Document:

<TABLE>
<CAPTION>

Name                                       Dated           Amount       Signatory
---------------------------------------    ------------    ------       ---------------
<S>                                        <C>             <C>          <C>

The Isosceles Fund Limited                 Dec  2, 1997    $  583,630   Walter Blum Gentilomo
Otato Limited Partnership                  Dec  5, 1997    $  145,969   Eva Forbes
Thomson Kernaghan & Co. Ltd.*              Nov 26, 1997    $1,428,686   Mark Valentine

*    This document has been filed

</TABLE>
<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: $3,250,000

       This               offering   consists  of  $3,250,000   of   Convertible
                          Debentures of Swissray International, Inc.

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

                             SUBSCRIPTION AGREEMENT

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

                                       1

<PAGE>   2

                             SUBSCRIPTION PROCEDURES

         Convertible Debentures of SWISSRAY INTERNATIONAL, INC.. (the "Company")
are  being  offered  in an  aggregate  amount  not  to  exceed  $3,250,000.  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:

                                       2

<PAGE>   3

         ABA #:
         Swift #:
         Account #:

         Acct.Name:        Joseph B. LaRocco, Esq.  Trustee Account

                                       3

<PAGE>   4

                             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  dated November 26, 1997,
together with any Exhibits thereto,  relating to an offering (the "Offering") of
up to $3,250,000 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").

                                       4

<PAGE>   5

1.       SUBSCRIPTION.

         (a) The  undersigned  hereby  irrevocably  subscribes for and agrees to
purchase $1,428,686 of the Company's Debentures.  The Debentures shall pay an 8%
cumulative interest payable annually,  in cash or in freely trading Common Stock
of the Company, at the Company's option, at the time of each conversion. If paid
in Common  Stock,  the  number of shares  of the  Company's  Common  Stock to be
received  shall be  determined  by dividing the dollar amount of the dividend by
the then  applicable  Market Price,  as of the interest  payment  date.  "Market
Price"  shall  mean 75% of the  average  of the 5 day  closing  bid  prices,  as
reported by Nasdaq,  or whatever primary exchange the Company's Common Stock may
be traded  on,  for the five  trading  days  immediately  preceding  the date of
conversion.  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(c).  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:

                                       5

<PAGE>   6

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

                  (b) The undersigned acknowledges that all documents,  records,
         and books  pertaining  to this  investment  which the  undersigned  has
         requested including Form 10-KSB for the fiscal year ended June 30, 1997
         and Form 10-Q for the quarter ended September 30, 1997 (the "Disclosure
         Documents")  have been made available for inspection by the undersigned
         or the undersigned has had 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

                                       6

<PAGE>   7

         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.

                  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:

                  THE SECURITIES REPRESENTED HEREBY HAVE BEEN INCLUDED IN THE
                  COMPANY'S REGISTRATION

                                       7

<PAGE>   8

                  STATEMENT  INITIALLY  FILED WITH THE  SECURITIES  AND EXCHANGE
                  COMMISSION ON __________,  1997, AND MAY BE SOLD IN ACCORDANCE
                  WITH THE COMPANY'S  PROSPECTUS DATED ___________,  1997, WHICH
                  FORMS A PART OF SUCH REGISTRATION  STATEMENT, OR AN OPINION OF
                  COUNSEL OR OTHER EVIDENCE  ACCEPTABLE TO THE COMPANY THAT SUCH
                  REGISTRATION IS NOT REQUIRED.

                  (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,

                                       8

<PAGE>   9

         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.  1,500,000
shares of Common Stock  issuable upon  conversion of all the  Debentures  issued
pursuant to this offering have been duly and validly  reserved for issuance,  or
alternative  arrangements agreed to in writing to cover the contingency of their
being insufficient  reserved shares and, upon issuance shall be duly and validly
issued,  fully paid, and non-assessable  (the "Reserved  Shares").  From time to
time, the Company shall keep such additional  shares of Common Stock reserved so
as to allow for the conversion of all the Debentures issued pursuant to this

                                       9

<PAGE>   10

offering. Upon an increase in the number of authorized shares of Common Stock of
the  Company  to  50,000,000,  the  Company  shall  reserve  a total of at least
5,000,000  shares  to cover  conversion  of all the  Debentures  issued  in this
offering.

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

                  (ii) In  anticipation  of the  potential  need for  additional
Reserved Shares, the Company has forwarded (to the S.E.C.) a Proxy Statement for
an annual meeting currently  scheduled to be held on December 23, 1997,  whereat
the Company proposes to increase its authorized  shares to 50,000,000  shares of
Common Stock.

