Document:

<TABLE>
<CAPTION>
Name                                       Dated           Amount         Maturity Date
---------------------------------------    ------------    ----------     ---------------
<S>                                        <C>             <C>            <C>
Dominion Capital Fund Ltd.*                Dec. 14, 1998    $   540,400    MAR. 14, 1999
Sovereign Partners LP.                     Dec. 14, 1998    $   540,000    MAR. 14, 1999
</TABLE>
*    This document has been filed.
<PAGE>
                                 PROMISSORY NOTE

$540,000.00                                           Hochdorf, Switzerland

                                                      December 14, 1998

         FOR VALUE RECEIVED, the undersigned,  SWISSRAY  INTERNATIONAL,  INC., a
New York corporation,  (the "Borrower"),  hereby promises to pay to the order of
SOVEREIGN PARTNERS LIMITED  PARTNERSHIP (the "Lender"),  the principal amount of
$540,000.00 in lawful money of the United States of America in same day or other
immediately  available funds, together with interest at the rate hereinafter set
forth, payable on or before March 14, 1999.

         Interest  on the  principal  balance  of this  Note  from  time to time
outstanding  and unpaid shall be computed on the basis of a 360-day year for the
actual number of days elapsed at a simple interest rate per annum equal to eight
percent (8%) commencing on December 14, 1998.

         Principal and all accrued  interest,  at the rate of eight percent (8%)
per annum,  shall be payable without the necessity for demand or notice on March
14, 1999.  All payments of principal and interest shall be paid by wire transfer
per the written instructions of Lender. As further  consideration for this loan,
Borrower  agrees to issue to Lender a Warrant to purchase  25,000  shares of the
Borrower's common stock, par value $0.01 per share, exercisable at the bid price
per share on date of closing for a period of five (5) years.

         The Borrower,  in Borrower's  sole  discretion,  may extend the term of
this Note for an  additional  sixty (60) day period at an additional 2% interest
rate per annum.  Borrower must send written notice of its election to extend the
term of this Note. Said written notice must be sent by facsimile pursuant to the
notice provisions of this Note, on or before March 12, 1999.  Borrower shall not
be entitled to extend the term of this Note beyond May 13, 1999.

         In the event the  Promissory  Note is not paid in full on or before its
due date, then in such event the terms of the Contingent Subscription Agreement,
Debenture and Registration  Rights Agreement,  which are incorporated  herein by
reference and made a part hereof, shall apply and control.

         The  obligations of Borrower under this Note are  secured  under the
provisions  of that certain  Security  Agreement  dated December 14, 1998, by
the "Inventory" as that term is defined in the Security  Agreement  and by a
second  mortgage on real estate owned by the Borrower  and  located in
Switzerland  (the "Security").  The Security is being provided as an  inducement
for  Lender to enter into this  loan  transaction  and so as to secure Lender
position in prior financings in
<PAGE>
which  Lender  have been  unable to  convert their   debentures   into   shares
of  the Borrower's   common   stock  due  to  NASDAQ delisting and absence of
established trading market.  The Security shall remain in effect throughout  the
term of this loan so long as any portion of the  Borrower's  indebtedness  to
Lender  continues  in  effect  and  such Security  shall  be  reduced  utilizing
the following formula:

A. Reducing the Borrower's  indebtedness  (evidenced by  convertible  debentures
aggregating  $12,500,000:  when such  $12,500,000  indebtedness  is  reduced  to
$10,000,000  then (i) 25% of secured  inventory  shall be released from lien and
(ii) 25% of second  mortgage on land and  building  shall  similarly be released
from lien.

B.       For each further reduction of an additional $2,500,000 in Borrower's
indebtedness from $10,000,000 to $5,000,000 releases from lien shall be
accomplished on a pro-rata basis in the same manner as indicated in A above,
i.e., each $2,500,000 reduction in indebtedness shall result in release of 25%
of each lien amount: and

C.       When indebtedness is reduced to $5,000,000 or less, then the second
mortgage on land and building shall be release in its entirety and inventory
collateral shall continue to be reduced on a pro-rata basis in the same manner
as indicated in paragraphs designated A. and B. above.

         Borrower  hereby  waives  presentment,  protest,  notice of protest and
notice of dishonor of this Note.  The  non-exercise  by the Lender of any rights
hereunder in any  particular  instance  shall not constitute a waiver thereof in
that or any other subsequent  instance.  The Borrower shall not create any class
of indebtedness that ranks senior to this Note.

