Document:

THE SECURITIES  REPRESENTED  HEREBY HAVE NOT BEEN REGISTERED UNDER UNITED STATES
FEDERAL  OR STATE  SECURITIES  LAWS AND MAY NOT BE  OFFERED  FOR  SALE,  SOLD OR
OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY OR INDIRECTLY, NOR MAY THE
SECURITIES BE TRANSFERRED ON THE BOOKS OF THE CORPORATION,  WITHOUT REGISTRATION
OF SUCH SECURITIES UNDER ALL APPLICABLE UNITED STATES FEDERAL SECURITIES LAWS OR
COMPLIANCE WITH AN APPLICABLE EXEMPTION THEREFROM, SUCH COMPLIANCE AT THE OPTION
OF THE CORPORATION,  TO BE EVIDENCED BY AN OPINION OF STOCKHOLDER'S  COUNSEL, IN
FORM  ACCEPTABLE  TO THE  CORPORATION,  THAT NO VIOLATION  OF SUCH  REGISTRATION
PROVISIONS WOULD RESULT FROM ANY PROPOSED TRANSFER OR ASSIGNMENT.

                      WARRANT TO PURCHASE 27,500 SHARES OF
                  COMMON STOCK OF SWISSRAY INTERNATIONAL, INC.

                     Exercisable Commencing March 26, 1999;
                            Void after March 26, 2004

         THIS CERTIFIES  that, for value received  ABERDEEN  AVENUE,  LLC or its
registered assigns (the  "Warrantholder") is entitled,  subject to the terms and
conditions set forth in this Warrant,  to purchase from SWISSRAY  INTERNATIONAL,
INC., a New York corporation (the "Company"), 27,500 fully paid, duly authorized
and  nonassessable  shares (the "Shares"),  of Common Stock,  $.01 par value per
share, of the Company (the "Common  Stock"),  at any time  commencing  March 26,
1999 and  continuing  up to 5:00 p.m. New York City time on March 26, 2004 at an
exercise price of $1.00 subject (the "Warrant Price") to adjustment  pursuant to
Section 8 hereof.

         This  Warrant  is  subject  to  the  following  provisions,  terms  and
conditions:

         Section 1.        Transferability.

         1.1 Registration.  The Warrants shall be issued only in registered form
and  Shares  issuable  upon  exercise  of the  Warrants  shall  have  piggy back
registration rights and shall be registered by the Company pursuant to the terms
of a Registration Rights Agreement between the Company and ABERDEEN AVENUE, LLC.

         1.2 Transfer.  This Warrant shall be transferable  only on the books of
the Company maintained at its principal executive offices upon surrender thereof
for  registration of transfer duly endorsed by the  Warrantholder or by its duly
authorized  attorney or  representative,  or accompanied  by proper  evidence of
succession,  assignment  or  authority  to transfer.  Upon any  registration  of
transfer,  the  Company  shall  execute and deliver a new Warrant or Warrants in
appropriate denominations to the person or persons entitled thereto.

         1.3      Legend on Warrant Shares.  Each certificate for Shares
initially issued

<PAGE>

upon  exercise  of a  Warrant,  unless  at  time of  exercise  such  Shares  are
registered under the Securities Act of 1933, as amended (the "Securities  Act"),
shall bear the following legend:

         THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER UNITED
         STATES  FEDERAL OR STATE  SECURITIES  LAWS AND MAY NOT BE  OFFERED  FOR
         SALE, SOLD OR OTHERWISE  TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY OR
         INDIRECTLY,  NOR MAY THE  SECURITIES BE TRANSFERRED ON THE BOOKS OF THE
         CORPORATION,   WITHOUT   REGISTRATION  OF  SUCH  SECURITIES  UNDER  ALL
         APPLICABLE UNITED STATES FEDERAL  SECURITIES LAWS OR COMPLIANCE WITH AN
         APPLICABLE  EXEMPTION  THEREFROM,  SUCH COMPLIANCE AT THE OPTION OF THE
         CORPORATION, TO BE EVIDENCED BY AN OPINION OF STOCKHOLDER'S COUNSEL, IN
         FORM  ACCEPTABLE  TO  THE  CORPORATION,   THAT  NO  VIOLATION  OF  SUCH
         REGISTRATION  PROVISIONS  WOULD  RESULT FROM ANY  PROPOSED  TRANSFER OR
         ASSIGNMENT.

         Any certificate  issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of  a  public  distribution  pursuant  to a  registration  statement  under  the
Securities Act of the securities  represented thereby) shall also bear the above
legend  unless the  Company  receives  an opinion of counsel  acceptable  to the
Company that registration or qualification of the securities represented thereby
under the laws referred to therein is not required.

         Section 2. Exchange of Warrant Certificate. Any Warrant certificate may
be exchanged for another certificate or certificates of like tenor entitling the
Warrantholder  to purchase a like aggregate  number of Shares as the certificate
or certificates  surrendered then entitle such  Warrantholder  to purchase.  Any
Warrantholder desiring to exchange a warrant certificate shall make such request
in writing delivered to the Company, and shall surrender, properly endorsed, the
certificate  evidencing the Warrant to be so exchanged.  Thereupon,  the Company
shall  execute  and  deliver  to  the  person  entitled  thereto  a new  Warrant
certificate as so requested.

         Section 3.        Terms of Warrants: Exercise of Warrants.

         (a) Subject to the terms of this Warrant,  the Warrantholder shall have
the right, at any time after March 26, 1999, but before 5:00 p.m., New York City
time on March 26, 2004 (the "Expiration  Time"), to purchase from the Company up
to the number of Shares which the  Warrantholder  may at the time be entitled to
purchase pursuant to the terms of this Warrant, upon surrender to the Company at
its principal executive office, of the certificate evidencing this Warrant to be
exercised,  together with the attached  Election to Exercise form duly filled in
and signed,  and upon payment to the Company of the Warrant Price (as defined in
and determined in accordance  with the provisions of Section 7 and 8 hereof) for
the  number of Shares  with  respect to which  such  Warrant is then  exercised.
Payment of the aggregate  Warrant Price shall be made in cash,  wire transfer or
by cashier's check or any combination thereof.