                  (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,  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 except at set forth in Exhibit D.

                                       10

<PAGE>   11

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,

                                       11

<PAGE>   12

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,  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.

                                       12

<PAGE>   13

         (k) Prior Shares Issued Under Regulation S or Regulation D. In the past
six months the Company raised $4,265,500 in Regulation S offerings.  The Company
has raised  $5,000,000  in Regulation D offerings in August of 1997 a portion of
which is being rolled over.  Also the Company is in the process of raising up to
an additional $3,800,000 in Regulation D financing.

         (l) Current  Authorized  Shares.  As of November 20,  1997,  there were
30,000,000  authorized shares of Common Stock of which approximately  28,443,403
shares of Common Stock were deemed  issued and  outstanding  on a fully  diluted
basis.

         (m)  Disclosure  Documents.   The  Disclosure  Documents  are  all  the
documents (other than preliminary  materials) that the Company has been required
to file  with  the SEC from  June 30,  1997,  to the  date  hereof.  As of their
respective  dates,  none  of  the  Disclosure  Documents  contained  any  untrue
statement of a material  fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the  circumstances  under which they were made, not misleading,  and no material
event has occurred since the Company's  filing on Form 10-KSB for the year ended
June 30,  1997,  which  could  make  any of the  disclosures  contained  therein
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 notes  thereto or, in the case of  unaudited  financial
statements,   only  to  normal   recurring   year-end  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  the funds  being held in
escrow,  less placement fees, at which time the Escrow Agent shall then have the
Debentures delivered to the Purchaser, per the Purchaser's instructions.

                                       13

<PAGE>   14

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

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

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

         (s) The  Purchaser has been advised that the Company has entered into a
consulting agreement with Net Financial International, Ltd. pursuant to which it
will pay a fee of 10% of the gross proceeds of this offering.

         4.       TERMS OF CONVERSION.

                                       14

<PAGE>   15

                  (a) Debentures.  Upon receipt by the Company or its designated
attorney of a facsimile or original of  Purchaser's  signed Notice of Conversion
and the original  Debenture  to be  converted  in whole or in part,  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.  Twenty-five  percent (25%) of the
face amount of the  Debentures  may be converted at the earlier of the effective
date of the  Registration  Statement or March 21, 1998. 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.  An  additional  twenty-five  percent (25%) of the face amount of the
Debentures,  fifty percent 50% cumulatively,  may be converted after the earlier
of 30 days following the effective date of the  Registration  Statement or April
20, 1998. An additional  twenty-five percent (25%),  seventy-five  percent (75%)
cumulatively,  may be  converted  after the  earlier  of 60 days  following  the
effective  date of the  Registration  Statement or May 20, 1998.  An  additional
twenty-five  percent  (25%),  one hundred  percent (100%)  cumulatively,  may be
converted  after the  earlier of 90 days  following  the  effective  date of the
Registration  Statement  or June  19,  1998.  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 Without Restrictive Legend. 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.

