signed:

     (Signature  must conform in all respects to name of Holder shown of face of
     Debenture)

Signature Guaranteed:

<PAGE>

                       AMENDMENT TO SUBSCRIPTION AGREEMENT

THIS AMENDMENT TO SUBSCRIPTION AGREEMENT ("Amendment") is made as of March 17,
1999, by and between DOMINION CAPITAL FUND, LTD. ("Purchaser") and SWISSRAY
INTERNATIONAL, INC. (the "Company"), (Collectively the "Parties").

WHEREAS,  the Parties  entered into a Subscription  Agreement  dated on or about
September 28, 1998, relating to a Regulation D private placement offering in the
aggregate  amount of $2,940,000 (the  "Offering") of which Purchaser  subscribed
for $1,440,000 of the Company's convertible debentures; and

WHEREAS,  in connection  with said  Offering,  the parties desire to correct and
amend  a  certain  section  in the  Subscription  Agreement  which  contained  a
typographical  error and was  overlooked by the Parties at the time the Offering
closed.

NOW  THEREFORE,  in  consideration  of the  covenants and  agreements  contained
herein, the parties agree to amend the Subscription Agreement as follows:

         AMENDMENT.

         A.  Section 1, SUBSCRIPTION, Subsection (a) is hereby corrected and
amended to read as follows:

         The  undersigned  hereby  irrevocably  subscribes  for  and  agrees  to
         purchase $1,440,000 of the Company's  Debentures.  The Debentures shall
         pay an 5% cumulative  interest payable  annually,  in cash or in freely
         trading Common Stock of the Company,  at the Company's  option,  at the
         time of each conversion.  If paid in Common Stock, the number of shares
         of the  Company's  Common Stock to be received  shall be  determined by
         dividing  the  dollar  amount of the  dividend  by the then  applicable
         Market Price,  as of the interest  payment date.  "Market  Price" shall
         mean 82% of the 10-day  average  closing  bid  price,  as  reported  by
         Bloomberg,  LP, for the ten (10)  consecutive  trading days immediately
         preceding  the date of  conversion  (the  "Conversion  Price").  If the
         interest  is to be paid in cash,  the Company  shall make such  payment
         within 5 business days of the date of conversion. If the interest is to
         be paid in Common  Stock,  said Common  Stock shall be delivered to the
         Purchaser, or per Purchaser's  instructions,  within 5 business days of
         the  date of  conversion.  The  Debentures  are  subject  to  automatic
         conversion  at the end of two years from the date of  issuance at which
         time all Debentures  outstanding will be automatically  converted based
         upon the formula set forth in Section 4(d). The closing shall be deemed
         to have  occurred on the date the funds are  received by the Company or
         its designated attorney (the "Closing Date").

          B. Section 4, TERMS OF CONVERSION, Subsection (d)(i) Conversion
          Rate is hereby corrected and amended to read as follows:

          Purchaser  is entitled,  at its option,  to convert the face amount of
          each Debenture,  plus accrued interest,  anytime following the Closing
          Date, at 82% of the 10 day average  closing bid price,  as reported by
          Bloomberg,   LP  for  the  10  consecutive  trading  days  immediately
          preceding the applicable  Conversion Date (the "Conversion Price"). No
          fractional  shares or scrip  representing  fractions of shares will be
          issued on  conversion,  but the  number of  shares  issuable  shall be
          rounded up or down, as the case may be, to the nearest whole share.

         C.  SECTION 5 LIMITS ON AMOUNT OF CONVERSION AND OWNERSHIP is hereby
         corrected and amended to read as follows:

         The  Purchaser is limited in the amount of Debenture it may convert and
         own. Other than the mandatory  conversion  provisions contained in this
         Agreement,  which are not limited by the following,  in no event except
         (i) with respect to a conversion  pursuant to redemption by the Company
         or (ii) if there is (a) a public  announcement  that 50% or more of the
         Company is being acquired,  (b) a public  announcement that the Company
         is being  merged,  or (c) a change in control,  shall the  Purchaser be
         entitled  to convert  any  Debentures  to the extent  that,  after such
         conversion,   the  sum  of  the  number  of  shares  of  Common   Stock
         beneficially  owned by the  Purchaser  and its  affiliates  (other than
         shares of Common Stock which may be deemed  beneficially  owned through
         the  ownership  of  the  unconverted   portion  of  the  Debentures  or
         unexercised  Warrants),  and (2) the  number of shares of Common  Stock
         issuable upon the  conversion of the  Debentures  with respect to which
         the  determination  of this  proviso  is being  made,  would  result in
         beneficial  ownership by the Purchaser and its  affiliates of more than
         4.99% of the  outstanding  shares of Common  Stock  (after  taking into
         account the shares to be issued to the Purchaser upon such conversion).
         For  purposes of the  proviso to the  immediately  preceding  sentence,
         beneficial  ownership  shall be determined  in accordance  with Section
         13(d) of the  Securities  Exchange  Act of 1934,  as amended (the "1934
         Act"), except as otherwise provided in clause (1) of such proviso.  The
         Purchaser further agrees that if the Purchaser transfers or assigns any
         of the Debentures to a party who or which would not be considered  such
         an affiliate, such assignment shall be made subject to the transferee's
         or assignee's  specific agreement to be bound by the provisions of this
         Section as if such  transferee  or  assignee  were a  signatory  to the
         Subscription Agreement.  Furthermore, the Company shall not process any
         conversions that would result in beneficial  ownership by the Purchaser
         and its  affiliates  of more  than  4.9% of the  outstanding  shares of
         Common Stock of the Company.

II.      EFFECTIVE DATE/PRIOR NEGOTIATIONS.

         This amendment shall relate back to and be effective as of the closing
date of the Offering.  This amendment is intended to correct and amend the
Subscription Agreement to conform to the Parties understanding of the terms of
the offering as negotiated by the Parties.

III.     FACSIMILE AS ORIGINAL.

         This  Amendment  may be executed  in  counterparts,  and the  facsimile
transmission of an executed  counterpart to this Amendment shall be effective as
an original.

         SWISSRAY INTERNATIONAL, INC.

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

         DOMINION CAPITAL FUND, LTD.

         --------------------------<TABLE>
<CAPTION>
Name                                       Dated           Amount         Signatory
---------------------------------------    ------------    ----------     ---------------
<S>                                        <C>             <C>            <C>
Dominion Capital Fund Ltd.*                Sept. 29, 1998  $ 1,440,000
Sovereign Partners LP.                     Sept. 29, 1998  $ 1,500,000
</TABLE>
*    This document has been filed.
<PAGE>

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

                          SWISSRAY INTERNATIONAL, INC.
                       ----------------------------------

THE SECURITIES  OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD
IN RELIANCE ON EXEMPTIONS FROM THE  REGISTRATION  REQUIREMENTS OF SUCH LAWS. THE
SECURITIES ARE SUBJECT TO RESTRICTIONS OF TRANSFERABILITY AND RESALE AND MAY NOT
BE  TRANSFERRED  OR RESOLD  EXCEPT AS  PERMITTED  UNDER  SUCH LAWS  PURSUANT  TO
REGISTRATION OR AN EXEMPTION  THEREFROM.  THE SECURITIES HAVE NOT BE APPROVED OR
DISAPPROVED BY THE SECURITIES  AND EXCHANGE  COMMISSION OR ANY OTHER  REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS OF THIS  OFFERING OR THE ACCURACY OR ADEQUACY OF THE OFFERING  MATERIALS.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

                          Maximum Offering: $2,940,000

      This offering consists of $2,940,00 of Convertible Debentures of Swissray
International, Inc.

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

                             SUBSCRIPTION AGREEMENT

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

                             SUBSCRIPTION PROCEDURES

         Convertible Debentures of SWISSRAY INTERNATIONAL, INC.. (the "Company")
are being offered in an aggregate amount not to exceed $2,940,000 The Debentures
will be transferable to the extent that any such transfer is permitted by law.
This offering is being made in accordance with the exemption from registration
under Section 4(2) of the Securities Act of 1933, as amended (the "Act") and
Rule 506 of Regulation D promulgated under the Act (the "Regulation D Offering")

                  The Investor  Questionnaire is designed to enable the Investor
to demonstrate the minimum legal requirements under federal and state securities
laws to purchase the Debentures.  The Signature Page for the Investor
Questionnaire and the Subscription Agreement contain representations relating to
the subscription.

                  Also included is an Internal Revenue Service Form W-9:
"Request for Taxpayer Identification Number and Certification" for U.S. citizens
or residents of the U.S. for U.S. federal income tax purposes only.  (Foreign
investors should consult their tax advisors regarding the need to complete
Internal Revenue Service Form W-9 and any other forms that may be required).

         If you are a foreign person or foreign entity,  you may be subject to a
withholding  tax equal to 30% of any dividends paid by the Company.  In order to
eliminate  or reduce  such  withholding  tax you may submit a properly  executed
I.R.S.  Form 4224  (Exemption  from  Withholding  of Tax on  Income  Effectively
Connected  with the  Conduct of a Trade or  Business  in the  United  States) or
I.R.S. Form 1001 (Ownership  Exemption or Reduced Trade  Certificate),  claiming
exemption from  withholding or eligibility  for treaty benefits in the form of a
lower rate of withholding tax on interest or dividends.

         Payment must be made by wire transfer as provided below:

Immediately  available  funds  should be sent via wire  transfer  to the  escrow
account  stated  below  and  the  completed  subscription  documents  should  be
forwarded to the Escrow Agent. Your subscription  funds will be deposited into a
non-interest bearing escrow account of Joseph B. LaRocco, Esq., Escrow Agent, at
First  Union  Bank of  Connecticut,  Stamford,  Connecticut.  In the  event of a
termination of the Regulation D Offering or the rejection of this  subscription,
all subscription funds will be returned without interest.  The wire instructions
are as follows:

         First Union Bank of Connecticut
         Executive Office
         300 Main Street, P. O. Box 700
         Stamford, CT  06904-0700

         ABA #:            021101108
         Swift #:          FUNBUS33
         Account #:                 20000-2072298-4
         Acct.Name:                 Joseph B. LaRocco, Esq.  Trustee Account

                             SUBSCRIPTION AGREEMENT

THE SECURITIES  OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD
IN RELIANCE ON EXEMPTIONS FROM THE  REGISTRATION  REQUIREMENTS OF SUCH LAWS. THE
SECURITIES ARE SUBJECT TO RESTRICTIONS OF TRANSFERABILITY AND RESALE AND MAY NOT
BE  TRANSFERRED  OR RESOLD  EXCEPT AS  PERMITTED  UNDER  SUCH LAWS  PURSUANT  TO
REGISTRATION OR AN EXEMPTION  THEREFROM.  THE SECURITIES HAVE NOT BE APPROVED OR
DISAPPROVED BY THE SECURITIES  AND EXCHANGE  COMMISSION OR ANY OTHER  REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS OF THIS  OFFERING OR THE ACCURACY OR ADEQUACY OF THE OFFERING  MATERIALS.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

To:      Swissray International, Inc.