         Nothing  contained  herein  shall be deemed to establish or require the
payment  of a rate of  interest  in  excess of the  maximum  rate  permitted  by
applicable  law.  In the event  that the rate of  interest  required  to be paid
hereunder  exceeds  the  maximum  rate  permitted  by such law,  such rate shall
automatically be reduced to the maximum rate permitted by such law.

         The  Borrower  and any  endorsers  hereof,  for  themselves  and  their
respective  representatives,  successors  and  assigns  (except as  specifically
provided in the Loan Agreement)  expressly waive presentment,  demand,  protest,
notice  of  dishonor,  notice of  non-payment,  notice  of  maturity,  notice of
protest,  diligence in collection, and the benefit of any applicable exemptions,
including, but not limited to, exemptions claimed under insolvency laws.

SECURED  CREDITORS.  Borrower  represents and warrants that it does not have any
outstanding  security interests in the inventory or real estate other than those
set forth in Schedule A attached  hereto and made a part hereof and it shall not
create

<PAGE>

or  incur  any   indebtedness  or  obligation  for  borrowed  money  except  for
indebtedness  with respect to trade obligations and other normal accruals in the
ordinary  course of business  not yet due and  payable,  and shall not grant any
other  security   interests  until  payment  and  performance  in  full  of  the
obligations hereunder, unless Lender otherwise consents in writing which consent
shall not be unreasonably withheld. Borrower represents,  warrants and covenants
that the Collateral and proceeds are not subject to any security interest, lien,
prior  assignment,  or other encumbrance of any nature whatsoever except for the
security  interest  created  by this Note other than as  indicated  in  attached
Schedule A.

         AFFIRMATIVE  COVENANTS OF BORROWER.  Borrower covenants and agrees that
from the date hereof until payment and  performance  in full of the  obligations
hereunder, unless Lender otherwise consents in writing:

         (a) Use of Proceeds.  The proceeds disbursed under the Note shall be
used primarily for working capital.

         (b) Borrower represents and warrants that there are no actions,  suits,
investigations  or  proceedings  pending or threatened  against or affecting the
validity or enforceability  of this Note and there are no outstanding  orders or
judgments of any court or governmental  authority or awards of any arbitrator or
arbitration  board  against  the  Borrower  excepting  for  such  law  suits  or
proceedings  as are indicated and  summarized in Borrower's  Form 10K for fiscal
year ended June 30, 1998.

DEFAULT.  If any of the following events occur (a "default"), the terms of the
Contingent Subscription Agreement, Debenture and Registration Rights Agreement
which are incorporated herein by reference and made a part hereof, shall apply
and control:

         (a)      Borrower fails to pay when due any principal or interest under
this Note;

         (b)      Borrower fails to observe or perform any covenant or agreement
set forth in this Note or in any instrument, document or agreement concerning
the Collateral;

         (c)  Borrower  makes  a  general  assignment  for  the  benefit  of its
creditors,  files or become  the  subject of a petition  in  bankruptcy,  for an
arrangement with its creditors or for reorganization  under any federal or state
bankruptcy or other insolvency law;

         (d)  Borrower  files or  becomes  the  subject  of a  petition  for the
appointment of a receiver,  custodian,  trustee or liquidator of the party or of
all or substantially  all of its assets under any federal or state bankruptcy or
other insolvency law;

<PAGE>

         (e)      Borrower is voluntarily or involuntarily terminated or
dissolved;

         (f) Borrower or any accommodation  maker,  endorser or guarantor enters
into  any  merger  or  consolidation,  or  sale,  lease,  liquidation  or  other
disposition of all or substantially all of its assets or any transaction outside
the  ordinary  course of its  business  or for less than fair  consideration  or
substantially equivalent value without Lender's prior written consent;

         (g) Any judgment is entered against  Borrower or any attachment upon or
garnishment  of any  property  of Borrower is issued  which  materially  effects
Borrower's ability to repay the Promissory Note; or

         (h) Any  representation  or statement  made herein or any other written
representation  or  statement  made or  furnished  to  Lender  by  Borrower  was
materially incorrect or misleading at the time it was made or furnished.

LITIGATION.

          (a) Forum Selection and Consent to Jurisdiction.  Any litigation based
on or arising out of, under,  or in connection  with, this Promissory Note shall
be brought and maintained exclusively in the courts of Switzerland.  The parties
hereby  expressly and  irrevocably  submit to the  jurisdiction of the state and
federal  courts of  Switzerland  for the purpose of any such  litigation  as set
forth above and  irrevocably  agree to be bound by any final  judgment  rendered
thereby in connection with such  litigation.  The Borrower  further  irrevocably
consents to the service of process by registered mail,  postage  prepaid,  or by
personal  service within or without  Switzerland.  The Borrower 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 Borrower 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 Borrower hereby irrevocably waives such immunity in
respect of its obligations under this agreement and the other loan documents.