                                       15

<PAGE>   16

           (d) (i)  Conversion  Rate.  Purchaser is  entitled,  at its option to
convert  twenty-five  percent (25%) of the face amount of the  Debentures,  plus
accrued  interest,  at the  earlier of the  effective  date of the  Registration
Statement or March 21, 1998, at 75% of the 5 day average  closing bid price,  as
reported by Nasdaq,  or whatever primary exchange the Company's Common Stock may
be traded  on,  for the 5 trading  days  immediately  preceding  the  applicable
Conversion Date (the "Conversion Price").  Purchaser is entitled,  at its option
to  convert  an  additional  twenty-five  percent  (25%),  fifty  percent  (50%)
cumulatively,  of the face amount of the Debentures,  plus accrued interest,  at
the earlier of 30 days after the effective date of the Registration Statement or
April 20, 1998,  at 75% of the 5 day average  closing bid price,  as reported by
Nasdaq,  or whatever  primary  exchange the Company's Common Stock may be traded
on, for the 5 trading days immediately preceding the applicable Conversion Date.
Purchaser  is  entitled,  at its option,  to convert an  additional  twenty-five
percent (25%),  seventy-five  percent (75%) cumulatively,  of the face amount of
the  Debentures,  plus  accrued  interest  at the  earlier  of 60 days after the
effective  date of the  Registration  Statement or May 20, 1998, at 75% of the 5
day average  closing  bid price,  as  reported  by Nasdaq,  or whatever  primary
exchange  the  Company's  Common  Stock may be traded on, for the 5 trading days
immediately  preceding the applicable Conversion Date. Purchaser is entitled, at
its option,  to convert an additional  twenty-five  percent  (25%),  one hundred
percent (100%) cumulatively,  of the face amount of the Debentures, plus accrued
interest at the earlier of 90 days after the effective date of the  Registration
Statement or June 19, 1998,  at 75% of the 5 day average  closing bid price,  as
reported by Nasdaq,  or whatever primary exchange the Company's Common Stock may
be traded  on,  for the 5 trading  days  immediately  preceding  the  applicable
Conversion Date. 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)  Redemption  Terms.  The 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  hundred ten (210) day period  following  the Closing
Date.  In the event the Company  exercises  such right of  redemption  up to and
including  the two hundred tenth (210th) day following the Closing Date it shall
pay the  Purchaser,  in U.S.  currency One Hundred  Thirty Percent (130%) of the
face amount of the  Debentures  redeemed.  Mandatory  redemption  by the Company
shall be effected by the Company  notifying  the  Purchaser  by facsimile at the
number listed in this Agreement of the Company's intention to exercise its right
of  mandatory  redemption.  The  Company  shall  state in such notice the dollar
amount of the  Debentures  it intends to redeem,  the amount that it will pay to
effectuate  such redemption and the date by which the Purchaser must deliver the
Debentures  to Joseph B. LaRocco,  Escrow Agent  (including  the Escrow  Agent's
address)  unless the  Company is  already in receipt of those  Debentures  to be
redeemed. The date by which the Debentures must be delivered to the Escrow Agent
shall not be later

                                       16

<PAGE>   17

than 10 business days  following the date the Company  notifies the Purchaser by
facsimile of the  redemption.  The Company  shall give the  Purchaser at least 2
business day's notice of the above  information.  On or before the date by which
the Purchaser is to deliver the original  Debentures  to the Escrow  Agent,  the
Company  shall  wire  to the  Escrow  Agent  that  amount  necessary  to pay the
Purchaser to effectuate  the mandatory  redemption.  Once the Escrow Agent is in
receipt of the original  Debentures and those funds  necessary to effectuate the
mandatory  conversion  he shall wire those funds to the Purchaser and deliver to
the Company the original  Debentures via overnight courier.  The Purchaser shall
not be entitled to send a  Conversion  Notice to the Company with respect to the
Debentures being redeemed during such period.

                  (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, without

                                       17

<PAGE>   18

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

         In the event the Company does not make delivery of the Common Stock, as
instructed by Purchaser,  within 8 business days after  delivery of the original
Debenture,  then in such event the Company shall pay to Purchaser an amount,  in
cash in accordance with the following schedule, wherein "No. Business Days Late"
is defined as the number of business  days beyond the 8 business  days  delivery
period.

<TABLE>

<CAPTION>

                                           Late Payment for Each
                                            $10,000 of Debenture

No. Business Days Late                     Amount Being Converted

- ----------------------                     ----------------------
<S>                                        <C>

         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

</TABLE>

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

         To the extent that the failure of the Company to issue the Common Stock
pursuant to this Section 4(g) is due to the  unavailability  of  authorized  but
unissued

                                       18

<PAGE>   19

shares of Common Stock,  the provisions of this Section 4(g) shall not apply but
instead the provisions of Section 4(h) shall apply.

         The Company shall make any payments incurred under this Section 4(g) in
immediately  available  funds within five (5) business days from the  Conversion
Date if late.  Nothing  herein shall limit a Purchaser's  right to pursue actual
damages or cancel the conversion for the Company's  failure to issue and deliver
Common Stock to the Holder within 8 business days after the Conversion Date.

         (h) The  Company  shall at all times  reserve  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  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.

                                       19

<PAGE>   20

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

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

     (i) The 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.

     Other than the Mandatory Conversion  provisions contained in this Agreement
which are not limited by the following, in no other event shall the Purchaser be
entitled  to convert  that  amount of  Debentures  in excess of that amount upon
conversion  of  which  the sum of (1) the  number  of  shares  of  Common  Stock
beneficially  owned by the  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  4.9%  of the
outstanding  shares  of  Common  Stock  of the  Company.  For  purposes  of this
provision to the immediately  preceding sentence,  beneficial ownership shall be
determined in accordance  with Section 13 (d) of the Securities  Exchange Act of
1934, as amended, and Regulation 13 D-G thereunder, except as otherwise provided
in clause (1) of such provision.