         (b) Subject to the terms of this Warrant,  upon such  surrender of this
Warrant and  payment of such  Warrant  Price as  aforesaid,  the  Company  shall
promptly issue and cause to be delivered to the  Warrantholder or to such person
or persons as the  Warrantholder  may  designate in writing,  a  certificate  or
certificates  (in such  name or  names as the  Warrantholder  may  designate  in
writing) for the number of duly authorized,  fully paid and non-assessable whole
Shares to be purchased  upon the exercise of this Warrant,  and shall deliver to
the  Warrantholder  Common  Stock or cash,  to the extent  provided in Section 9
hereof,  with respect to any  fractional  Shares  otherwise  issuable  upon such
surrender.  Such certificate or certificates shall be deemed to have been issued
and any person so  designated to be named therein shall be deemed to have become
a holder of such Shares as of the close of business on the date of the surrender
of this  Warrant  and  payment of the Warrant  Price,  notwithstanding  that the
certificates  representing such Shares shall not actually have been delivered or
that the Share and Warrant  transfer  books of the Company shall then be closed.
This Warrant shall be  exercisable,  at the sole election of the  Warrantholder,
either  in full  or from  time to time  in  part  and,  in the  event  that  any
certificate  evidencing this Warrant (or any portion thereof) is exercised prior
to the  Termination  Date with respect to less than all of the Shares  specified
therein at any time prior to the  Termination  Date, a new  certificate  of like
tenor  evidencing  the remaining  portion of this Warrant shall be issued by the
Company, if so requested by the Warrantholder.

         (c)  Upon  the  Company's   receipt  of  a  facsimile  or  original  of
Warrantholder's  signed  Election to Exercise,  the Company  shall  instruct its
transfer agent to issue one or more stock Certificates  representing that number
of shares of Common  Stock  which the  Warrantholder  is entitled to purchase in
accordance  with the terms and  conditions  of this  Warrant and the Election to
Exercise attached hereto.  The Company's transfer agent or attorney shall act as
Registrar and shall  maintain an  appropriate  ledger  containing  the necessary
information with respect to each Warrant.

         (d) Such exercise shall be effectuated by  surrendering to the Company,
or its  attorney,  the  Warrants to be  converted  together  with a facsimile or
original  of the signed  Election to Exercise  which  evidences  Warrantholder's
intention to exercise those Warrants  indicated.  The date on which the Election
to Exercise is  effective  ("Exercise  Date")  shall be deemed to be the date on
which the  Warrantholder has delivered to the Company a facsimile or original of
the  signed  Election  to  Exercise,  as long  as the  original  Warrants  to be
exercised  are  received  by the  Company or its  designated  attorney  within 5
business days  thereafter.  As long as the Warrants to be exercised are received
by the Company  within  five  business  days after it  receives a  facsimile  or
original of the signed  Election to Exercise,  the Company  shall deliver to the
Warrantholder,  or per the  Warrantholder's  instructions,  the shares of Common
Stock to an address in the U.S.,  without  restrictive  legend or stop  transfer
instructions, within 5 business days of receipt of the Warrants to be converted.

         (e) Nothing  contained in this Warrant  shall be deemed to establish or
require the payment of interest to the  Warrantholder 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 Warrantholder 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  exercise  date.  Upon  surrender of any
Warrants  that are to be  converted  in part,  the  Company  shall  issue to the
Warrantholder  new Warrants equal to the unconverted  amount, if so requested by
Warrantholder.

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

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

         (h) Each  person in whose  name any  certificate  for  shares of Common
Stock shall be issued shall for all purposes be deemed to have become the holder
of record  of the  Common  Stock  represented  thereby  on the date on which the
Warrant was  surrendered  and payment of the purchase  price and any  applicable
taxes was made,  irrespective of date of issue or delivery of such  certificate,
except that if the date of such  surrender and payment is a date when the Shares
transfer  books of the Company are closed,  such person  shall be deemed to have
become the holder of such Shares on the next succeeding date on which such Share
transfer  books are open.  The Company shall not close such Share transfer books
at any one time for a period longer than seven days.

         Section 4.  Payment of Taxes.  The  Company  shall pay all  documentary
stamp  taxes,  if any,  attributable  to the  initial  issuance  of the  Shares;
provided,  however,  that the  Company  shall not be  required to pay any tax or
taxes which may be payable,  (i) with respect to any secondary  transfer of this
Warrant or the Shares or (ii) as a result of the  issuance  of the Shares to any
person other than the  Warrantholder,  and the Company  shall not be required to
issue or deliver  any  certificate  for any  Shares  unless and until the person
requesting  the  issuance  thereof  shall have paid to the Company the amount of
such tax or shall  have  produced  evidence  that  such tax has been paid to the
appropriate taxing authority.

         Section 5.  Mutilated or Missing  Warrant.  In case the  certificate or
certificates  evidencing  this  Warrant  shall be  mutilated,  lost,  stolen  or
destroyed,  the Company shall,  at the request of the  Warrantholder,  issue and
deliver in exchange and substitution for and upon  cancellation of the mutilated
certificate or certificates,  or in lieu of and substitution for the certificate
or  certificates  lost,  stolen  or  destroyed,  a new  Warrant  certificate  or
certificates of like tenor and representing an equivalent right or interest, but
only upon receipt of evidence satisfactory to the Company of such loss, theft or
destruction  of such  Warrant and of a bond of  indemnity,  if  requested,  also
satisfactory  to the Company in form and amount,  and issued at the  applicant's
cost.  Applicants for such substitute Warrant certificate shall also comply with
such other reasonable  regulations and pay such other reasonable  charges as the
Company may prescribe.