         This  Subscription  Agreement is made between  Swissray  International,
Inc.,  ("Company"  or  "Seller")  a New York  corporation,  and the  undersigned
prospective purchaser  ("Purchaser") who is subscribing hereby for the Company's
Convertible Debentures (the "Debentures").  The Debentures being offered will be
separately  transferable,  to the extent that any such  transfer is permitted by
law. The  conversion  terms of the  Debentures  are set forth in Section 4. This
subscription is submitted to you in accordance with and subject to the terms and
conditions  described in this Subscription  Agreement together with any Exhibits
thereto,  relating  to an  offering  (the  "Offering")  of up to  $2,940,000  of
Debentures.  This  Offering is  comprised  of an offering of the  Debentures  to
accredited  investors  (the  "Regulation  D Offering")  in  accordance  with the
exemption from registration under Section 4(2) of the Securities Act of 1933, as
amended (the "Act"),  and Rule 506 of  Regulation  D  promulgated  under the Act
("Regulation D").

1.       SUBSCRIPTION.

         (a) The  undersigned  hereby  irrevocably  subscribes for and agrees to
purchase $2,940,000 of the Company's Debentures.  The Debentures shall pay an 5%
cumulative interest payable annually,  in cash or in freely trading Common Stock
of the Company, at the Company's option, at the time of each conversion. If paid
in Common  Stock,  the  number of shares  of the  Company's  Common  Stock to be
received  shall be  determined  by dividing the dollar amount of the dividend by
the then  applicable  Market Price,  as of the interest  payment  date.  "Market
Price" shall mean the lesser of (a) 82% of the 10-day average closing bid price,
as  reported  by  Bloomberg,  LP,  for the ten  (10)  consecutive  trading  days
immediately  preceding the date of conversion or (b) $1.00 (each being  referred
to as the  "Conversion  Price").  If the  interest  is to be paid in  cash,  the
Company  shall  make  such  payment  within  5  business  days  of the  date  of
conversion.  If the  interest is to be paid in Common  Stock,  said Common Stock
shall be delivered to the Purchaser, or per Purchaser's  instructions,  within 5
business days of the date of conversion. The Debentures are subject to automatic
conversion  at the end of two years from the date of  issuance at which time all
Debentures  outstanding will be  automatically  converted based upon the formula
set forth in Section  4(d).  The closing shall be deemed to have occurred on the
date the funds are  received by the Company or its  designated  attorney  (the "
Closing Date").

         (b) Upon  receipt  by the  Company  of the  requisite  payment  for the
Debentures  being purchased the Debentures so purchased will be forwarded by the
Escrow Agent, Joseph B. LaRocco, to the Purchaser and the name of such Purchaser
will be registered on the Debenture  transfer books of the Company as the record
owner of such  Debentures.  The Escrow  Agent shall not be liable for any action
taken or omitted by him in good faith and in no event shall the Escrow  Agent be
liable or  responsible  except for the Escrow  Agent's own gross  negligence  or
willful  misconduct.  The Escrow Agent has made no representations or warranties
in connection with this transaction and has not been involved in the negotiation
of the terms of this  Agreement  or any  matters  relative  thereto.  Seller and
Purchaser  each agree to indemnify  and hold  harmless the Escrow Agent from and
with respect to any suits, claims, actions or liabilities arising in any way out
of this transaction  including the obligation to defend any legal action brought
which in any way arises out of or is related to this Agreement. The Escrow Agent
is not  rendering  securities  advice to anyone  with  respect to this  proposed
transaction;  nor is the Escrow Agent opining on the  compliance of the proposed
transaction under applicable securities law.

2.       REPRESENTATIONS AND WARRANTIES.

         The undersigned hereby represents and warrants to, and agrees with, the
Company as follows:

                  (a) The undersigned has been furnished with, and has carefully
         read the applicable form of Debenture  included herein as Exhibit A and
         the form of Registration  Rights Agreement  annexed hereto as Exhibit B
         (the  "Registration  Rights  Agreement"),  and  is  familiar  with  and
         understands  the terms of the  Offering.  With respect to tax and other
         economic considerations involved in his investment,  the undersigned is
         not relying on the Company.  The undersigned  has carefully  considered
         and  has,  to the  extent  the  undersigned  believes  such  discussion
         necessary,  discussed with the undersigned's  professional  legal, tax,
         accounting and financial  advisors the  suitability of an investment in
         the  Company,  by  purchasing  the  Debentures,  for the  undersigned's
         particular  tax and  financial  situation and has  determined  that the
         investment  being made by the undersigned is a suitable  investment for
         the undersigned.

                  (b) The undersigned acknowledges that all documents,  records,
         and books  pertaining  to this  investment  which the  undersigned  has
         requested  includes Form 10-KSB for the fiscal year ended June 30, 1997
         inclusive of  10-KSB/A1,  10-KSB/A2 and 10-KSB/A3 and Form 10-Q for the
         quarters ended September 30, 1997, December 31, 1997 and March 31, 1998
         inclusive of 10-Q/A1 for  September 30, 1997 and December 31, 1997 (the
         "Disclosure  Documents") have been made available for inspection by the
         undersigned or the undersigned has access to the Disclosure Documents.

                  (c)      The undersigned has had a reasonable opportunity to
ask questions of and receive answers from a  person or persons acting on behalf
of the Company concerning the Offering and all such questions have been answered
to the full satisfaction of the undersigned.

                  (d) The  undersigned  will not sell or otherwise  transfer the
         Debentures  without  registration  under  the Act or  applicable  state
         securities laws or an exemption therefrom. The Debentures have not been
         registered  under the Act or under the  securities  laws of any states.
         The Common Stock  underlying  the Debentures is to be registered by the
         Company  pursuant  to the terms of the  Registration  Rights  Agreement
         attached  hereto as Exhibit B and  incorporated  herein and made a part
         hereof.  Without  limiting the right to convert the Debentures and sell
         the Common Stock pursuant to the  Registration  Rights  Agreement,  the
         undersigned   represents   that  the   undersigned  is  purchasing  the
         Debentures for the  undersigned's  own account,  for investment and not
         with a view to resale or  distribution  except in  compliance  with the
         Act.  The  undersigned  has not  offered  or sold  any  portion  of the
         Debentures  being  acquired nor does the  undersigned  have any present
         intention  of  dividing  the  Debentures  with  others  or of  selling,
         distributing  or otherwise  disposing of any portion of the  Debentures
         either currently or after the passage of a fixed or determinable period
         of time or upon the occurrence or  non-occurrence  of any predetermined
         event or  circumstance  in violation of the Act.  Except as provided in
         the  Registration  Rights  Agreement,  the Company has no obligation to
         register the Common Stock issuable upon conversion of the Debentures.

                  (e)      The undersigned recognizes that an investment in the
Debentures involves substantial risks, including loss of the entire amount of
such investment. Further, the undersigned has carefully read and considered the
schedule entitled Pending Litigation matters attached hereto
         as Exhibit C.

                  (f)      Legends.

                           (i)      The undersigned acknowledges that each
certificate representing the Debentures unless registered pursuant to the
Registration Rights Agreement, shall be stamped or otherwise imprinted with a
legend substantially in the following form:

                  THE  SECURITIES  EVIDENCED  BY  THIS  CERTIFICATE  MAY  NOT BE
                  OFFERED  OR  SOLD,  TRANSFERRED,   PLEDGED,   HYPOTHECATED  OR
                  OTHERWISE  DISPOSED  OF EXCEPT (i)  PURSUANT  TO AN  EFFECTIVE
                  REGISTRATION  STATEMENT  UNDER THE  SECURITIES ACT OF 1933, AS
                  AMENDED, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT
                  (OR  ANY  SIMILAR   RULE  UNDER  SUCH  ACT   RELATING  TO  THE
                  DISPOSITION  OF  SECURITIES),  OR (iii) IF AN  EXEMPTION  FROM
                  REGISTRATION UNDER SUCH ACT IS AVAILABLE.

                  NOTWITHSTANDING THE FOREGOING, THE COMMON STOCK INTO WHICH THE
                  SECURITIES  EVIDENCED BY THIS  CERTIFICATE ARE CONVERTIBLE ARE
                  ALSO SUBJECT TO THE  REGISTRATION  RIGHTS SET FORTH IN EACH OF
                  THAT CERTAIN  SUBSCRIPTION  AGREEMENT AND REGISTRATION  RIGHTS
                  AGREEMENT BY AND BETWEEN THE HOLDER HEREOF AND THE COMPANY,  A
                  COPY OF EACH IS ON FILE AT THE COMPANY'S  PRINCIPAL  EXECUTIVE
                  OFFICE.

                           (ii) The Common  Stock issued upon  conversion  shall
contain the following legend if converted prior to effectiveness of Registration
Statement:

                  "No  sale,  offer  to  sell  or  transfer  of  the  securities
                  represented  by  this  certificate  shall  be  made  unless  a
                  registration  statement  under the Federal  Securities  Act of
                  1933, as amended,  with respect to such  securities is then in
                  effect or an exemption  from the  registration  requirement of
                  such Act is then in fact applicable to such securities."

                           (iii)  Common Stock issued upon conversion and
subsequent to effective date of Registration Statement (pursuant to which shares
underlying conversion are registered) shall not bear any restrictive legend.