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

<PAGE>   21

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,

<PAGE>   22

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  Delaware.  The  Company  hereby  expressly  and
irrevocably  submits to the  jurisdiction of the state and federal courts of the
State of Delaware 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

<PAGE>   23

further  irrevocably  consents  to the  service of process by  registered  mail,
postage prepaid, or by personal service within or without the State of Delaware.
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 Delaware 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. C/O Gary B. Wolff, Esq., 747 Third Avenue, 25th
Floor,  New  York,  NY  10017(ii)  if to the  undersigned,  at the  address  for
correspondence set

<PAGE>   24

forth in the Questionnaire,  or at such other address as may have been specified
by written notice given in accordance with this paragraph 9(c).

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

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

11. SIGNATURE.

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

                   [BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
                          SWISSRAY INTERNATIONAL, INC.

                           CORPORATION QUESTIONNAIRE

                           INVESTOR NAME:  Thomson Kernaghan & Co. Ltd

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

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

<PAGE>   25

is required to be reported to the  Securities  and  Exchange  Commission  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 Toronto, Canada.

             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 1995 and 1996
                         and who  reasonably  expects  an  individual  income in
                         excess of $200,000 in 1997; 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 1995 and
                         1996  and who  reasonably  expects  a joint  income  in
                         excess of $300,000  during  1997;  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

<PAGE>   26

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)

<PAGE>   27

      Name:Thomson Kernaghan & Co. Ltd

      Principal Place of Business:  Toronto, Canada

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

      Address for Correspondence (if different):         SAME

                                                ----------------------------
      365 Bay St. Toronto, Ontario MSH-2V2__________________ (Number and Street)

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

      Telephone Number:(416) 860-6130
                          (Area Code)       (Number)

      Jurisdiction of Incorporation:_Toronto, Canada

      Date of Formation: N/A____________________________________________________

      Taypayer Identification Number:N/A_______________________________________

      Number of Shareholders: Unlimited_________________________________________

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

      Name: Mark Valentine______________________________________________________

      Position or Title: Vice President & Director______________________________

<PAGE>   28

                          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 Thomson Kernaghan & Co. Ltd and, further, that Thomson Kernaghan & Co.
Ltd has all requisite  authority to purchase the  Debentures and enter into this
Subscription Agreement.

          $1,428,686_______________________           Nov. 26, 1997_____________
        Amount of Debentures subscribed for                          Date

                                               Thomson Kernaghan & Co. Ltd

                                                                     (Purchaser)

                                               By: /s/ Mark Valentine
                                                        (Signature)

                                               Name: Mark Valentine_____________
                                                        (Please Type or Print)

                                               Title: Vice President & 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

<PAGE>   29

UNDER THE ACT.

                            COMPANY ACCEPTANCE PAGE

     This Subscription Agreement accepted
     and agreed to this 26 day of November, 1997

     SWISSRAY INTERNATIONAL, INC.

     BY Ruedi G. Laupper

       Ruedi G. Laupper, its Chairman and President
       duly authorized

<PAGE>   30

                                   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 NOVEMBER ____, 1997.

DATE OF CONVERSION_________________________________________

APPLICABLE CONVERSION PRICE_________________________________

NUMBER OF SHARES ISSUABLE UPON THIS CONVERSION______________

SIGNATURE___________________________________________________
                  [NAME]

ADDRESS_____________________________________________________

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

PHONE______________________   FAX___________________________

<PAGE>   31

                                  Exhibit E

_______________, 1997

Purchasers of [Company] [Describe Securities]

                                  Re:[Company]

Ladies and Gentlemen:

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

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

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

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

     1. The Company has been duly incorporated and is validly existing as

<PAGE>   32

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

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

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

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

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

     6. To the best of our knowledge, after due inquiry, the execution, delivery
and  performance  of the  Agreements by the Company and the  performance  of its
obligations  thereunder do not and will not  constitute a breach or violation of
any of the terms and  provisions  of, or  constitute a default under or conflict
with or violate any provision of (i) the Company's  Certificate of Incorporation
or By-Laws, (ii) any

<PAGE>   33

indenture,  mortgage,  deed of trust, agreement or other instrument to which the
Company  is party or by which it or any of its  property  is  bound,  (iii)  any
applicable  statute or regulation or as other,  (iv) or any judgment,  decree or
order of any court or governmental body having  jurisdiction over the Company or
any of its property.