         Section 6.  Reservation  of Shares.  The  Company  has duly and validly
reserved,  and shall at all times so long as this Warrant  remains  outstanding,
keep  reserved,  out of its authorized  and unissued  capital stock,  sufficient
shares of Common  Stock as shall be subject to purchase  under this Warrant (the
"Reserved Shares"). The issuance, sale and delivery of the Warrants and Reserved
Shares have been duly authorized by all required corporate action on the part of
the Company 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,  fully paid,  and  non-assessable  and  enforceable in
accordance  with their terms,  subject to the laws of bankruptcy  and creditors'
rights  generally.  The  Company  shall  pay all taxes in  respect  of the issue
thereof.  As a condition precedent to the taking of any action that would result
in the effective  purchase  price per share of Common Stock upon the exercise of
this  Warrant  being less than the par value per share (if such shares of Common
Stock then have a par value),  the Company  will take such  corporate  action as
may, in the opinion of its  counsel,  be necessary in order that the Company may
comply with all its obligations under this Agreement with regard to the exercise
of this Warrant.

         Prior to exercise of all the Warrants,  if at anytime the conversion of
all the  Shares  and  exercise  of all the  Warrants  outstanding  results in an
insufficient  number  of  Reserved  Shares  being  available  to  cover  all the
conversions and exercises, then in such event, the Company will move to call and
hold a  shareholder's  meeting  within 45 days of such event for the  purpose of
authorizing  additional  Shares to facilitate the conversions.  In such an event
the Company shall:  (1) recommend to its current or future  officers,  directors
and  other  control  people to vote  their  shares  in favor of  increasing  the
authorized   number  of  shares  of  Common  Stock  and  (2)  recommend  to  all
shareholders  to vote their shares in favor of increasing the authorized  number
of shares of Common Stock. As for any  shareholders who do not vote on the issue
of increasing the authorized  number of shares of Common Stock,  such failure to
vote  shall  automatically  be  taken  as a vote  in  favor  of  increasing  the
authorized  number of shares of Common Stock.  The proxy sent out by the Company
to all  shareholders  shall  provide  that if no vote is  received  a consent to
action will be executed on behalf of those  shares of Common  Stock for which no
vote was received,  in favor of increasing  the  authorized  number of shares of
Common  Stock of the Company.  Company  represents  and  warrants  that under no
circumstances will it deny or prevent Warrantholder from exercising the Warrants
as permitted under the terms of the Subscription Agreement,  the Warrants or the
Registration Rights Agreement.

         Section 7.        Warrant Price.  From March 26, 1999 through 5:00 p.m
New York City time on March 26, 2004, the Warrant Price shall be subject to
adjustment pursuant to Section 8 hereof.

         Section 8.        Adjustment of Warrant Price and Number of Shares.
The number and kind of securities purchasable upon the exercise of this Warrant
and the Warrant Price shall be subject to adjustment from time to time after the
date hereof upon the happening of certain events, as follows:

         8.1      Adjustments.  The number of Shares purchasable upon the
exercise of this Warrant shall be subject to adjustments as follows:

         (a) In case the  Company  shall (i) pay a dividend  on Common  Stock in
Common  Stock or  securities  convertible  into,  exchangeable  for or otherwise
entitling a holder  thereof to receive  Common  Stock,  (ii)  declare a dividend
payable in cash on its Common Stock and at substantially the same time offer its
shareholders  a right to purchase  new Common Stock (or  securities  convertible
into,  exchangeable  for or other  entitling a holder  thereof to receive Common
Stock) from the proceeds of such  dividend  (all Common Stock so issued shall be
deemed to have been issued as a stock dividend), (iii) subdivide its outstanding
shares of Common  Stock into a greater  number of shares of Common  Stock,  (iv)
combine its  outstanding  shares of Common Stock into a smaller number of shares
of Common Stock, or (v) issue by reclassification of its Common Stock any shares
of Common  Stock of the Company,  the number of shares of Common Stock  issuable
upon  exercise of the Warrants  immediately  prior  thereto shall be adjusted so
that the  holders  of the  Warrants  shall be  entitled  to  receive  after  the
happening of any of the events described above that number and kind of shares as
the holders would have received had such Warrants be converted immediately prior
to the  happening  of such event or any record date with  respect  thereto.  Any
adjustment made pursuant to this subdivision shall become effective  immediately
after the close of business  on the record date in the case of a stock  dividend
and shall  become  effective  immediately  after the  close of  business  on the
effective  date in the  case  of a  stock  split,  subdivision,  combination  or
reclassification.

         (b)  In  case  the  Company   shall   distribute,   without   receiving
consideration  therefor,  to all holders of its Common  Stock  evidences  of its
indebtedness  or assets  (excluding  cash  dividends  other than as described in
Section  (8)(a)(ii)),  then in such case,  the number of shares of Common  Stock
thereafter  issuable  upon  exercise  of the  Warrants  shall be  determined  by
multiplying  the  number of shares of Common  Stock  theretofore  issuable  upon
exercise of the Warrants,  by a fraction,  of which the  numerator  shall be the
closing  bid  price  per  share  of  Common  Stock on the  record  date for such
distribution, and of which the denominator shall be the closing bid price of the
Common Stock less the then fair value (as  determined  by the Board of Directors
of the Company,  whose  determination shall be conclusive) of the portion of the
assets or evidences of  indebtedness  so distributed  per share of Common Stock.
Such adjustment  shall be made whenever any such  distribution is made and shall
become  effective  immediately  after the record date for the  determination  of
stockholders entitled to receive such distribution.

         (c) Any  adjustment  in the number of shares of Common  Stock  issuable
hereunder  otherwise  required to be made by this  Section 8 will not have to be
adjusted  if such  adjustment  would not  require an increase or decrease in one
percent  (1%) or more in the  number of shares of  Common  Stock  issuable  upon
exercise of the Warrant.  No adjustment in the number of Shares purchasable upon
exercise  of this  Warrant  will be made for the  issuance  of shares of capital
stock  to  directors,  employees  or  independent  contractors  pursuant  to the
Company's or any of its  subsidiaries'  stock option,  stock  ownership or other
benefit plans or  arrangements  or trusts related thereto or for issuance of any
shares of Common Stock  pursuant to any plan providing for the  reinvestment  of
dividends or interest payable on securities of the Company and the investment of
additional optional amounts in shares of Common Stock under such plan.