                  (g) If this  Subscription  Agreement is executed and delivered
         on behalf of a  corporation,  (i) such  corporation  has the full legal
         right and power and all authority and approval  required (a) to execute
         and deliver,  or authorize execution and delivery of, this Subscription
         Agreement and all other instruments (including, without limitation, the
         Registration  Rights Agreement)  executed and delivered by or on behalf
         of such  corporation in connection  with the purchase of the Debentures
         and (b) to purchase and hold the Debentures:  (ii) the signature of the
         party  signing  on  behalf of such  corporation  is  binding  upon such
         corporation;  and (iii) such  corporation  has not been  formed for the
         specific  purpose of acquiring the  Debentures,  unless each beneficial
         owner of such entity is qualified as an accredited  investor within the
         meaning of Rule 501(a) of  Regulation D and has  submitted  information
         substantiating such individual qualification.

                  (h) The  undersigned  shall  indemnify  and hold  harmless the
         Company  and each  stockholder,  executive,  employee,  representative,
         affiliate,  officer,  director,  agent  (including  Counsel) or control
         person  of  the  Company,  who is or  may  be a  party  or is or may be
         threatened  to  be  made  a  party  to  any   threatened,   pending  or
         contemplated  action,  suit or  proceeding,  whether  civil,  criminal,
         administrative  or  investigative,  by  reason of or  arising  from any
         actual  or  alleged  misrepresentation  or  misstatement  of  facts  or
         omission to  represent or state facts made or alleged to have been made
         by the  undersigned  to the  Company or omitted or alleged to have been
         omitted  by  the   undersigned,   concerning  the  undersigned  or  the
         undersigned's  subscription  for and purchase of the  Debentures or the
         undersigned's  authority to invest or financial  position in connection
         with   the   Offering,   including,   without   limitation,   any  such
         misrepresentation,   misstatement   or  omission   contained   in  this
         Subscription  Agreement,   the  Questionnaire  or  any  other  document
         submitted by the undersigned,  against losses, liabilities and expenses
         for  which  the  Company,  or  any  stockholder,  executive,  employee,
         representative, affiliate, officer, director, agent (including Counsel)
         or control  person of the Company  has not  otherwise  been  reimbursed
         (including  attorneys'  fees and  disbursements,  judgments,  fines and
         amounts paid in  settlement)  actually and  reasonably  incurred by the
         Company, or such officer,  director stockholder,  executive,  employee,
         agent (including Counsel), representative,  affiliate or control person
         in connection with such action, suit or proceeding.

                  (i)      The undersigned is not subscribing for the Debentures
         as a result of, or pursuant to, any advertisement, article, notice or
         other communication published in any newspaper, magazine or similar
         media or broadcast over television or radio or presented at any seminar
         or meeting.

                  (j) The undersigned or the undersigned's  representatives,  as
         the case may be, has such  knowledge and  experience in financial,  tax
         and  business  matters so as to enable the  undersigned  to utilize the
         information  made available to the  undersigned in connection  with the
         Offering  to  evaluate  the  merits and risks of an  investment  in the
         Debentures  and to make an informed  investment  decision  with respect
         thereto.

                  (k)      The Purchaser is purchasing the Debentures for its
         own account for investment, and not with a view toward the resale or
         distribution thereof.  Purchaser is neither an underwriter of, nor a
         dealer in, the Debentures or the Common Stock issuable upon conversion
         thereof and is not participating in the distribution or resale of the
         Debentures or the Common Stock issuable upon conversion thereof.

                  (l) There has never been represented, guaranteed, or warranted
         to the undersigned by any broker, the Company, its officers,  directors
         or  agents,  or  employees  or  any  other  person,   expressly  or  by
         implication  (i) the  percentage of profits and/or amount of or type of
         consideration,  profit or loss to be  realized,  if any, as a result of
         the  Company's  operations;  and  (ii)  that the  past  performance  or
         experience  on the part of the  management  of the  Company,  or of any
         other  person,  will  in  any  way  result  in the  overall  profitable
         operations of the Company.

         3.       SELLER REPRESENTATIONS.

                  (a) Concerning the Securities. The issuance, sale and delivery
of the Debentures have been duly authorized by all required  corporate action on
the part of Seller,  and when issued,  sold and delivered in accordance with the
terms  hereof and thereof for the  consideration  expressed  herein and therein,
will be duly and validly issued and  enforceable in accordance with their terms,
subject to the laws of bankruptcy and creditors' rights generally. At least 200%
of the number of shares of Common  Stock  issuable  upon  conversion  of all the
Debentures  issued pursuant to this Offering have been duly and validly reserved
for  issuance,  or  alternative  arrangements  agreed to in writing to cover the
contingency of their being insufficient  reserved shares or stockholder approval
to  authorize  additional  shares as described  in the proxy  statement  for the
August 31, 1998 meeting has or will be obtained and, upon issuance shall be duly
and validly issued, fully paid, and non-assessable (the "Reserved Shares"). From
time to time,  the Company  shall keep such  additional  shares of Common  Stock
reserved so as to allow for the conversion of all the Debentures issued pursuant
to this offering.

         Prior to conversion of all the Debentures, if at anytime the conversion
of all the  Debentures  outstanding  would result in an  insufficient  number of
authorized  shares of Common Stock being available to cover all the conversions,
then in such  event,  the  Company  will  move to call and hold a  shareholder's
meeting within 60 days of such event for the purpose of  authorizing  additional
shares of  Common  Stock to  facilitate  the  conversions.  In such an event the
Company  shall  recommend to all  shareholders  to vote their shares in favor of
increasing the authorized  number of shares of Common Stock.  Seller  represents
and warrants  that under no  circumstances  will it deny or prevent  Purchaser's
right  to  convert  the  Debentures  as  permitted   under  the  terms  of  this
Subscription  Agreement or the Registration  Rights  Agreement.  Nothing in this
Section shall limit the obligation of the Company to make the payments set forth
in Section 4(h).

                  (b)      Authority to Enter Agreement.  This Agreement has
been duly authorized, validly executed and delivered on behalf of Seller and is
a valid and binding agreement in accordance with its terms, subject to general
principals of equity and to bankruptcy or other laws affecting the enforcement
of creditors' rights generally.

                           (c)      Non-contravention.      The execution and
delivery of this Agreement and the consummation of the issuance of the
Debentures, and the transactions contemplated by this Agreement do not and will
not conflict with or result in a breach by Seller of any of the terms or
provisions  of, or constitute a default  under,  the articles of incorporation
or by-laws of Seller, or any indenture,  mortgage,  deed of trust, or other
material agreement or instrument to which Seller is a party or by which it or
any of its properties or assets are bound, or any existing applicable law,
rule, or regulation of the United States or any State thereof or any  applicable
decree,  judgment,  or order of any  Federal  or State  court,  Federal or State
regulatory body,  administrative agency or other United States governmental body
having jurisdiction over Seller or any of its properties or assets.

                  (d) Company  Compliance.  The Company  represents and warrants
that the Company and its subsidiaries are: (i) in full compliance, to the extent
applicable,  with all reporting  obligations under either Section 13(a) or 15(d)
of the  Securities  Exchange  Act of 1934;  (ii) not in violation of any term or
provision of its Certificate of Incorporation  or by-laws;  (iii) not in default
in the  performance  or  observance  of any  obligation,  agreement or condition
contained in any bond,  debenture (excepting for reservation of number of shares
required if all Debentures were to be converted),  note or any other evidence of
indebtedness or in any mortgage, deed of trust, indenture or other instrument or
agreement to which they are a party,  either  singly or jointly,  by which it or
any of its property is bound or subject.  Furthermore,  the Company is not aware
of any other  facts,  which it has not  disclosed  which  could  have a material
adverse effect on the business, condition, (financial or otherwise), operations,
earnings,   performance,   properties  or  prospects  of  the  Company  and  its
subsidiaries taken as a whole.

                  (e)  Pending  Litigation.  Except as  otherwise  disclosed  in
Exhibit C, there is (i) no action,  suit or  proceeding  before or by any court,
arbitrator or governmental body now pending or, to the knowledge of the Company,
threatened or contemplated to which the Company or any of its subsidiaries is or
may be a party or to which the business or property of the Company or any of its
subsidiaries  is or may be  bound  or  subject,  (ii)  no  law,  statute,  rule,
regulation,  order or ordinance that has been enacted,  adopted or issued by any
Governmental Body or that, to the knowledge of the Company, has been proposed by
any   Governmental   Body  adversely   affecting  the  Company  or  any  of  its
subsidiaries, (iii) no injunction, restraining order or order of any nature by a
federal,  state or foreign court or Governmental Body of competent  jurisdiction
to which the Company or any of its  subsidiaries  is subject issued that, in the
case of clauses (i), (ii) and (iii) above, (x) is reasonably  likely,  singly or
in the  aggregate,  to  result in a  material  adverse  effect on the  business,
condition,   (financial  or  otherwise),   operations,   earnings,  performance,
properties or prospects of the Company, and its subsidiaries taken as a whole or
(y) would  interfere with or adversely  affect the issuance of the Debentures or
would  be  reasonably  likely  to  render  this  Subscription  Agreement  or the
Debentures, or any portion thereof, invalid or unenforceable.

                  (f) Issuance of the  Debentures.  No action has been taken and
no law, statute, rule, regulation,  order or ordinance has been enacted, adopted
or issued by any Governmental  Body that prevents the issuance of the Debentures
or the Common Stock issuable upon conversion or exercise thereof; no injunction,
restraining  order  or order  of any  nature  by a  federal  or  state  court of
competent  jurisdiction  has been  issued  that  prevents  the  issuance  of the
Debentures or the Common Stock issuable upon  conversion or exercise  thereof or
suspends the sale of the Debentures or the Common Stock issuable upon conversion
thereof  in any  jurisdiction;  and no  action,  suit or  proceeding  is pending
against  or,  to the  best  knowledge  of the  Company,  threatened  against  or
affecting, the Company, any of its subsidiaries or, to the best knowledge of the
Company,  before any court or  arbitrator  or any  Governmental  Body  that,  if
adversely  determined,  would prohibit,  materially  interfere with or adversely
affect the  issuance or  marketability  of the  Debentures  or the Common  Stock
issuable  upon  conversion  or  exercise  thereof  or  render  the  Subscription
Agreement or the Debentures, or any portion thereof, invalid or unenforceable.