         (b) Waiver of Jury Trial. The Lender and the Borrower 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,
written  statements  or  actions  of the Lender or the  Borrower.  The  Borrower
acknowledges  and agrees that it has received full and sufficient  consideration
for

<PAGE>

this provision and that this  provision is a material  inducement for the Lender
entering into this agreement.

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  Promissory  Note 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 Borrower, c/o Gary B. Wolff, Esq. 747 Third Avenue , 25th Floor, NY,
NY 10017 with a facsimile copy sent on the dame date and (ii) if to Lender c/o
Joseph B. LaRocco, Esq. 49 Locust Avenue, Suite 107, New Canaan, CT 06840.

         (d) This Promissory  Note shall be enforced,  governed and construed in
all  respects  in  accordance  with the laws of  Switzerland,  as such  laws are
applied by  Switzerland  courts to agreements  entered into, and to be performed
in,  Switzerland by and between  residents of Switzerland,  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  Lender,  its
successors and assigns.  If any provision of this  Promissory Note 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.

         THE BORROWER  ACKNOWLEDGES  THAT THE  TRANSACTIONS  IN CONNECTION  WITH
WHICH THIS NOTE WAS EXECUTED AND  DELIVERED  AND WHICH ARE  CONTEMPLATED  BY THE
TERMS OF THE  AGREEMENT  ARE,  IN ALL CASES,  COMMERCIAL  TRANSACTIONS;  AND THE
BORROWER HEREBY EXPRESSLY WAIVES ANY AND ALL  CONSTITUTIONAL  RIGHTS IT MAY HAVE
AS NOW  CONSTITUTED OR HEREAFTER  AMENDED,  WITH REGARD TO NOTICE,  ANY JUDICIAL
PROCESS AND ANY AND ALL OTHER RIGHTS IT MAY HAVE,  AND THE LENDER MAY INVOKE ANY
PREJUDGMENT REMEDY AVAILABLE TO IT OR ITS SUCCESSORS OR ASSIGNS.

                                                 SWISSRAY INTERNATIONAL, INC.

                                            By/s/Ruedi G. Laupper________
                                              Ruedi G. Laupper its Chairman
                                               and President duly authorized<TABLE>
<CAPTION>
Name                                       Dated           Amount         Signatory
---------------------------------------    ------------    ----------     ---------------
<S>                                        <C>             <C>            <C>
Dominion Capital Fund Ltd.*                Dec.  , 1998    $   559,800    Inter Caribean Services
                                                                          (Bahamas) Ltd.
Sovereign Partners LP.                     Dec.  , 1998    $   559,800    Steven HIcks
</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: $1,119,600

                     This offering consists of $1,119,600 of
                       Convertible Debentures of Swissray
                               International, Inc.

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

                        CONTINGENT SUBSCRIPTION AGREEMENT

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

<PAGE>

                             SUBSCRIPTION PROCEDURES

         Convertible Debentures of SWISSRAY INTERNATIONAL, INC.. (the "Company")

are being offered in an aggregate amount not to exceed $1,119,600 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.

         If and to the extent that there are any  discrepancies  or  differences
between the Term Sheet and the underlying documents consisting of the Promissory
Note, Security Agreement,  Title Search on Real Estate,  Mortgage to be Recorded
on Swiss Land  Records,  Search of Swiss  Records for Other  Recorded  Financing
Statements  that may also Secure the  Inventory,  Financing  Statement to Secure
Promissory Note with Inventory,  Contingent Subscription Agreement,  Convertible
Debenture,  Registration  Rights Agreement and Warrants,  the terms contained in
the Term Sheet shall take  precedence  over those  contained  in the  underlying
documents. For instance (but by no means limited to) if the Term Sheet indicates
interest  at the rate of 8% per  annum  and the  underlying  documents  refer to
interest at a different rate or on a different basis, then those terms contained
in the Term Sheet shall  control.  In the event that the Term Sheet is silent as
to any  specific  terms  and  conditions,  then  in that  event  the  terms  and
conditions  in  the  underlying  documents  (absent  any  contradictions  in the
aforesaid Term Sheet) shall control.