         (d)  Whenever the number of shares of Common  Stock  issuable  upon the
exercise of the Warrants is adjusted, as herein provided the Warrant Price shall
be adjusted (to the nearest cent) by multiplying such Warrant Price  immediately
prior to such  adjustment  by a fraction,  of which the  numerator  shall be the
number of shares of Common Stock issuable upon the exercise of each share of the
Warrants  immediately  prior to such  adjustment,  and of which the  denominator
shall be the number of shares of Common Stock issuable immediately thereafter.

         (e) The Company  from time to time by action of its Board of  Directors
may  decrease  the  Warrant  Price by any  amount  for any period of time if the
period is at least 20 days,  the decrease is  irrevocable  during the period and
the Board of Directors of the Company in its sole  discretion  shall have made a
determination  that such decrease  would be in the best interest of the Company,
which determination shall be conclusive. Whenever the Warrant Price is decreased
pursuant to the preceding sentence,  the Company shall mail to holders of record
of the  Warrants a notice of the decrease at least 15 days prior to the date the
decreased Warrant Price takes effect,  and such notice shall state the decreased
Warrant Price and the period it will be in effect.

         8.2 Mergers. Etc. In the case of any (i) consolidation or merger of the
Company  into any entity  (other  than a  consolidation  or merger that does not
result  in  any   reclassification,   exercise,   exchange  or  cancellation  of
outstanding shares of Common Stock of the Company),  (ii) sale, transfer,  lease
or  conveyance  of all or  substantially  all of the assets of the Company as an
entirety or substantially  as an entirety,  or (iii)  reclassification,  capital
reorganization  or change of the Common Stock (other than solely a change in par
value,  or from par  value to no par  value),  in each case as a result of which
shares of Common  Stock  shall be  converted  into the right to  receive  stock,
securities or other property (including cash or any combination  thereof),  each
holder of Warrants then outstanding  shall have the right thereafter to exercise
such  Warrant  only  into the kind and  amount  of  securities,  cash and  other
property receivable upon such consolidation,  merger,  sale,  transfer,  capital
reorganization or reclassification by a holder of the number of shares of Common
Stock of the  Company  into  which  such  Warrants  would  have  been  converted
immediately  prior  to  such  consolidation,  merger,  sale,  transfer,  capital
reorganization or reclassification,  assuming such holder of Common Stock of the
Company (A) is not an entity with which the Company  consolidated  or into which
the  Company  merged or which  merged  into the Company or to which such sale or
transfer was made, as the case may be ("constituent entity"), or an affiliate of
a constituent  entity, and (B) failed to exercise his or her rights of election,
if any,  as to the  kind or  amount  of  securities,  cash  and  other  property
receivable upon such  consolidation,  merger, sale or transfer (provided that if
the kind or amount of securities,  cash and other property  receivable upon such
consolidation, merger, sale or transfer is not the same for each share of Common
Stock of the Company held immediately prior to such consolidation,  merger, sale
or transfer by other than a  constituent  entity or an affiliate  thereof and in
respect  of  which  such  rights  or  election  shall  not have  been  exercised
("non-electing  share"),  then for the purpose of this  Section 8.2 the kind and
amount  of   securities,   cash  and  other   property   receivable   upon  such
consolidation,  merger,  sale or  transfer by each  non-electing  share shall be
deemed to be the kind and amount so  receivable  per share by a plurality of the
non-electing shares). If necessary,  appropriate adjustment shall be made in the
application  of the  provision  set forth  herein with respect to the rights and
interests  thereafter of the holder of Warrants,  to the end that the provisions
set forth herein shall thereafter  correspondingly be made applicable, as nearly
as may reasonably be, in relation to any shares of stock or other  securities or
property  thereafter  deliverable  on the  exercise of the  Warrants.  The above
provisions shall similarly apply to successive  consolidations,  mergers, sales,
transfers, capital reorganizations and reclassifications.  The Company shall not
effect any such  consolidation,  merger,  sale or  transfer  unless  prior to or
simultaneously with the consummation thereof the successor company or entity (if
other than the  Company)  resulting  from such  consolidation,  merger,  sale or
transfer assumes, by written instrument, the obligation to deliver to the holder
of Warrants such shares of stock,  securities  or assets as, in accordance  with
the  foregoing  provision,  such holder may be  entitled  to receive  under this
Section 8.2.

         8.3      Statement of Warrants.             Irrespective of any
adjustments in the Warrant Price of the number or kind of shares purchasable
upon the exercise of this Warrant, this Warrant certificate or certificates
hereafter issued may continue to express the same price and number and kind of
shares as are stated in this Warrant.

         Section 9.  Fractional  Shares.  Any fractional  shares of Common Stock
issuable  upon  exercise of the Warrants  shall be rounded to the nearest  whole
share or, at the  election  of the  Company,  the  Company  shall pay the holder
thereof an amount in cash equal to the closing bid price thereof. Whether or not
fractional shares are issuable upon exercise shall be determined on the basis of
the total number of Warrants the holder is at the time exercising and the number
of shares of Common Stock issuable upon such exercise.