         (g) The Company  shall  indemnify  and hold  harmless the Purchaser and
each  stockholder,  executive,  employee,  representative,  affiliate,  officer,
director or control person of the  Purchaser,  who is or may be a party or is or
may be threatened to be made a party to any threatened,  pending or contemplated
action,  suit  or  proceeding,   whether  civil,  criminal,   administrative  or
investigative,   by  reason  of  or   arising   from  any   actual  or   alleged
misrepresentation  or  misstatement  of facts or omission to  represent or state
facts  made or  alleged to have been made by the  Company  to the  Purchaser  or
omitted or alleged to have been omitted by the Company, concerning the Purchaser
or the  Purchaser's  subscription  for and  purchase  of the  Debentures  or the
Purchaser 's authority to invest or financial  position in  connection  with the
Offering,   including,   without   limitation,   any   such   misrepresentation,
misstatement  or  omission  contained  in  this  Subscription   Agreement,   the
Questionnaire  or any other document  submitted by the Company,  against losses,
liabilities and expenses for which the Purchaser, or any stockholder, executive,
employee, representative,  affiliate, officer, director or control person of the
Purchaser has not  otherwise  been  reimbursed  (including  attorneys'  fees and
disbursements,  judgments,  fines and amounts paid in  settlement)  actually and
reasonably incurred by the Purchaser,  or such officer,  director,  stockholder,
executive, employee,  representative,  affiliate or control person in connection
with such action, suit or proceeding.

         (h) No Change.  Other than filings  required by the Blue Sky or federal
securities  law and/or  NASDAQ Rules and  Regulations,  no consent,  approval or
authorization of or designation,  declaration or filing with any governmental or
other regulatory  authority on the part of the Company is required in connection
with the valid  execution,  delivery  and  performance  of this  Agreement.  Any
required  qualification or notification under applicable federal securities laws
and state Blue Sky laws of the offer,  sale and issuance of the Debentures,  has
been obtained on or before the date hereof or will have been obtained within the
allowable period thereafter, and a copy thereof will be forwarded to Counsel for
the Purchaser.

         (i) True Statements.  Neither this Agreement nor any of the "Disclosure
Documents",  as hereinafter defined, contains any untrue statement of a material
fact or  omits  to  state  any  material  fact  necessary  in  order to make the
statements  contained  herein  or  therein  not  misleading  in the light of the
circumstances  under which such  statements  are made.  There  exists no fact or
circumstances  which, to the knowledge of the Company,  materially and adversely
affects  the  business,  properties  or  assets,  or  conditions,  financial  or
otherwise,  of the  Company,  which has not been set forth in this  Subscription
Agreement or disclosed in such documents.

         (j) The  Purchaser  has been  advised that the Company has not retained
any independent professionals to review or comment on this Offering or otherwise
protect the  interests of the  Purchaser.  Although the Company has retained its
own  counsel,  neither  such  counsel  nor any other firm,  including  Joseph B.
LaRocco,  Esq., has acted on behalf of the Purchaser,  and the Purchaser  should
not rely on the Company's legal counsel or Joseph B. LaRocco,  Esq. with respect
to any matters herein described.

         (k)      Prior Shares Issued Under Regulation S or Regulation D.  In
the past six months the Company raised $13,643,849 in Regulation S and
Regulation D offerings, including redemptions and rollovers.

         (l)      Current Authorized Shares. As of September 25, 1998 there were
50,000,000 authorized shares of Common Stock of which approximately ___________
shares of Common Stock were deemed issued and outstanding on a fully diluted
basis.

         (m)  Disclosure  Documents.   The  Disclosure  Documents  are  all  the
documents (other than preliminary  materials) that the Company has been required
to file with the SEC from June 30, 1997,  to the date hereof,  exclusive of such
registration   statements  as  have  been  filed  in  accordance   with  certain
registration rights  agreeements.  As of their respective dates, and/or dates of
amended filings with respect thereto, none of the Disclosure Documents contained
any  untrue  statement  of a material  fact or omitted to state a material  fact
required  to be stated  therein  or  necessary  in order to make the  statements
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading,  and no material  event has  occurred  since the  Company's  initial
filing  on Form  10-KSB  for the year  ended  June 30,  1997 (or the  filing  of
necessary  amendments thereto so as to restate certain financial  statements for
fiscal  years  ended  June  30,  1997  and  1996 so as to  properly  record  the
accounting treatment of certain beneficial conversion features and debt issuance
cost of  convertible  debentures  issued during the year ended June 30, 1997 and
the auditing for the value of stock  options  granted  during the years June 30,
1997 and 1996),  which could make any of the disclosures  contained  therein (as
subsequently  amended and restated)  misleading The financial  statements of the
Company  included in the  Disclosure  Documents have been prepared in accordance
with generally  accepted  accounting  principles  applied on a consistent  basis
during  the  periods   involved  (except  as  may  be  indicated  in  the  audit
adjustments)  the  consolidated  financial  position  of  the  Company  and  its
consolidated  subsidiaries as at the dates thereof and the consolidated  results
of their  operations  and changes in  financial  position  for the periods  then
ended.

         (n) Information  Supplied.  The information  supplied by the Company to
Purchaser in connection with the offering of the Debentures does not contain any
untrue  statement of a material fact or omit to state a material fact  necessary
to make the  statements,  in the light of the  circumstances  in which they were
made,  not  misleading.  There  exists no fact or  circumstances  which,  to the
knowledge  of the  Company,  materially  and  adversely  affects  the  business,
properties, assets, or conditions, financial or otherwise, of the Company, which
has not been set forth in this Agreement or disclosed in such documents.

         (o) Delivery  Instructions.  On the Closing Date the  Debentures  being
purchased  hereunder  shall be  delivered to Joseph B.  LaRocco,  Esq. as Escrow
Agent,  who will  simultaneously  wire to the Company's  counsel the funds being
held in escrow,  less placement  fees, if not already  directly wired to Company
Counsel, at which time the Escrow Agent shall then have the Debentures delivered
to the Purchaser, per the Purchaser's instructions.

         (p) Non-contravention.  The execution and delivery of this Agreement by
the Company, the issuance of the Debentures, and the consummation by the Company
of the other transactions  contemplated by this Agreement, and the Debentures do
not and will not  conflict  with or result in a breach by the  Company of any of
the terms or provisions of, or constitute a default under,  the (i)  certificate
of incorporation or by-laws of the Company, (ii) any indenture,  mortgage,  deed
of trust,  or other  material  agreement or instrument to which the Company is a
party or by which it or any of its  properties  or assets are  bound,  (iii) any
material existing  applicable law, rule, or regulation or any applicable decree,
judgment,  or (iv) order of any court, United States federal or state regulatory
body, administrative agency, or other governmental body having jurisdiction over
the Company or any of its properties or assets, except such conflict,  breach or
default  which  would not have a  material  adverse  effect on the  transactions
contemplated herein.

         (q) No Default.  Except as may be set forth in the Company's  report on
form 10-KSB for the fiscal year ending June 30,  1997,  as  initially  filed and
subsequnetly  amended,  the  Company  is not in default  in the  performance  or
observance  of  any  material  obligation,   agreement,  covenant  or  condition
contained in any indenture, mortgage, deed of trust or other material instrument
or agreement to which it is a party or by which it or its property is bound, and
neither  the  execution  of,  nor  the  delivery  by the  Company  of,  nor  the
performance  by the Company of its  obligations  under,  this  Agreement  or the
Debentures,  other than the conversion provision thereof,  will conflict with or
result in the  breach or  violation  of any of the  terms or  provisions  of, or
constitute  a default or result in the  creation  or  imposition  of any lien or
charge on any  assets or  properties  of the  Company  under,  (i) any  material
indenture, mortgage, deed of trust or other material agreement applicable to the
Company or  instrument  to which the Company is a party or by which it is bound,
(ii)  any  statute  applicable  to  the  Company  or  its  property,  (iii)  the
Certificate  of  Incorporation  or  ByLaws  of the  Company,  (iv) any  decree ,
judgment,  order, rule or regulation of any court or governmental agency or body
having  jurisdiction  over the Company or its  properties,  or (v) the Company's
listing agreement for its Common Stock.

         (r)      Use of Proceeds.             The Company represents that the
net proceeds of this offering will be primarily used for the purposes set forth
on page 4 of the term sheet under the caption "Closing Proceeds".

         (s)               The Company hereby represents that it shall be paying
consultant  a fee of  $230,000 from the gross proceeds of this Offering, which
fee shall be paid out of escrow by the Escrow Agent

         4.       TERMS OF CONVERSION.

                  (a) Debentures.  Upon receipt by the Company or its designated
attorney of a facsimile or original of  Purchaser's  signed Notice of Conversion
followed by receipt of the  original  Debenture  to be  converted in whole or in
part (within 5 business  days as indicated  in 4(b)  below),  the Company  shall
instruct its transfer agent to issue one or more Certificates  representing that
number of shares of Common  Stock into which the  Debenture  is  convertible  in
accordance  with the  provisions  regarding  conversion  set forth in  Exhibit D
hereto. The Seller's transfer agent or attorney shall act as Registrar and shall
maintain an appropriate ledger containing the necessary information with respect
to each Debenture.

                  (b) Conversion  Procedures.  The face amount of each Debenture
may be converted  anytime  following the Closing Date. Such conversion  shall be
effectuated by surrendering to the Company,  or its attorney,  the Debentures to
be  converted  together  with a facsimile  or  original of the signed  Notice of
Conversion  which evidences  Purchaser's  intention to convert those  Debentures
indicated.  The date on which the Notice of Conversion is effective ("Conversion
Date") shall be deemed to be the date on which the  Purchaser  has  delivered to
the Company a facsimile or original of the signed Notice of Conversion,  as long
as the original  Debentures  to be converted  are received by the Company or its
designated attorney within 5 business days thereafter. Unless otherwise notified
by the Company in writing via facsimile,  the Company's  designated  attorney is
Gary B. Wolff,  Esq., 747 Third Avenue,  New York, NY 10017 (P) 212-644-6446 (f)
212-644-6498.