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

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

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

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

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

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

                                                Very truly yours,

                                                By: _____________________Name                                       Dated           Signatory
---------------------------------------    ------------    ---------------
Canadian Advantage Limited Partnership     Nov. 26, 1997
Dominion Capital Fund, Ltd.                Nov. 26, 1997
Sovereign Partners LP                      Nov. 26, 1997

*    This document has been filed.

<PAGE>

                                                                   Exhibit 10.18

                          REGISTRATION RIGHTS AGREEMENT

         THIS  REGISTRATION  RIGHTS  AGREEMENT,  dated as of December ___, 1997,
("this Agreement"),  is made by and between SWISSRAY  INTERNATIONAL,  INC. a New
York  corporation  (the  "Company"),  and the person named on the signature page
hereto (the "Initial Investor").

                                   WITNESSETH:

         WHEREAS,   upon  the  terms  and  subject  to  the  conditions  of  the
Subscription  Agreement,  dated as of December  ___,  1997,  between the Initial
Investor and the Company (the "Subscription Agreement"),  the Company has agreed
to issue and sell to the  Initial  Investor  8%  Convertible  Debentures  of the
Company (the "Debentures"),  which will be convertible into shares of the common
stock,  $.01 par value (the "Common  Stock"),  of the Company  (the  "Conversion
Shares") upon the terms and subject to the conditions of such Debentures; and

         WHEREAS,  to induce the  Initial  Investor  to execute  and deliver the
Subscription  Agreement,  the Company has agreed to provide certain registration
rights  under  the  Securities  Act of  1933,  as  amended,  and the  rules  and
regulations  thereunder,  or any similar  successor statute  (collectively,  the
"Securities  Act"),  and applicable  state  securities  laws with respect to the
Conversion Shares;

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
covenants  contained  herein  and other  good and  valuable  consideration,  the
receipt and  sufficiency of which are hereby  acknowledged,  the Company and the
Initial Investor hereby agrees as follows:

         I.  Definitions.

         (a) As used in this  Agreement,  the  following  terms  shall  have the
following meaning:

         (i) "Closing  Date" means the date funds are received by the Company or
its designated attorney pursuant to the Subscription Agreement.

         (ii)  "Investor"  means the  Initial  Investor  and any  transferee  or
assignee  who agrees to become  bound by the  provisions  of this  Agreement  in
accordance with Section 9 hereof.

         (iii)  "Register."   "Registered."  and   "Registration"   refer  to  a
registration  effected  by  preparing  and filing a  Registration  Statement  or
Statements in compliance  with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering  securities on a
continuous  basis ("Rule 415"), and the declaration or ordering of effectiveness
of such Registration

<PAGE>   2

Statement by the United States Securities and Exchange Commission (the "SEC").

         (iv)  "Registrable Securities" means the Conversion Shares.

         (v)  "Registration  Statement"  means a  registration  statement of the
Company under the Securities Act.

         (b) As used in this  Agreement,  the term  Investor  includes  (i) each
Investor (as defined  above) and (ii) each person who is a permitted  transferee
or  assignee  of the  Registrable  Securities  pursuant  to  Section  9 of  this
Agreement.

         (c)  Capitalized  terms used herein and not  otherwise  defined  herein
shall have the respective meanings set forth in the Subscription Agreement.

         2. REGISTRATION.

         (a) MANDATORY REGISTRATION. The Company shall prepare and file with the
SEC,  no later than  thirty  (30)  calendar  days  after the  Closing  Date,  an
amendment  to  the  Form  S-1  Registration  Statement,  or a  new  Registration
Statement  if required,  covering a sufficient  number of shares of Common Stock
for the Initial  Investors into which is not more than  $3,800,000 of Debentures
in the total  offering would be  convertible.  In the event the amendment is not
filed within  thirty (30)  calendar  days after the Closing  Date,  then in such
event the Company shall pay the Investor 2% of the face amount of each Debenture
for each 30 day period, or portion thereof,  after 30 days following the Closing
Date that the Registration  Statement is not filed. The Investor is also granted
additional  Piggyback  registration  rights on any other Registration  Statement
filings made by the Company.  Such  Registration  Statement shall state that, in
accordance with the Securities Act, it also covers such indeterminate  number of
additional  shares of Common  Stock as may become  issuable to prevent  dilution
resulting from Stock splits, or stock  dividends).  If at any time the number of
shares of Common Stock into which the  Debenture  may be  converted  exceeds the
aggregate number of shares of Common Stock then  registered,  the Company shall,
within ten (10) business days after receipt of written notice from any Investor,
either (i) amend the Registration Statement filed by the Company pursuant to the
preceding  sentence,  if  such  Registration  Statement  has not  been  declared
effective  by the SEC at that time,  to register all shares of Common Stock into
which the Debenture may be converted, or (ii) if such Registration Statement has
been declared effective by the SEC at that time, file with the SEC an additional
Registration  Statement  on Form S-1 to register the shares of Common Stock into
which the Debenture may be converted that exceed the aggregate  number of shares
of Common Stock already  registered.  The above damages shall continue until the
obligation  is fulfilled  and shall be paid within 5 business days after each 30
day period,  or portion  thereof,  until the  Registration  Statement  is filed.
Failure of the  Company to make  payment  within  said 5 business  days shall be
considered a default.