         Section  10. No  Rights as  Stockholders:  Notices  to  Warrantholders.
Nothing  contained in this Warrant  shall be  construed as  conferring  upon the
Warrantholder  or its  transferees  any rights as a stockholder  of the Company,
including the right to vote, receive dividends,  consent or receive notices as a
stockholder  with  respect to any meeting of  stockholders  for the  election of
directors of the Company or any other matter. If, however,  at any time prior to
5:00 p.m., New York City time, on March 26, 2004,  (the  "Expiration  Time") and
prior to the exercise of this Warrant, any of the following events shall occur:

         (a)      any action which would require an adjustment pursuant to
Section 8.1; or
         (b)      a dissolution, liquidation or winding up of the Company or any
consolidation, merger or sale of its property, assets and business as an
entirety; then in any one or more of said events, the Company shall give notice
in writing of such event to the Warrantholder at least 10 days prior to the date
fixed as a record date or the date of closing the transfer books for the
determination  of the shareholders entitled to any relevant dividend,
distribution,  subscription rights,  or  other  rights  or  for  the  effective
date  of  any  dissolution, liquidation of winding up or any merger,
consolidation, or sale of substantially all assets,  but failure to mail or
receive such notice or any defect therein or in the mailing  thereof  shall not
affect the validity of any such action taken. Such notice shall  specify such
record date or the  effective  date, as the case may be.

         Section 11.       Successors.  All the covenants and provisions of this
Warrant by or for the benefit of the Company or the Warrantholder shall bind and
inure to the benefit of their respective successors and permitted assigns
hereunder.

         Section 12.       Applicable Law.  This Warrant shall be construed and
enforced in accordance with and the rights of the parties shall be governed by
the laws of the State of New York.

         Section 13.       Benefits of this Agreement.  Nothing in this Warrant
shall be construed to give to any person or corporation other than the Company
and the Warrantholder any legal or equitable right, remedy or claim under this
Warrant, and this Warrant shall be for the sole and exclusive

benefit of the Company and the Warrantholder.

         Section 14. Piggy-back Registration Rights. If at any time prior to the
expiration of the warrant the Company shall propose to prepare on its own behalf
or  on  behalf  of  any  of  its  stockholders   (other  than  Warrantholder)  a
registration statement in connection with an underwritten public offering of any
equity securities of the Company,  the Company shall give Warrantholder  written
notice at least 20 days before the anticipated  filing date of such registration
statement.  Should  Warrantholder  desire to have any of the Shares  included in
such registration statement Warrantholder shall so advise the Company in writing
no later than 15 days after the  Company's  notice is given,  setting  forth the
number or amount of Shares  which  Warrantholder  requests to be included in the
registration  statement,  and the Company shall include the securities specified
in such  request  in such  registration  statement  and keep  such  registration
statement in effect and maintain  compliance with each federal and state law and
regulation as set forth herein. The Company may, at its option, require that the
amount of Shares offered for sale by  Warrantholder  pursuant to this Section 14
be decreased if, in the opinion of the Company's  investment  banking firm, such
reduction is necessary in order to permit the orderly  distribution  and sale of
the  securities  being  offered.  If the Company shall require such a reduction,
Warrantholder shall have the right to withdraw from the offering.

         Section 15.       Definitions.

         "Common  Stock" shall mean (i) Common Stock,  $.01 par value per share,
of the Company and (ii) any other security purchasable upon the exercise of this
Warrant upon the happening of certain events.

         IN WITNESS  WHEREOF,  the parties  have caused this  Warrant to be duly
executed, all as of the day and year first above written.

                                            SWISSRAY INTERNATIONAL , INC.

                                            By:_/s/_Ruedi G. Laupper__________
                                Ruedi G. Laupper its Chairman and President

<PAGE>

                          SWISSRAY INTERNATIONAL, INC.

                              ELECTION TO EXERCISE

SWISSRAYINTERNATIONAL, INC.
c/o Gary B. Wolff, Esq.
747 Third Avenue - 25th Floor
New York, NY 10017

The  undersigned  hereby  irrevocably  elects to exercise  the right of purchase
represented by the within Warrant for, and to purchase thereunder, _______shares
of  Common  Stock  (the  "Share")  provided  for  therein,   and  requests  that
certificates for the Shares be issued in the name of:*

Name:___________________________________________________________
Address:_________________________________________________________
Social Security No.________________________________________________
or Tax ID Number:_________________________________________________

and, if such number of Shares shall not be all of the Shares  purchasable  under
the  Warrant,  that a new  Warrant  certificate  for the  balance  of the Shares
purchasable  under  the  within  Warrant  be  registered  in  the  name  of  the
undersigned  warrantholder  or his Assignee* as indicated below and delivered to
the address stated below:

Dated:________, 19___

Name of Warrantholder of
Assignee (Please Print)_____________________________________________

Address:_________________________________________________________

Signature:________________________________________________________

Signature Guaranteed:______________________________________________
                                    Signature of Guarantor

--------------------
*        The Warrant contains restrictions on sale, assignment or transfer.

**       Note:  The above signature must correspond with the name as written on
the face of this Warrant certificate in every particular, without alteration or
enlargement or any change whatever, unless this warrant has been assigned.

                               FORM OF ASSIGNMENT

                 (To be signed only upon assignment of Warrant)*

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

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

----------------------------------------------------------------
(Name and Address of Assignee must be Printed or Typewritten)

the   within   Warrant,   hereby   irrevocably   constituting   and   appointing
_________Attorney  to transfer  said Warrant on the books of the  Company,  with
full power of substitution in the premises.

Dated:______________, 19____

                                            ________________________________**
                                            Signature of Registered Holder

Signature Guaranteed: ________________________________
                                    Signature of Guarantor

--------------------
*        The Warrant contains restrictions on sale, assignment or transfer.

**       Note:  The signature of this assignment must correspond with the name
as it appears upon the face of the Warrant certificate in every particular,
without alteration or enlargement or any change whatever.<TABLE>
<CAPTION>
Name                                       Dated           Amount         Signatory
---------------------------------------    ------------    ----------     ---------------
<S>                                        <C>             <C>            <C>
Endeavour Capital Fund SA. *               May 17, 1999    $   500,000    Shmuli Margulies
Excalber Capital Fund SA                   May.  , 1999    $   200,000    William Hechter
Carbon Mesa Partners, LLC                  June 5, 1999    $   150,000    Michael S. Rosenblum

</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: $1,100,000

       This offering consists of $500,000 of Convertible  Debentures of Swissray
International, Inc.