                  (c) Common  Stock to be  Issued.  Upon the  conversion  of any
Debentures  and upon  receipt by the  Company or its  designated  attorney  of a
facsimile or original of Purchaser's signed Notice of Conversion (see Exhibit D)
Seller  shall  instruct  Seller's  transfer  agent to issue  Stock  Certificates
without  restrictive legend or stop transfer  instructions,  if at that time the
Registration  Statement has been deemed  effective  (or with proper  restrictive
legend if the Registration Statement has not as yet been declared effective), in
the name of Purchaser (or its nominee) and in such denominations to be specified
at conversion  representing  the number of shares of Common Stock  issuable upon
such conversion, as applicable. Seller warrants that no instructions, other than
these  instructions,  have been given or will be given to the transfer agent and
that the Common Stock shall  otherwise be freely  transferable  on the books and
records of Seller, except as may be set forth herein.

                  (d) (i) Conversion Rate. Purchaser is entitled, at its option,
to convert the face amount of each  Debenture,  plus accrued  interest,  anytime
following  the  Closing  Date,  at the  lesser of (a) 82% of the 10 day  average
closing bid price, as reported by Bloomberg,  LP for the 10 consecutive  trading
days  immediately  preceding the applicable  Conversion  Date or (b) $1.00 (each
being  referred to as the  "Conversion  Price").  No fractional  shares or scrip
representing fractions of shares will be issued on conversion, but the number of
shares  issuable shall be rounded up or down, as the case may be, to the nearest
whole share.

                  (ii) Most Favored  Financing.  If after the Closing Date,  but
prior to the Purchaser's  conversion of all the  Debentures,  the Company raises
money under either Regulation D or Regulation S on terms that are more favorable
than those terms set forth in this Subscription  Agreement,  then in such event,
the  Purchaser  at its sole option shall be entitled to  completely  replace the
terms  of this  Subscription  Agreement  with the  terms of the more  beneficial
Subscription  Agreement as to that balance,  including  accrued interest and any
accumulated  liquidated damages,  remaining on Purchaser's  original investment.
The Debentures are subject to a mandatory,  24 month  conversion  feature at the
end of which all Debentures  outstanding will be automatically  converted,  upon
the terms set forth in this section ("Mandatory Conversion Date").

                  (e) Nothing contained in this Subscription  Agreement shall be
deemed to  establish  or require the payment of interest to the  Purchaser  at a
rate in excess of the maximum rate permitted by governing law. In the event that
the rate of interest  required to be paid exceeds the maximum rate  permitted by
governing  law,  the rate of interest  required to be paid  thereunder  shall be
automatically  reduced to the maximum rate permitted under the governing law and
such excess shall be returned with reasonable promptness by the Purchaser to the
Company.

                  (f) It  shall  be the  Company's  responsibility  to take  all
necessary  actions and to bear all such costs to issue the Certificate of Common
Stock as provided herein,  including the responsibility and cost for delivery of
an opinion  letter to the transfer  agent,  if so required.  The person in whose
name the  certificate of Common Stock is to be registered  shall be treated as a
shareholder  of record on and after the conversion  date.  Upon surrender of any
Debentures  that are to be  converted  in part,  the Company  shall issue to the
Purchaser a new Debenture  equal to the unconverted  amount,  if so requested in
writing by Purchaser.

                  (g)  Within  five  (5)  business  days  after  receipt  of the
documentation  referred to above in Section  4(b),  the Company  shall deliver a
certificate  in accordance  with Section 4(c) for the number of shares of Common
Stock issuable upon the conversion.  It shall be the Company's responsibility to
take all necessary  actions and to bear all such costs to issue the Common Stock
as provided herein,  including the cost for delivery of an opinion letter to the
transfer  agent,  if so required.  The person in whose name the  certificate  of
Common Stock is to be registered  shall be treated as a shareholder of record on
and after the conversion  date.  Upon surrender of any Debentures that are to be
converted  in part,  the Company  shall issue to the  Purchaser a new  Debenture
equal to the unconverted amount, if so requested in writing by Purchaser.

         In the event the Company does not make delivery of the Common Stock, as
instructed by Purchaser,  within 8 business days after  delivery of the original
Debenture,  then in such event the Company shall pay to Purchaser an amount,  in
cash in accordance with the following schedule, wherein "No. Business Days Late"
is defined as the number of business  days beyond the 8 business  days  delivery
period.
                             Late Payment for Each  $10,000 of Debenture
No. Business Days Late                          Amount Being Converted
----------------------                          ----------------------
         1                                             $100
         2                                             $200
         3                                             $300
         4                                             $400
         5                                             $500
         6                                             $600
         7                                             $700
         8                                             $800
         9                                             $900
         10                                            $1,000
         10                                            $1,000 + $200 for each
                                                       Business Day Beyond 10

         The Company  acknowledges  that its failure to deliver the Common Stock
within 8 business  days after the  Conversion  Date will cause the  Purchaser to
suffer  damages in an amount that will be difficult to  ascertain.  Accordingly,
the  parties  agree  that it is  appropriate  to  include  in this  Agreement  a
provision for liquidated  damages.  The parties  acknowledge  and agree that the
liquidated  damages provision set forth in this section  represents the parties'
good faith effort to qualify such damages and, as such,  agree that the form and
amount of such  liquidated  damages are  reasonable  and will not  constitute  a
penalty.  The payment of  liquidated  damages shall not relieve the Company from
its  obligations  to deliver  the  Common  Stock  pursuant  to the terms of this
Agreement.

         To the extent that the failure of the Company to issue the Common Stock
pursuant to this Section 4(g) is due to the unavailability of authorized but
unissued shares of Common Stock,  the provisions of this Section 4(g) shall not
apply but instead the provisions of Section 4(h) shall apply.  The Company shall
make any payments  incurred  under this Section 4(g) in  immediately  available
funds within five (5) business days from the  Conversion  Date if late.  Nothing
herein shall limit a Purchaser's right to pursue actual damages or cancel the
conversion for the Company's failure to issue and deliver Common Stock to the
Holder within 8 business days after the Conversion Date.

                  (h)  The  Company   shall  at  all  times   reserve  (or  make
alternative  written  arrangements  for reservation or contribution of shares or
stockholder  approval to authorize  additional  shares as described in the proxy
statement for the August 31, 1998,  meeting) and have available all Common Stock
necessary to meet  conversion of the  Debentures by all Purchasers of the entire
amount of  Debentures  then  outstanding.  If, at any time  Purchaser  submits a
Notice of Conversion  and the Company does not have  sufficient  authorized  but
unissued shares of Common Stock (or alternative shares of Common Stock as may be
contributed by stockholders)  available to effect,  in full, a conversion of the
Debentures (a "Conversion  Default",  the date of such default being referred to
herein  as the  "Conversion  Default  Date"),  the  Company  shall  issue to the
Purchaser all of the shares of Common Stock which are available,  and the Notice
of Conversion as to any  Debentures  requested to be converted but not converted
(the "Unconverted Debentures"), upon Purchaser's sole option, may be deemed null
and void. The Company shall provide notice of such Conversion  Default  ("Notice
of Conversion Default") to all existing Purchasers of outstanding Debentures, by
facsimile,  within three (3)  business  day of such  default  (with the original
delivered by overnight or two day courier),  and the Purchaser shall give notice
to the Company by facsimile within five business days of receipt of the original
Notice of Conversion  Default  (with the original  delivered by overnight or two
day  courier)  of its  election  to either  nullify  or  confirm  the  Notice of
Conversion.
         The Company agrees to pay to all  Purchasers of outstanding  Debentures
payments for a Conversion Default  ("Conversion Default Payments") in the amount
of  (N/365)  x (.24) x the  initial  issuance  price of the  outstanding  and/or
tendered  but not  converted  Debentures  held by each  Purchaser  where N = the
number of days from the Conversion Default Date to the date (the  "Authorization
Date") that the Company authorizes a sufficient number of shares of Common Stock
to effect conversion of all remaining Debentures.  The Company shall send notice
("Authorization  Notice")  to each  Purchaser  of  outstanding  Debentures  that
additional shares of Common Stock have been authorized,  the Authorization  Date
and the amount of Purchaser's  accrued Conversion Default Payments.  The accrued
Conversion  Default  shall be paid in cash or shall be  convertible  into Common
Stock at the Conversion Rate, at the Purchaser's option, payable as follows: (i)
in the event Purchaser  elects to take such payment in cash, cash payments shall
be made to such  Purchaser  of  outstanding  Debentures  by the fifth day of the
following  calendar month,  or (ii) in the event  Purchaser  elects to take such
payment in stock,  the  Purchaser  may convert such  payment  amount into Common
Stock at the conversion  rate set forth in section 4(d) at anytime after the 5th
day of the calendar month following the month in which the Authorization  Notice
was received, until the expiration of the mandatory 24 month conversion period.

         The Company  acknowledges  that its  failure to  maintain a  sufficient
number of  authorized  but  unissued  shares of Common Stock to effect in full a
conversion of the  Debentures  will cause the Purchaser to suffer  damages in an
amount that will be difficult to ascertain.  Accordingly, the parties agree that
it is  appropriate  to include in this  Agreement  a  provision  for  liquidated
damages. The parties acknowledge and agree that the liquidated damages provision
set forth in this section  represents the parties' good faith effort to quantify
such  damages  and, as such,  agree that the form and amount of such  liquidated
damages  are  reasonable  and will not  constitute  a  penalty.  The  payment of
liquidated damages shall not relieve the Company from its obligations to deliver
the Common Stock pursuant to the terms of this  Agreement.  Nothing herein shall
limit the Purchaser's  right to pursue actual damages for the Company's  failure
to maintain a sufficient number of authorized shares of Common Stock.

                  (i) During the remainder of 1998, the Purchaser agrees to make
up to an  additional  $1,000,000  in  financing  available  to the Company  upon
mutually  agreeable terms.  Additional funding above $1,000,000 may be available
depending  upon certain  events and conditions  including  stock price,  trading
volume and changes in the Company.  The  Purchaser  shall be entitled to convert
any or all of the Debentures,  even though the Registration  Statement  covering
those  Debentures  may not have been  declared  effective at that time, in which
case the Purchaser shall receive  legended  Common Stock until the  Registration
Statement is declared  effective or in the written  opinion of legal counsel the
legend may be removed.  As a further  condition to the  Purchaser  providing the
funding set forth herein,  the Company agrees to repurchase  1,465,000 shares of
Common Stock which the Purchaser currently owns at a price of $.36875 per share.