         The Company acknowledges that its failure to file with the SEC, said

                                       2

<PAGE>   3

Registration  Statement  no later than thirty  (30) days after the Closing  Date
will cause the  Initial  Investor  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 register the Common Stock
and  deliver  the Common  Stock  pursuant  to the terms of this  Agreement,  the
Subscription Agreement and the Debenture.

         (b) UNDERWRITTEN  OFFERING.  If any offering pursuant to a Registration
Statement pursuant to Section 2(a) hereof involves an underwritten offering, the
Investors acting by majority in interest of the Registrable  Securities  subject
to such  underwritten  offering shall have the right to select one legal counsel
to represent their interests, and an investment banker or bankers and manager or
managers to  administer  the  offering,  which  investment  banker or bankers or
manager  or  managers  shall be  reasonably  satisfactory  to the  Company.  The
Investors  who  hold  the   Registrable   Securities  to  be  included  in  such
underwriting shall pay all underwriting discounts and commissions and other fees
and  expenses  of such  investment  banker or bankers and manager or managers so
selected in  accordance  with this  Section  2(b) (other than fees and  expenses
relating  to  registration  of  Registrable  Securities  under  federal or state
securities  laws, which are payable by the Company pursuant to Section 5 hereof)
with respect to their  Registrable  Securities and the fees and expenses of such
legal counsel so selected by the Investors.

         (c) PAYMENT BY THE COMPANY. If the Registration  Statement covering the
Registrable  Securities  required to be filed by the Company pursuant to Section
2(a) hereof is not  declared  effective  by February  20,  1998,  (the  "Initial
Date"),  then the Company  will make  payments  to the Initial  Investor in such
amounts and at such times as shall be determined  pursuant to this Section 2(c).
The amount to be paid by the Company to the Initial Investor shall be determined
as of each  Computation  Date, as defined  below in this Section 2(c),  and such
amount  shall be equal to two (2%)  percent  of the  purchase  price paid by the
Initial Investor for the Debenture  pursuant to the  Subscription  Agreement for
the period from the Initial  Date to the first  Computation  Date,  and two (2%)
percent of the purchase price for each Computation Date thereafter,  to the date
the  Registration  Statement  is declared  effective  by the SEC (the  "Periodic
Amount").  The full Periodic  Amount shall be paid by the Company in immediately
available  funds  within  five  business  days  after  each  Computation   Date.
Notwithstanding  the foregoing,  the amounts payable by the Company  pursuant to
this provision shall not be payable to the extent any delay in the effectiveness
of the  Registration  Statement occurs because of an act of, or a failure to act
or to act timely by the Initial Investor or its counsel. The above damages shall
continue until the obligation is fulfilled and shall be paid within 5

                                       3

<PAGE>   4

business  days  after  each  30  day  period,  or  portion  thereof,  until  the
Registration  Statement is filed.  Failure of the Company to make payment within
said 5 business days shall be considered a default.

         The Company  acknowledges  that its failure to file with the SEC,  said
Registration  Statement  no later than thirty  (30) days after the Closing  Date
will cause the  Initial  Investor  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 register the Common Stock
and  deliver  the Common  Stock  pursuant  to the terms of this  Agreement,  the
Subscription Agreement and the Debenture.

         As used in this  Section  2(c),  the  following  terms  shall  have the
following meanings:

         "Computation  Date"  means the date which is the earlier of (a) 35 days
after the Company is notified by the SEC that the Registration  Statement may be
declared  effective or (b) one hundred  twenty (120) days after the Closing Date
and, if the Registration  Statement required to be filed by the Company pursuant
to Section 2(a) has not therefore been declared  effective by the SEC, each date
which is thirty  (30) days  after  the  previous  Computation  Date  until  such
Registration Statement is so declared effective.