<PAGE>

                        CONTINGENT 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  $1,119,600  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 $_____________ of the Company's Debentures. The Purchaser entering into
this  Contingent  Subscription  Agreement  shall pay the purchase  price for the
Debentures  by  delivering  immediately  available  good funds in United  States
Dollars to the escrow agent. (Said amount shall be deemed to have been delivered
to the Company upon non-payment of the full amount of principal and interest due
on the  Promissory  Note dated  December  14,  1998  between the Company and the
Purchaser.  The fully executed Contingent Subscription  Agreement,  Registration
Rights  Agreement and Debenture shall be held by the escrow agent and shall only
be delivered to the Purchaser  upon  non-payment of the full amount of principal
and interest due on the Promissory Note on its "Due Date". The "Due Date" of the
Promissory  Note assuming  non-payment  of the Promissory  Note,  shall mean the
later of March 14, 1999, or sixty (60) days thereafter if the Company  exercises
its option to extend the March 14, 1999 payoff date. The Debentures  shall pay a
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
Due Date, as that term is defined above.

         (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
         and 10K for fiscal  year ended June 30, 1998  inclusive  of any and all
         amendments  thereto and Form 10-Q for the quarters ended  September 30,
         1997,  December  31,  1997,  March  31,  1998 and  September  30,  1998
         inclusive  of  any  and  all   amendments   thereto  (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 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,  or such greater period of
time if  statutorily  required or  reasonabilly  necessary  as regards  standard
brokerage house and/or SEC requirements  and/or  procedures,  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;  excepting  that the  Company
acknowledges  that it did not  timely  file its Form 10-K for its  fiscal  year
ended June 30, 1998, and its Form 10-Q for the fiscal  quarter ended  September
30, 1998, both of which were  subsequently  filed on December 3, 1998, (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 and excepting for registration of underlying shares as same relates to
preexisting debentures), 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 nine months the Company raised $13,643,849 in Regulation S and
Regulation D offerings, including redemptions and rollovers.

         (l)      Current Authorized Shares. As of December 10, 1998 there were
50,000,000 authorized shares of Common Stock of which approximately 4,659,288
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  filing on
Form 10-K and 10-K/A for the year ended June 30,  1998 and Form 10-Q for quarter
ended  September  30,  1998 which  could make any of the  disclosures  contained
therein (as  subsequently  amended  and/or  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 Due Date, assuming
non-payment of the Promissory Note, the Debentures being purchased hereunder
which are being held in escrow by Joseph B. LaRocco, Esq. as Escrow Agent, at
which time shall be 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.

<PAGE>
         (q) No Default.  Except as may be set forth in the Company's  report on
form 10-K for the  fiscal  year  ending  June 30,  1998,  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 By-Laws 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,  excepting for the fact that
the Company's  securities  were delisted from the Nasdaq Stock Market  effective
with the close of business  October 26, 1998,  pursuant to letter dated  October
26, 1998, from the Nasdaq Listing Qualifications Panel.

         (r)      Use of Proceeds.          The Company represents that the net
proceeds of this offering will be primarily used for working capital.

         (s)      The Company hereby represents that it shall be paying
consultant a fee of  $80,000 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 Due 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 Due 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) 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) 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.

                  (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 Due 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 Due 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 Due 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 Due 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  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 (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 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.

6.       DELIVERY INSTRUCTIONS.

         Prior to or on the Due 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 Due 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 and if
Promissory Note is not paid, credit  outstanding  principal and interest towards
Debentures  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.  Wherever the term "Closing
Date" is used herein it shall have the same meaning as "Due Date".

         (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,

<PAGE>

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)

<PAGE>

                          SWISSRAY INTERNATIONAL, INC.

                            CORPORATION QUESTIONNAIRE
                         Investor Name: Dominion Capital Fund Ltd

         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 The Bahamas.

                  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:Dominion Capital Fund Ltd

Principal Place of Business:  Bahamas Financial Centre 3rd Fl
                              Shwley & Charlole Streets, P.O.Box CB 13136
                              Nassau, Bahamas
----------------------------------------------------------------

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

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

Telephone Number:__242-356-5928___________
               (Area Code)               (Number)

Jurisdiction of Incorporation:____Nassau, Bahamas_______

Date of Formation:_______Aug. 28, 1995_______________________

Taypayer Identification Number:____N/A_________________________

Number of Shareholders:_________50____________________________

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

Name:____Inter Caribean Services (Bahamas) Ltd.________________

Position or Title:_______________Director______________________

<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

                          Dominion Capital Fund Ltd_
  (Purchaser)

                                                    By: ___/s/Illegible________
                                                                (Signature)

                           Name: _Inter Caribean Services (Bahamas) Ltd_
                                                          (Please Type or Print)

                                                  Title:   Director_______
                                                          (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 ____ day of __________, 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
Contingent Subscription Agreement dated December 14, 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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