                  (j) Right of First Refusal:       The Purchaser is granted the
Right of First Refusal on any subsequent financing the Company may seek during
the next twelve months.

                  (k)  Redemption:  Company  reserves  the  right,  at its  sole
option,  to call a mandatory  redemption of any percentage of the balance on the
Debentures  during the two year period  following the Closing Date. In the event
the Company  exercises such right of redemption up to and including the last day
of the fourth (4th) month following the Closing Date it shall pay the Purchaser,
in U.S. currency One Hundred Fifteen (115%) of the face amount of the Debentures
to be redeemed,  plus accrued interest.  In the event the Company exercises such
right of  redemption  at anytime  during the fifth (5th) or sixth  (6th)  months
following  the Closing  Date it shall pay the  Purchaser,  in U.S.  currency One
Hundred Twenty (120%) of the face amount of the Debentures to be redeemed,  plus
accrued interest. In the event the Company exercises such right of redemption at
anytime  after the last day of the sixth (6th) month  following the Closing Date
it shall pay the Purchaser,  in U.S. currency One Hundred  Twenty-five (125%) of
the face amount of the  Debentures to be redeemed,  plus accrued  interest.  The
date by which the Debentures  must be delivered to the Escrow Agent shall not be
later than 5 business days following the date the Company notifies the Purchaser
by facsimile of the redemption.  The Company shall give the Purchaser at least 5
business day's notice of its intent to redeem.

                  (l)      The Company shall furnish to Purchaser such number of
prospectuses and other documents incidental to the registration of the shares of
Common Stock underlying the Debentures, including any amendment of or
supplements thereto.

5.       LIMITS ON AMOUNT OF CONVERSION AND OWNERSHIP.

         Notwithstanding  the provisions  hereof or of the  Debenture(s),  in no
event except (i) with respect to a conversion  pursuant to redemption or (ii) if
the  Company  is in  default  of any of its  obligations  under  the  Debenture,
Subscription  Agreement,  or the Registration Rights Agreement and the Purchaser
has  asserted  such  default)  shall the  Purchaser  be  entitled to convert any
Debentures to the extent that, after such conversion,  the sum of (1) the number
of shares of Common Stock beneficially owned by the Purchaser and its affiliates
(other  than  shares of Common  Stock  which  may be deemed  beneficially  owned
through the ownership of the unconverted portion of the Debentures), and (2) the
number of shares of Common Stock  issuable upon the conversion of the Debentures
with respect to which the  determination  of this  proviso is being made,  would
result in beneficial  ownership by the Purchaser and its affiliates of more than
9.99% of the  outstanding  shares of Common Stock (after taking into account the
shares to be issued to the Purchaser upon such conversion).  For purposes of the
proviso to the immediately  preceding  sentence,  beneficial  ownership shall be
determined in accordance  with Section 13(d) of the  Securities  Exchange Act of
1934, as amended (the "1934 Act"), except as otherwise provided in clause (1) of
such proviso.  The Purchaser  further agrees that if the Purchaser  transfers or
assigns any of the  Debentures  to a party who or which would not be  considered
such an affiliate,  such assignment shall be made subject to the transferee's or
assignee's  specific  agreement to be bound by the provisions of this Section as
if such transferee or assignee were a signatory to the Subscription Agreement.

6.       DELIVERY INSTRUCTIONS.

         Prior to or on the Closing Date the Company shall deliver to the Escrow
Agent an opinion  letter  signed by counsel for the Company in the form attached
hereto as Exhibit E. Also,  prior to or on the Closing  Date the  Company  shall
deliver to the Escrow Agent a signed  Registration  Rights Agreement in the form
attached hereto as Exhibit B. The Debentures being purchased  hereunder shall be
delivered  to Joseph B.  LaRocco,  Esq. as Escrow  Agent,  who will hold them in
escrow  until  funds have been wired to the Company or its Counsel at which time
the Escrow Agent shall then have the Debentures delivered to the Purchaser,  per
the Purchaser's instructions.

7.       UNDERSTANDINGS.

         The undersigned  understands,  acknowledges and agrees with the Company
as follows:

FOR ALL SUBSCRIBERS:

         (a)      This Subscription may be rejected, in whole or in part, by the
Company in its sole and absolute discretion at any time before the date set for
closing unless the Company has given notice of acceptance of the undersigned's
subscription by signing this Subscription Agreement.

         (b)      No U.S. federal or state agency or any agency of any other
jurisdiction has made any finding or determination as to the fairness of the
terms of the Offering for investment nor any recommendation or endorsement of
the Debentures.

         (c) The  representations,  warranties and agreements of the undersigned
and  the  Company  contained  herein  and  in any  other  writing  delivered  in
connection with the transactions  contemplated  hereby shall be true and correct
in all  material  respects on and as of the date of the sale of the  Debentures,
and as of the date of the conversion and exercise thereof,  as if made on and as
of such date and shall survive the  execution and delivery of this  Subscription
Agreement and the purchase of the Debentures.

                  (d) IN MAKING AN INVESTMENT DECISION,  PURCHASERS MUST RELY ON
THEIR OWN  EXAMINATION  OF THE COMPANY AND THE TERMS OF THE OFFERING,  INCLUDING
THE MERITS AND RISKS INVOLVED.  THE DEBENTURES HAVE NOT BEEN  RECOMMENDED BY ANY
FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE
FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY
OF ANY  MEMORANDUM OR THIS  DOCUMENT.  ANY  REPRESENTATION  TO THE CONTRARY IS A
CRIMINAL OFFENSE.

         (e)  The   Regulation   D  Offering  is  intended  to  be  exempt  from
registration  under  the  Securities  Act  by  virtue  of  Section  4(2)  of the
Securities Act and the  provisions of Regulation D thereunder,  which is in part
dependent upon the truth,  completeness  and accuracy of the statements  made by
the undersigned herein and in the Questionnaire.

         (f)      It is understood that in order not to jeopardize the
Offering's exempt status under Section 4(2) of the Securities Act and Regulation
D, any transferee may, at a minimum, be required to fulfill the investor
suitability requirements thereunder.

         (g)      THE DEBENTURES MAY NOT BE TRANSFERRED, RESOLD OR OTHERWISE
DISPOSED OF EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.  PURCHASERS
SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

         (h)      NASAA UNIFORM LEGEND

         IN  MAKING  AN  INVESTMENT  DECISION  INVESTORS  MUST RELY ON THEIR OWN
EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THE
OFFERING,  INCLUDING THE MERITS AND RISKS  INVOLVED.  THESE  SECURITIES HAVE NOT
BEEN  RECOMMENDED  BY ANY FEDERAL OR STATE  SECURITIES  COMMISSION OR REGULATORY
AUTHORITY.  FURTHERMORE,  THE  FOREGOING  AUTHORITIES  HAVE  NOT  CONFIRMED  THE
ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT.  ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.  THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY  AND  RESALE  AND MAY NOT BE  TRANSFERRED  OR  RESOLD  EXCEPT AS
PERMITTED UNDER THE SECURITIES ACT OF 1933 AND THE APPLICABLE  STATE  SECURITIES
LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE
THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.

9.       Litigation.

         (a) Forum Selection and Consent to  Jurisdiction.  Any litigation based
thereon,  or arising out of, under, or in connection with, this agreement or any
course of conduct,  course of dealing,  statements  (whether oral or written) or
actions of the Company or Holder shall be brought and maintained  exclusively in
the  courts  of  the  State  of New  York.  The  Company  hereby  expressly  and
irrevocably  submits to the  jurisdiction of the state and federal courts of the
State of New York for the purpose of any such  litigation as set forth above and
irrevocably  agrees  to be bound  by any  final  judgment  rendered  thereby  in
connection with such litigation. The Company further irrevocably consents to the
service of process by registered mail,  postage prepaid,  or by personal service
within or  without  the State of New York.  The  Company  hereby  expressly  and
irrevocably  waives, to the fullest extent permitted by law, any objection which
it may have or hereafter may have to the laying of venue of any such  litigation
brought  in any  such  court  referred  to  above  and any  claim  that any such
litigation has been brought in any  inconvenient  forum.  To the extent that the
Company has or hereafter may acquire any immunity from jurisdiction of any court
or from any legal process (whether  through service or notice,  attachment prior
to judgment, attachment in aid of execution or otherwise) with respect to itself
or its property,  the Company hereby irrevocably waives such immunity in respect
of its obligations under this agreement and the other loan documents.

         (b) Waiver of Jury Trial. The Holder and the Company hereby  knowingly,
voluntarily and intentionally  waive any rights they may have to a trial by jury
in respect of any  litigation  based  hereon,  or arising out of,  under,  or in
connection  with, this agreement,  or any course of conduct,  course of dealing,
statements  (whether  oral or written) or actions of the Holder or the  Company.
The Company  acknowledges  and agrees that it has received  full and  sufficient
consideration  for  this  provision  and  that  this  provision  is  a  material
inducement for the Holder entering into this agreement.

         (c)  Submission  To  Jurisdiction  . Any legal action or  proceeding in
connection with this Agreement or the  performance  hereof may be brought in the
state and federal courts located in the State of New York and the parties hereby
irrevocably  submit to the  non-exclusive  jurisdiction  of such  courts for the
purpose of any such action or proceeding.

10.      MISCELLANEOUS.

         (a)      All pronouns and any variations thereof used herein shall be
deemed to refer to the masculine, feminine, impersonal, singular or plural, as
the identity of the person or persons may require.

         (b)      Neither this Subscription Agreement nor any provision hereof
shall be waived, modified, changed, discharged, terminated, revoked or canceled,
except by an instrument in writing signed by the party effecting the same
against whom any change, discharge or termination is sought.

         (c) Notices  required or  permitted to be given  hereunder  shall be in
writing and shall be deemed to be sufficiently  given when personally  delivered
or sent by registered mail, return receipt requested,  addressed:  (i) if to the
Company, at SWISSRAY  International,  Inc., 200 East 32nd Street, Suite 34B, New
York,  New York 10017 with a copy by facsimile and mail to Gary B. Wolff,  P.C.,
747 Third Avenue,  25th Floor, New York, NY 10017and (ii) if to the undersigned,
at the address for  correspondence  set forth in the  Questionnaire,  or at such
other address as may have been  specified by written  notice given in accordance
with this paragraph 10(c).