         3. OBLIGATION OF THE COMPANY.  In connection  with the  registration of
the Registrable Securities, the Company shall do each of the following:

         (a) Prepare promptly,  and file with the SEC within thirty (30) days of
the Closing Date, an amendment to the Form S-1 Registration  Statement, or a new
Registration Statement if required,  with respect to not less than the number of
Registrable  Securities  provided in Section 2(a), above, and thereafter use its
best  efforts to cause  each  Registration  Statement  relating  to  Registrable
Securities  to become  effective  the  earlier of (i) five  business  days after
notice  from the  Securities  and  Exchange  Commission  that  the  Registration
Statement may be declared  effective,  or (b) ninety (90) days after the Closing
Date,  and keep the  Registration  Statement  effective  at all times  until the
earliest (the "Registration Period") of (i) the date that is two years after the
Closing  Date  (ii)  the  date  when the  Investors  may  sell  all  Registrable
Securities  under Rule 144 or (iii) the date the  Investors no longer own any of
the  Registrable   Securities,   which  Registration  Statement  (including  any
amendments or supplements thereto and prospectuses  contained therein) shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated  therein or necessary to make the statements  therein,  in
light of the circumstances in which they were made, not misleading;

                                       4

<PAGE>   5

         (b)  Prepare  and  file  with  the  SEC  such   amendments   (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus  used  in  connection  with  the  Registration  Statement  as  may be
necessary  to  keep  the   Registration   effective  at  all  times  during  the
Registration  Period,  and,  during the  Registration  Period,  comply  with the
provisions  of  the  Securities  Act  with  respect  to the  disposition  of all
Registrable  Securities  of the Company  covered by the  Registration  Statement
until such time as all of such  Registrable  Securities have been disposed of in
accordance  with the intended  methods of  disposition  by the seller or sellers
thereof as set forth in the Registration Statement;

         (c) Furnish to each Investor whose Registrable  Securities are included
in the Registration  Statement and its legal counsel  identified to the Company,
(i) promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the  Company,  one (1) copy of the  Registration  Statement,
each  preliminary  prospectus and  prospectus,  and each amendment or supplement
thereto, and (ii) such number of copies of a prospectus, including a preliminary
prospectus, and all amendments and supplements thereto and such other documents,
as such Investor may reasonably  request in order to facilitate the  disposition
of the Registrable Securities owned by such Investor;

         (d) Use reasonable  efforts to (i) register and qualify the Registrable
Securities covered by the Registration  Statement under such other securities or
blue sky laws of such  jurisdictions  as the  Investors  who hold a majority  in
interest of the Registrable  Securities being offered  reasonably request and in
which significant volumes of shares of Common Stock are traded, (ii) prepare and
file  in  those   jurisdictions   such  amendments   (including   post-effective
amendments) and supplements to such  registrations and  qualifications as may be
necessary  to  maintain  the  effectiveness  thereof  at all  times  during  the
Registration  Period,  (iii) take such  other  actions  as may be  necessary  to
maintain such  registrations and qualification in effect at all times during the
Registration  Period,  and (iv) take all other actions  reasonably  necessary or
advisable to qualify the Registrable  Securities for sale in such jurisdictions:
provided,  however,  that  the  Company  shall  not be  required  in  connection
therewith  or as a  condition  thereto  to (A)  qualify  to do  business  in any
jurisdiction  where it would not  otherwise  be required to qualify but for this
Section 3(d), (B) subject itself to general  taxation in any such  jurisdiction,
(C) file a general consent to service of process in any such  jurisdiction,  (D)
provide any  undertakings  that cause more than nominal expense or burden to the
Company or (E) make any change in its  articles of  incorporation  or by-laws or
any then  existing  contracts,  which in each case the Board of Directors of the
Company  determines to be contrary to the best  interests of the Company and its
stockholders;

         (e) As  promptly as  practicable  after  becoming  aware of such event,
notify  each  Investor  of the  happening  of any event of which the Company has
knowledge,  as a result of which the  prospectus  included  in the  Registration
Statement, as then

                                       5

<PAGE>   6

in effect,  includes any untrue statement of a material fact or omits to state a
material fact required to be stated  therein or necessary to make the statements
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading,  and uses its best  efforts  promptly  to  prepare a  supplement  or
amendment to the Registration Statement or other appropriate filing with the SEC
to correct such untrue statement or omission,  and deliver a number of copies of
such  supplement or amendment to each  Investor as such Investor may  reasonably
request;