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

                             SUBSCRIPTION AGREEMENT

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

                             SUBSCRIPTION PROCEDURES

         Convertible Debentures of SWISSRAY INTERNATIONAL, INC.. (the "Company")
are being offered in an aggregate amount not to exceed $1,100,000 The Debentures
will  be  transferable to the extent that any such transfer is permitted by law.
This  offering  is being made in accordance with the exemption from registration
under  Section  4(2)  of  the Securities Act of 1933, as amended (the "Act") and
Rule 506 of Regulation D promulgated under the Act (the"Regulation D Offering").

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

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

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

         Payment must be made by wire transfer as provided below:

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

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

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

                             SUBSCRIPTION AGREEMENT

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

To:      Swissray International, Inc.

         This  Subscription  Agreement is made between  Swissray  International,
Inc.,  ("Company"  or  "Seller")  a New York  corporation,  and the  undersigned
prospective purchaser  ("Purchaser") who is subscribing hereby for the Company's
Convertible Debentures (the "Debentures").  The Debentures being offered will be
separately  transferable,  to the extent that any such  transfer is permitted by
law. The  conversion  terms of the  Debentures  are set forth in Section 4. This
subscription is submitted to you in accordance with and subject to the terms and
conditions  described in this Subscription  Agreement together with any Exhibits
thereto,  relating  to an  offering  (the  "Offering")  of up to  $1,100,000  of
Debentures.  This  Offering is  comprised  of an offering of the  Debentures  to
accredited  investors  (the  "Regulation  D Offering")  in  accordance  with the
exemption from registration under Section 4(2) of the Securities Act of 1933, as
amended (the "Act"),  and Rule 506 of  Regulation  D  promulgated  under the Act
("Regulation D").

1.       SUBSCRIPTION.

         (a) The  undersigned  hereby  irrevocably  subscribes for and agrees to
purchase $500,000 of the Company's Debentures. The Debentures shall pay interest
in  cash  or  in  freely  trading  Common Stock of the Company, at the Company's
option, at the time of each conversion.The Debentures shall pay an 5% cumulative
interest, payable  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 interest by the then  applicable
Market Price,  as of the interest  payment  date.  "Market Price" shall mean 80%
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) 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 including Form 10-K for the fiscal year ended June
30, 1998  (inclusive  of any and all  amendments  thereto) and Form 10-Q for the
quarters  ended  September 30, 1998 and December 31, 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 there 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 90 days of such event for the purpose of  authorizing  additional
shares of  Common  Stock to  facilitate  the  conversions.  In such an event the
Company  shall  recommend to all  shareholders  to vote their shares in favor of
increasing the authorized  number of shares of Common Stock.  Seller  represents
and warrants  that under no  circumstances  will it deny or prevent  Purchaser's
right  to  convert  the  Debentures  as  permitted   under  the  terms  of  this
Subscription  Agreement or the Registration  Rights  Agreement.  Nothing in this
Section shall limit the obligation of the Company to make the payments set forth
in Section  4(h).  In the event the  Company's  shareholder's  meeting  does not
result in the necessary authorization,  the Company shall redeem the outstanding
Debentures  for  an  amount  equal  to (x)  the  sum  of  the  principal  of the
outstanding Debentures plus accrued interest thereon multiplied by (y) 125%.

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

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

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

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

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

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

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

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

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

         (k) Prior Shares Issued Under Regulation S or Regulation D. In the past
thirteen  months the Company raised $16,068,649 in Regulation S and Regulation D
offerings,  including  redemptions  and  rollovers   inclusive   of   contingent
convertible debentures.

         (l) Current  Authorized  Shares.  As  of  April  26,  1999  there  were
50,000,000  authorized  shares of Common Stock of which approximately 11,712,379
shares of Common Stock were deemed issued and outstanding.

         (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, 1998,  to the date hereof,  exclusive of such
registration   statements  as  have  been  filed  in  accordance   with  certain
registration  rights agreements.  As of their respective dates,  and/or dates of
amended filings with respect thereto, none of the Disclosure Documents contained
any  untrue  statement  of a material  fact or omitted to state a material  fact
required  to be stated  therein  or  necessary  in order to make the  statements
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading,  and no material  event has  occurred  since the  Company's  initial
filing on Form 10-K for the year ended June 30, 1998 (or the filing of necessary
amendments  thereto) which could make any of the disclosures  contained  therein
(as subsequently  amended and restated)  misleading The financial  statements of
the  Company  included  in  the  Disclosure  Documents  have  been  prepared  in
accordance with generally accepted accounting principles applied on a consistent
basis  during the  periods  involved  (except as may be  indicated  in the audit
adjustments)  the  consolidated  financial  position  of  the  Company  and  its
consolidated  subsidiaries as at the dates thereof and the consolidated  results
of their  operations  and changes in  financial  position  for the periods  then
ended.

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

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

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

         (q) No Default.  Except as may be set forth in the Company's  report on
form 10-K for the fiscal year  ending  June 30,  1998,  as  initially  filed and
subsequently  amended,  the  Company  is not in default  in the  performance  or
observance  of  any  material  obligation,   agreement,  covenant  or  condition
contained in any indenture, mortgage, deed of trust or other material instrument
or agreement to which it is a party or by which it or its property is bound, and
neither  the  execution  of,  nor  the  delivery  by the  Company  of,  nor  the
performance  by the Company of its  obligations  under,  this  Agreement  or the
Debentures,  other than the conversion provision thereof,  will conflict with or
result in the  breach or  violation  of any of the  terms or  provisions  of, or
constitute  a default or result in the  creation  or  imposition  of any lien or
charge on any  assets or  properties  of the  Company  under,  (i) any  material
indenture, mortgage, deed of trust or other material agreement applicable to the
Company or  instrument  to which the Company is a party or by which it is bound,
(ii)  any  statute  applicable  to  the  Company  or  its  property,  (iii)  the
Certificate  of  Incorporation  or  ByLaws  of the  Company,  (iv) any  decree ,
judgment,  order, rule or regulation of any court or governmental agency or body
having  jurisdiction  over the Company or its  properties,  or (v) the Company's
listing agreement, if any, for its Common Stock.