         (d)  This  Subscription  Agreement  shall  be  enforced,  governed  and
construed in all respects in accordance  with the laws of the State of New York,
as such laws are applied by New York courts to agreements  entered into,  and to
be performed  in, New York by and between  residents  of New York,  and shall be
binding  upon  the  undersigned,   the  undersigned's   heirs,   estate,   legal
representatives,  successors  and  assigns and shall inure to the benefit of the
Company,  its  successors  and assigns.  If any  provision of this  Subscription
Agreement is invalid or  unenforceable  under any  applicable  statue or rule of
law, then such provisions shall be deemed  inoperative to the extent that it may
conflict  therewith and shall be deemed modified to conform with such statute or
rule of law. Any provision hereof that may prove invalid or unenforceable  under
any law shall not affect the validity or  enforceability  of any other provision
hereof.

         (e) This Subscription Agreement,  together with Exhibits A, B, C, D and
E  attached  hereto and made a part  hereof,  constitute  the  entire  agreement
between the parties  hereto with respect to the subject matter hereof and may be
amended only by a writing executed by both parties hereto. An executed facsimile
copy of the Subscription Agreement shall be effective as an original.

11.      SIGNATURE.

         The  signature of this  Subscription  Agreement is contained as part of
the applicable Subscription Package, entitled "Signature Page."

                  [BALANCE OF PAGE INTENTIONALLY LEFT BLANK)

                           SWISSRAY INTERNATIONAL, INC.

                            CORPORATION QUESTIONNAIRE
                         Investor Name: _______________

         The information  contained in this  Questionnaire is being furnished in
order  to  determine  whether  the  undersigned  CORPORATION'S  Subscription  to
purchase the Debentures described in the Subscription Agreement may be accepted.

         ALL  INFORMATION  CONTAINED  IN  THIS  QUESTIONNAIRE  WILL  BE  TREATED
CONFIDENTIALLY.  The  undersigned  CORPORATION  understands,  however,  that the
Company may present this  Questionnaire to such parties as it deems  appropriate
if called upon to establish  that the proposed  offer and sale of the Debentures
is exempt  from  registration  under the  Securities  Act of 1933,  as  amended.
Further, the undersigned  CORPORATION  understands that the offering is required
to be reported to the Securities and Exchange Commission,  NASDAQ and to various
state securities and "blue sky" regulators.

         IN ADDITION TO SIGNING THE SIGNATURE PAGE, THE UNDERSIGNED  CORPORATION
MUST COMPLETE FORM W-9 ATTACHED HERETO.

I.       PLEASE CHECK EACH OF THE STATEMENTS BELOW THAT APPLIES TO THE
CORPORATION.

                  1.       The undersigned CORPORATION: (a) has total assets in
excess of $5,000,000; (b) was not formed for the specific purpose of acquiring
the Debentures and (c) has its principal place of business in ___________.

                  2.       Each of the shareholders of the undersigned
CORPORATION is able to certify that such shareholder meets at least one of the
following three conditions:

                           the shareholder is a natural person whose individual
net worth* or joint net worth with his or her spouse exceeds $1,000,000; or the
shareholder  is a  natural  person  who  had  an individual  income*  in  excess
of  $200,000  in each of 1996  and 1997 and who reasonably expects an individual
income in excess of $200,000 in 1998; or Each of the shareholders of the
undersigned CORPORATION  is able to  certify  that such shareholder is a natural
person   who, together with his or her spouse,  has had a joint income in excess
of  $300,000 in each of 1996 and 1997 and who reasonably  expects a joint income
in excess of $300,000  during 1998; and the  undersigned  CORPORATION  has  its
principal   place   of   business   in ___________________.

* For purposes of this  Questionnaire,  the term "net worth" means the excess of
total assets over total liabilities.  In determining  income, an investor should
add to his or her adjusted gross income any amounts  attributable  to tax-exempt
income received, losses claimed as a limited partner in any limited partnership,
deductions claimed for depletion, contributions to IRA or Keogh retirement plan,
alimony payments and any amount by which income from long-term capital gains has
been reduced in arriving at adjusted gross income.

                  3.       The undersigned CORPORATION is:

                           (a)      a bank as defined in Section 3(a)(2) of the
Securities Act; or

                           (b)      a savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the Securities Act whether
acting in its individual or fiduciary capacity; or

                           (c)      a broker or dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934; or

                           (d)      an insurance company as defined in Section
2(13) of the Securities Act; or

                           (e)      An investment company registered under the
Investment Company Act of 1940 or a business development company as defined in
Section 2 (a)(48) of the Investment Company Act of 1940; or

                           (f)      a small business investment company licensed
by the U.S. Small Business Administration under Section 301 (c) or (d) of the
Small Business Investment Act of 1958; or

                           (g)      a private business development company as
defined in Section 202(a) (22) of the Investment Advisors Act of 1940.

II.      OTHER CERTIFICATIONS.

         By signing the Signature Page, the undersigned certifies the following:

         (a)      That the CORPORATION'S purchase of the Debentures will be
solely for the CORPORATION'S own account and not for the account of any other
person or entity; and

         (b)      that the CORPORATION'S name, address of principal place of
business, place of incorporation and taxpayer identification number as set forth
in this Questionnaire are true, correct and complete.

III.     GENERAL INFORMATION

         (a)      PROSPECTIVE PURCHASER (THE CORPORATION)

Name:

Principal Place of Business:  ________________________________________

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

Address for Correspondence (if different):         SAME
                        (Number and Street)

----------------------------------------------------------------
         (City)                                      (State) (Zip Code)

Telephone Number:________________________________________________
                                    (Area Code)                        (Number)

Jurisdiction of Incorporation:__________________________________

Date of Formation:_________________________________________________

Taypayer Identification Number:______________________________________

Number of Shareholders:____________________________________________

         (b)      INDIVIDUAL WHO IS EXECUTING THIS QUESTIONNAIRE ON BEHALF OF
THE CORPORATION.

Name:___________________________________________________________

Position or Title:__________________________________________________

<PAGE>

                          SWISSRAY INTERNATIONAL, INC.
                           CORPORATION SIGNATURE PAGE

         Your  signature  on  this  Corporation  Signature  Page  evidences  the
agreement by the Purchaser to be bound by the Questionnaire and the Subscription
Agreement.

         1. The undersigned hereby represents that (a) the information contained
in the  Questionnaire is complete and accurate and (b) the Purchaser will notify
SWISSRAY  INTERNATIONAL,  INC.  immediately if any material change in any of the
information  occurs  prior  to the  acceptance  of the  undersigned  Purchaser's
subscription  and  will  promptly  send  SWISSRAY  INTERNATIONAL,  INC.  written
confirmation of such change.

         2.       The undersigned officer of the Purchaser hereby certifies that
he has read and understands this Subscription Agreement.

         3.       The undersigned officer of the Purchaser hereby represents and
warrants that he has been duly authorized by all requisite action on the part of
the Corporation to acquire the Debentures and sign this Subscription Agreement
on behalf of  _______________ and, further, that ____________________ has all
requisite authority to purchase the Debentures and enter into this Subscription
Agreement.

--------------------------                   --------------------------
Amount of Debentures subscribed for                       Date

                                               (Purchaser)

                                                     By: _______________________
                                                             (Signature)

                                                     Name: ____________________
                                                         (Please Type or Print)

                                                     Title:_____________________
                                                          (Please Type or Print)

         THE  DEBENTURES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933.  AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED UNLESS SUCH SECURITIES ARE INCLUDED IN AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT.

                             COMPANY ACCEPTANCE PAGE

This Subscription Agreement accepted
and agreed to this 29 day of Sept. __, 1998

SWISSRAY INTERNATIONAL, INC.

BY_/s/_Ruedi G. Laupper___________________
     Ruedi G. Laupper, its Chairman and President
     duly authorized

<PAGE>

                                    Exhibit D

                              NOTICE OF CONVERSION

           (To be Executed by the Registered owner in order to Convert
                                 the Debentures

         The undersigned hereby irrevocably  elects, as of ______________,  199_
to convert  $__________ of Convertible  Debentures into Common Stock of SWISSRAY
INTERNATIONAL,  INC.(the "Company") according to the conditions set forth in the
Subscription Agreement dated September ____, 1998.

Date of Conversion_________________________________________

Applicable Conversion Price_________________________________

Number of Shares Issuable upon this conversion______________

Signature___________________________________________________
                           [Name]

Address_____________________________________________________

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

Phone______________________   Fax___________________________

                                    Exhibit E

_______________, 1998

Purchasers of [Company] [Describe Securities]

                                 Re: [Company]

Ladies and Gentlemen:

         We have acted as counsel to [Company], a corporation incorporated under
the laws of the State of  _________  (the  "Company"),  in  connection  with the
proposed issuance and sale of convertible debentures (the "Securities") pursuant
to the Distribution  Agreement and the related Subscription Agreement (including
all Exhibits and Appendices thereto) (collectively the "Agreements").

         In connection  with  rendering  the opinions set forth herein,  we have
examined drafts of the Agreement,  the Company's  Certificate of  Incorporation,
and its Bylaws, as amended to date [other documents - describe], the proceedings
of the Company's  Board of Directors  taken in connection with entering into the
Agreements,  and such  other  documents,  agreements  and  records  as we deemed
necessary to render the opinions set forth below.

         In conducting our examination,  we have assumed the following: (i) that
each of the Agreements  has been executed by each of the parties  thereto in the
same form as the  forms  which we have  examined,  (ii) the  genuineness  of all
signatures, the legal capacity of natural persons, the authenticity and accuracy
of all documents  submitted to us as originals,  and the conformity to originals
of all documents  submitted to us as copies,  (iii) that each of the  Agreements
has been duly and validly  authorized,  executed  and  delivered by the party or
parties  thereto  other than the Company,  and (iv) that each of the  Agreements
constitutes  the valid and  binding  agreement  of the party or parties  thereto
other than the Company,  enforceable against such party or parties in accordance
with the Agreements' terms.