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

         (s) The  Company hereby represents that it shall be paying a consultant
fee  and  other  legal  fees  $100,000 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
preceded by,  together with or followed by receipt of the original  Debenture to
be converted  in whole or in part  (within 5 business  days as indicated in 4(b)
below),  the Company  shall  instruct  its  transfer  agent to issue one or more
Certificates  representing  that number of shares of Common Stock into which the
Debenture is convertible in accordance with the provisions  regarding conversion
set forth in Exhibit D hereto. The Seller's transfer agent or attorney shall act
as Registrar and shall maintain an appropriate  ledger  containing the necessary
information with respect to each Debenture.

                  (b) Conversion  Procedures.  The face amount of each Debenture
may be converted  anytime  following  the Closing  Date except as otherwise  set
forth  herein  in this  Article  4.  Such  conversion  shall be  effectuated  by
surrendering  to the Company,  or its attorney,  the  Debentures to be converted
together with a facsimile or original of the signed  Notice of Conversion  which
evidences Purchaser's intention to convert those Debentures indicated.  The date
on which the Notice of  Conversion  is  effective  ("Conversion  Date") shall be
deemed to be the date on which the  Purchaser  has  delivered  to the  Company a
facsimile  or  original  of the  signed  Notice  of  Conversion,  as long as the
original  Debentures  to be  converted  are  received  by  the  Company  or  its
designated attorney within 5 business days thereafter. Unless otherwise notified
by the Company in writing via facsimile,  the Company's  designated  attorney is
Gary B. Wolff,  Esq., 747 Third Avenue,  New York, NY 10017 (P) 212-644-6446 (f)
212-644-6498.

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

                  (d) (i) Conversion Rate. Purchaser is entitled, at its option,
to  convert  the  face  amount of each Debenture, plus accrued interest, anytime
following  the  Closing  Date at 80% 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"). 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.  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)The  Purchaser  shall  not  be  allowed to convert any
portion  of  the  Debentures  for  120  days from the Closing  Date,  unless the
closing  bid  price  of  the  Company's  common  stock  on  the day prior to the
Conversion Date is greater  than $5.50.  Every 30-day  period  after the Closing
Date, until the expiration of 300 days following the Closing Date, the Purchaser
shall be allowed to convert and sell based  upon the  following  terms:  So long
as the closing bid price of the Company's common stock on the day  prior  to the
Conversion  Date is over $1.50,  the Purchaser shall be allowed to convert up to
15% of the original  face amount of its  Debentures;  so long as the closing bid
price of the Company's  common stock on the day prior to the Conversion  Date is
over $7.50,  the Purchaser shall be allowed to convert up to 20% of the original
face amount of its Debentures. The Purchaser shall not be allowed to convert any
of its  Debentures  for 300 days from the  Closing  Date if the bid price of the
Company's common stock is below $1.50. None of the foregoing  restrictions shall
apply after the 300th day following the Closing Date.

                  (iii) 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 5 business days after delivery of the Notice of Conversion or,
if  later, 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 5 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 5 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 5 business days after the Conversion Date.

                  (h)  The  Company   shall  at  all  times   reserve  (or  make
alternative written  arrangements for reservation) 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.

                  Deliberately Deleted.

                  (j)  Redemption:  Company  reserves  the  right,  at its  sole
option,  to call a mandatory  redemption of any percentage of the balance on the
Debentures  during the two year period  following the Closing Date. In the event
the Company  exercises such right of redemption it shall pay the  Purchaser,  in
U.S.  currency  One  Hundred  Twenty  Percent  (120%) 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  advance  notice of its  intent to redeem and shall  honor all  Conversion
Notices received by the Company prior to the time that the Purchaser  receives a
redemption  notice  from the  Company.  If the  Company  does not timely pay the
redemption amount, then the Purchaser shall be entitled to cancel the redemption
and the  Company  shall not have the  right to redeem  under  this  section  (j)
anytime thereafter.

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

7.       UNDERSTANDINGS.

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

FOR ALL SUBSCRIBERS:

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

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

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

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

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

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

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

         (h) NASAA UNIFORM LEGEND

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

9.       LITIGATION.

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

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

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

10.      MISCELLANEOUS.

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

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

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

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

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

                  [BALANCE OF PAGE INTENTIONALLY LEFT BLANK)

                           SWISSRAY INTERNATIONAL, INC.

                                        CORPORATION QUESTIONNAIRE
                                      Investor Name: Endeavour Capital Fund SA

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

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

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

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

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

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

                           the  shareholder is a natural person whose individual
net worth* or joint net worth with his or her spouse exceeds $1,000,000; or

                           the  shareholder  is a  natural  person  who  had  an
individual  income*  in  excess  of  $200,000  in each of 1997  and 1998 and who
reasonably expects an individual income in excess of $200,000 in 1999; 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 1997 and 1998 and who reasonably  expects a joint income in excess of
$300,000 during 1999; 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:Endeavour Capital Fund SA

Principal Place of Business: B. V. I.

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

Address for Correspondence (if different): c/o Endeavour Management Inc.
                                                14/14 Divrei Chaim
                                                             (Number and Street)

---Jerusalem---------------------------------------Israel             94479
         (City)                                      (State)          (Zip Code)

Telephone Number:_______972-2-582-4433________
                                    (Area Code)                        (Number)

Jurisdiction of Incorporation:_____B.V.I.________________

Date of Formation:___________2-21-97__________________________

Taypayer Identification Number:_____N/A_____________________________

Number of Shareholders:______20+____________________________

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

Name:_______Shmuli Margulies________________________________

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.

--$500,000-----                           --------------------------
Amount of Debentures subscribed for                  Date
                                                       Endeavour Capital Fund SA
                                                     (Purchaser)

                                                     By: /s/Illegible__________
                                                                (Signature)

                                                     Name: ___Shmuli Margulies__
                                                          (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 __________, 1999

SWISSRAY INTERNATIONAL, INC.

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

<PAGE>

                                    Exhibit C

A. On or about October 3, 1997,  the Registrant  and Swissray  Healthcare,  Inc.
were served with a complaint  by a company  engaged in the business of providing
services related to imaging equipment  alleging that defendant received benefits
from breach of fiduciary duties and contract obligations and misappropriation of
trade secrets by certain former employees of such competitor.  Such company also
obtained a temporary  restraining  order  against the  Registrant  and  Swissray
Healthcare,  Inc.  On  November  10,  1997,  the  Court  denied a  Motion  for a
preliminary  injunction  and the  temporary  restraining  order was vacated.  On
December 1, 1997 and January 30, 1998 the Registrant  answered the Complaint and
Amended Complaint respectively by denying the allegations contained therein. The
Plaintiff  in such  action (on  December  2, 1997) filed a Motion to reargue and
renew its prior denied Motion for a Preliminary  Injunction  and such Motion was
(by Order and  Decision  dated June 17,  1998)  denied.  The Company  denied the
allegations,  vigorously  defended the litigation  and  thereafter  settled such
litigation  and all  outstanding  matters with respect  thereto in July 1998 for
$60,000.

B. Dispute with Gary J. Durday  ("Durday"),  Kenneth R. Montler  ("Montler") and
Michael  E.  Harle  ("Harle").  On July 17,  1998,  two legal  proceedings  were
commenced by Swissray,  and two of its subsidiaries against Durday,  Montler and
Harle. Harle and Montler are former Chief Executive Officers of Swissray Medical
Systems Inc.  and  Swissray  Healthcare  Inc.,  respectively,  and Durday is the
former  Chief  Financial  Officer of both of those  companies.  Each of them was
employed  pursuant  to an  Employment  Agreement  dated  October  17,  1997.  In
addition,  these  three  individuals  were  owners of a  company  by the name of
Service  Support  Group LLC  ("SSG"),  the assets of which were sold to Swissray
Medical Systems Inc. pursuant to an Asset Purchase Agreement dated as of October
17,  1997.  whereby  Messrs.  Durday,  Montler and Harle  received,  among other
consideration,  33,333  shares of Swissray's  common stock,  together with a put
option entitling these individuals to require Swissray to purchase any or all of
such shares at a purchase  price equal to $45.00 per share (on or after June 30,
1998 and until April 16, 1999,  subject to certain  adjustments set forth in the
Asset Purchase Agreement).

         On July 17,  1998,  Swissray  and its  subsidiaries,  Swissray  Medical
Systems Inc. and Swissray  Healthcare Inc.  commenced an arbitration  proceeding
before the American Arbitration Association in Seattle,  Washington (Case No. 75
489 00196 98)  alleging  that  Messrs.  Durday,  Montler and Harle  fraudulently
induced  Swissray and its  subsidiaries to enter into the above referenced Asset
Purchase Agreement and otherwise  breached that Agreement.  The relief sought in
the arbitration  proceeding was the recovery of damages  suffered as a result of
this alleged wrongful conduct and a rescission of the put option provided for in
the Asset Purchase Agreement. Messrs. Durday, Montler and Harle responded to the
allegations  made  in the  arbitration  proceeding  and  asserted  counterclaims
against  Swissray  and its  subsidiaries  claiming  a  breach  by them of  their
obligations under the Asset Purchase Agreement and other relief. The arbitration
took place in Seattle on January 8-10, 1999; the proceeding concluded on January
27, 1999 after the submission of post-hearing  briefs. On February 23, 1999, the
Arbitrator  issued  his  ruling,  awarding  Messrs.  Durday,  Montler  and Harle
$1,500,000  and  ordering  them to  surrender  all  rights to  33,333  shares of
Swissray  common  stock.  On February  26, 1999,  Swissray and Swissray  Medical
Systems  Inc.  filed a petition in Supreme  Court,  New York  County  (Index No.
99/104017) to vacate the above referenced arbitration award.

         In addition to the above referenced  arbitration  proceeding,  Swissray
and its  subsidiaries  commenced an action against Messrs.  Durday,  Montler and
Harle which is currently  pending in the Supreme Court of the State of New York,
County of New York,  alleging that these  individuals  breached the  obligations
undertaken by them in their respective Employment Agreements.  Further,  Messrs.
Durday,  Montler and Harle  commenced an action in state court in Pierce County,
Washington,  and asked that Court to  adjudicate  the issues raised in the above
referenced New York State Court action.  Swissray filed applications in both the
Washington and New York  litigations  urging that,  because the action was first
filed in New York, the New York court,  rather than the Washington court, should
decide where the litigation should proceed.  Messrs.  Durday,  Montler and Harle
initially  opposed  that  position  and  urged  the  Washington  State  court to
adjudicate all issues, but subsequently  withdrew their opposition to Swissray's
application and consented to a stay of all further proceedings in the Washington
State court  action  until after the New York court had reached a decision as to
whether it or the  Washington  court is the proper forum for  litigation  of the
parties'  dispute.  The New York court has not yet  rendered a decision  on this
issue.

         It is  Swissray's  management's  intention  to  contest  these  matters
vigorously since Swissray believes that its claims are meritorious,  and that it
has meritorious  defenses to the claims asserted  against them,  notwithstanding
the above referenced arbitration ruling.

<PAGE>

                                    Exhibit D

                              NOTICE OF CONVERSION

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

         The undersigned hereby irrevocably  elects, as of ______________,  199_
to convert  $__________ of Convertible  Debentures into Common Stock of SWISSRAY
INTERNATIONAL,  INC.(the "Company") according to the conditions set forth in the
Subscription Agreement dated May____, 1999.

Date of Conversion_________________________________________

Applicable Conversion Price_________________________________

Number of Shares Issuable upon this conversion______________

Signature___________________________________________________
                           [Name]

Address_____________________________________________________

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

Phone______________________   Fax___________________________

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