         Based upon the subject to the foregoing, we are of the opinion that:

         1. The Company has been duly  incorporated and is validly existing as a
corporation in good standing under the laws of the State of __________,  is duly
qualified to do business as a foreign corporation and is in good standing in all
jurisdictions  where the Company owns or leases properties,  maintains employees
or  conducts  business,  except  for  jurisdictions  in which the  failure to so
qualify  would not have a material  adverse  effect on the Company,  and has all
requisite  corporate  power and authority to own its  properties and conduct its
business.

         2.       The authorized capital stock of the Company  consists of
_______ shares of Common Stock, ________ par value per share, ("Common Stock")
and  ______________ Preferred Stock, par value $________ per share; [describe
classes if applicable]

         3. The Common Stock is registered  pursuant to Section 12(b) or Section
12(g) of the  Securities  Exchange  Act of 1934,  as amended and the Company has
timely filed all the material required to be filed pursuant to Sections 13(a) or
15(d) of such Act for a period  of at least  twelve  months  preceding  the date
hereof;

         4.  When  duly  countersigned  by  the  Company's  transfer  agent  and
registrar, and delivered to you or upon your order against payment of the agreed
consideration therefor in accordance with the provisions of the Agreements,  the
Securities  [and any  Common  Stock to be  issued  upon  the  conversion  of the
Securities]  as described  in the  Agreements  represented  thereby will be duly
authorized and validly issued, fully paid and nonassessable;

         5 The Company has the requisite  corporate power and authority to enter
into the  Agreements and to sell and deliver the Securities and the Common Stock
to be  issued  upon  the  conversion  of  the  Securities  as  described  in the
Agreements;  each of the Agreements has been duly and validly  authorized by all
necessary  corporate action by the Company to our knowledge,  no approval of any
governmental or other body is required for the execution and delivery of each of
the  Agreements  by  the  Company  or  the   consummation  of  the  transactions
contemplated  thereby; each of the Agreements has been duly and validly executed
and  delivered  by and on behalf  of the  Company,  and is a valid  and  binding
agreement of the Company,  enforceable in accordance  with its terms,  except as
enforceability  may be  limited  by general  equitable  principles,  bankruptcy,
insolvency,  fraudulent  conveyance,  reorganization,  moratorium  or other laws
affecting creditors rights generally,  and except as to compliance with federal,
state, and foreign securities laws, as to which no opinion is expressed;

         6. To the best of our  knowledge,  after due  inquiry,  the  execution,
delivery and performance of the Agreements by the Company and the performance of
its obligations  thereunder do not and will not constitute a breach or violation
of any of the terms and provisions of, or constitute a default under or conflict
with or violate any provision of (i) the Company's  Certificate of Incorporation
or By-Laws,  (ii) any  indenture,  mortgage,  deed of trust,  agreement or other
instrument  to which the Company is party or by which it or any of its  property
is bound,  (iii) any applicable  statute or regulation or as other,  (iv) or any
judgment,  decree or order of any court or governmental body having jurisdiction
over the Company or any of its property.

         7.       The issuance of Common Stock upon conversion of the debentures
in accordance with the terms and conditions of the Agreements, will not violate
the applicable listing agreement between the Company and any securities exchange
or market on which the Company's securities are listed.

         8.       To the best of our knowledge, after due inquiry, there is no
pending or threatened litigation, investigation or other proceedings against the
Company [except as described in Exhibit A hereto].

         9.       The Company complies with the eligibility requirements for the
use of Form S-3, under the Securities Act of 1933, as amended.

Note: Use this where Registration Rights were included in the offering and the
Company is S-3 eligible.

         This opinion is rendered only with regard to the matters set out in the
numbered  paragraphs  above.  No other  opinions are intended nor should they be
inferred.  This opinion is based  solely upon the laws of the United  States and
the State of _____________  and does not include an  interpretation or statement
concerning  the  laws  of  any  other  state  or  jurisdiction.  Insofar  as the
enforceability of the Agreements may be governed by the laws of other states, we
have  assumed  that such laws are  identical  in all respects to the laws of the
State of ___________.

         The opinions  expressed  herein are given to you solely for your use in
connection  with the  transaction  contemplated by the Agreements and may not be
relied upon by any other person or entity or for any other  purpose  without our
prior consent.

                                                Very truly yours,

                                               By:      _____________________

<PAGE>

                       AMENDMENT TO SUBSCRIPTION AGREEMENT

THIS AMENDMENT TO SUBSCRIPTION AGREEMENT ("Amendment") is made as of March 17,
1999, by and between DOMINION CAPITAL FUND, LTD. ("Purchaser") and SWISSRAY
INTERNATIONAL, INC. (the "Company"), (Collectively the "Parties").

WHEREAS,  the Parties  entered into a Subscription  Agreement  dated on or about
September 28, 1998, relating to a Regulation D private placement offering in the
aggregate  amount of $2,940,000 (the  "Offering") of which Purchaser  subscribed
for $1,440,000 of the Company's convertible debentures; and

WHEREAS,  in connection  with said  Offering,  the parties desire to correct and
amend  a  certain  section  in the  Subscription  Agreement  which  contained  a
typographical  error and was  overlooked by the Parties at the time the Offering
closed.

NOW  THEREFORE,  in  consideration  of the  covenants and  agreements  contained
herein, the parties agree to amend the Subscription Agreement as follows:

         AMENDMENT.

         A.  Section 1, SUBSCRIPTION, Subsection (a) is hereby corrected and
amended to read as follows:

         The  undersigned  hereby  irrevocably  subscribes  for  and  agrees  to
         purchase $1,440,000 of the Company's  Debentures.  The Debentures shall
         pay an 5% cumulative  interest payable  annually,  in cash or in freely
         trading Common Stock of the Company,  at the Company's  option,  at the
         time of each conversion.  If paid in Common Stock, the number of shares
         of the  Company's  Common Stock to be received  shall be  determined by
         dividing  the  dollar  amount of the  dividend  by the then  applicable
         Market Price,  as of the interest  payment date.  "Market  Price" shall
         mean 82% of the 10-day  average  closing  bid  price,  as  reported  by
         Bloomberg,  LP, for the ten (10)  consecutive  trading days immediately
         preceding  the date of  conversion  (the  "Conversion  Price").  If the
         interest  is to be paid in cash,  the Company  shall make such  payment
         within 5 business days of the date of conversion. If the interest is to
         be paid in Common  Stock,  said Common  Stock shall be delivered to the
         Purchaser, or per Purchaser's  instructions,  within 5 business days of
         the  date of  conversion.  The  Debentures  are  subject  to  automatic
         conversion  at the end of two years from the date of  issuance at which
         time all Debentures  outstanding will be automatically  converted based
         upon the formula set forth in Section 4(d). The closing shall be deemed
         to have  occurred on the date the funds are  received by the Company or
         its designated attorney (the "Closing Date").

          B. Section 4, TERMS OF CONVERSION, Subsection (d)(i) Conversion
          Rate is hereby corrected and amended to read as follows:

          Purchaser  is entitled,  at its option,  to convert the face amount of
          each Debenture,  plus accrued interest,  anytime following the Closing
          Date, at 82% of the 10 day average  closing bid price,  as reported by
          Bloomberg,   LP  for  the  10  consecutive  trading  days  immediately
          preceding the applicable  Conversion Date (the "Conversion Price"). No
          fractional  shares or scrip  representing  fractions of shares will be
          issued on  conversion,  but the  number of  shares  issuable  shall be
          rounded up or down, as the case may be, to the nearest whole share.

         C.  SECTION 5 LIMITS ON AMOUNT OF CONVERSION AND OWNERSHIP is hereby
         corrected and amended to read as follows:

         The  Purchaser is limited in the amount of Debenture it may convert and
         own. Other than the mandatory  conversion  provisions contained in this
         Agreement,  which are not limited by the following,  in no event except
         (i) with respect to a conversion  pursuant to redemption by the Company
         or (ii) if there is (a) a public  announcement  that 50% or more of the
         Company is being acquired,  (b) a public  announcement that the Company
         is being  merged,  or (c) a change in control,  shall the  Purchaser be
         entitled  to convert  any  Debentures  to the extent  that,  after such
         conversion,   the  sum  of  the  number  of  shares  of  Common   Stock
         beneficially  owned by the  Purchaser  and its  affiliates  (other than
         shares of Common Stock which may be deemed  beneficially  owned through
         the  ownership  of  the  unconverted   portion  of  the  Debentures  or
         unexercised  Warrants),  and (2) the  number of shares of Common  Stock
         issuable upon the  conversion of the  Debentures  with respect to which
         the  determination  of this  proviso  is being  made,  would  result in
         beneficial  ownership by the Purchaser and its  affiliates of more than
         4.99% of the  outstanding  shares of Common  Stock  (after  taking into
         account the shares to be issued to the Purchaser upon such conversion).
         For  purposes of the  proviso to the  immediately  preceding  sentence,
         beneficial  ownership  shall be determined  in accordance  with Section
         13(d) of the  Securities  Exchange  Act of 1934,  as amended (the "1934
         Act"), except as otherwise provided in clause (1) of such proviso.  The
         Purchaser further agrees that if the Purchaser transfers or assigns any
         of the Debentures to a party who or which would not be considered  such
         an affiliate, such assignment shall be made subject to the transferee's
         or assignee's  specific agreement to be bound by the provisions of this
         Section as if such  transferee  or  assignee  were a  signatory  to the
         Subscription Agreement.  Furthermore, the Company shall not process any
         conversions that would result in beneficial  ownership by the Purchaser
         and its  affiliates  of more  than  4.9% of the  outstanding  shares of
         Common Stock of the Company.

II.      EFFECTIVE DATE/PRIOR NEGOTIATIONS.

         This amendment shall relate back to and be effective as of the closing
date of the Offering.  This amendment is intended to correct and amend the
Subscription Agreement to conform to the Parties understanding of the terms of
the offering as negotiated by the Parties.

III.     FACSIMILE AS ORIGINAL.

         This  Amendment  may be executed  in  counterparts,  and the  facsimile
transmission of an executed  counterpart to this Amendment shall be effective as
an original.

         SWISSRAY INTERNATIONAL, INC.

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

         DOMINION CAPITAL FUND, LTD.

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

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