         (f) As  promptly as  practicable  after  becoming  aware of such event,
notify each  Investor who holds  Registrable  Securities  being sold (or, in the
event of an underwritten offering, the managing underwriters) of the issuance by
the SEC of any notice of  effectiveness or any stop order or other suspension of
the effectiveness of the Registration Statement at the earliest possible time;

         (g) Use its commercially reasonable efforts, if eligible, either to (i)
cause all the Registrable Securities covered by the Registration Statement to be
listed  on a  national  securities  exchange  and on  each  additional  national
securities  exchange on which  securities  of the same class or series issued by
the  Company  are  then  listed,  if any,  if the  listing  of such  Registrable
Securities is then permitted  under the rules of such  exchange,  or (ii) secure
designation  of all  the  Registrable  Securities  covered  by the  Registration
Statement as a National  Association of Securities Dealers Automated  Quotations
System ("NASDAQ") "Small  Capitalization"  within the meaning of Rule 11Aa2-1 of
the SEC under the  Securities  Exchange Act of 1934,  as amended (the  "Exchange
Act"),  and the quotation of the Registrable  Securities on the NASDAQ Small Cap
Market; or if, despite the Company's commercially  reasonable efforts to satisfy
the preceding  clause (i) or (ii), the Company is  unsuccessful  in doing so, to
secure NASD  authorization and quotation for such Registrable  Securities on the
over-the-counter  bulletin  board and,  without  limiting the  generality of the
foregoing,  to  arrange  for at least two  market  makers to  register  with the
National  Association of Securities Dealers,  Inc. ("NASD") as such with respect
to such registrable securities;

         (h) Provide a transfer agent for the  Registrable  Securities not later
than the effective date of the Registration Statement;

         (i) Cooperate with the Investors who hold Registrable  Securities being
offered to facilitate the timely  preparation and delivery of  certificates  for
the Registrable  Securities to be offered pursuant to the Registration Statement
and  enable  such  certificates  for the  Registrable  Securities  to be in such
denominations  or amounts as the case may be, as the  Investors  may  reasonably
request and registration in such names as the Investors may request; and, within
five (5) business days after a Registration Statement which includes Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and shall
cause legal counsel  selected by the Company to deliver,  to the transfer  agent
for the Registrable  Securities (with copies to the Investors whose  Registrable
Securities

                                       6

<PAGE>   7

are included in such Registration /statement) an appropriate instruction and
opinion of such counsel; and

         (j) Take  all  other  reasonable  actions  necessary  to  expedite  and
facilitate  distribution to the Investor of the Registrable  Securities pursuant
to the Registration Statement.

         4. OBLIGATIONS OF THE INVESTORS. In connection with the registration of
the Registrable Securities, the Investors shall have the following obligations;

         (a) It shall be a condition precedent to the obligations of the Company
to complete  the  registration  pursuant to this  Agreement  with respect to the
Registrable  Securities of a particular Investor that such Investor shall timely
furnish to the  Company  such  information  regarding  itself,  the  Registrable
Securities held by it, and the intended method of disposition of the Registrable
Securities  held  by  it,  as  shall  be  reasonably   required  to  effect  the
registration  of such  Registrable  Securities  and shall  timely  execute  such
documents in connection  with such  registration  as the Company may  reasonably
request.  At least five (5) days prior to the first  anticipated  filing date of
the  Registration  Statement,  the Company  shall  notify  each  Investor of the
information  the  Company  requires  from each  such  Investor  (the  "Requested
Information") if such Investor elects to have any of such Investor's Registrable
Securities included in the Registration  Statement. If at least two (2) business
days  prior to the  filing  date the  Company  has not  received  the  Requested
Information from an Investor (a "Non-Responsive Investor"), then the Company may
file the Registration Statement without including Registrable Securities of such
Non- Responsive Investor;

         (b) Each  Investor by such  Investor's  acceptance  of the  Registrable
Securities  agrees to cooperate with the Company as reasonably  requested by the
Company  in  connection  with the  preparation  and  filing of the  Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such  Investor's  election  to  exclude  all  of  such  Investor's   Registrable
Securities from the Registration Statement; and

         (c) Each  Investor  agrees  that,  upon  receipt of any notice from the
Company of the  happening of any event of the kind  described in Section 3(e) or
3(f),  above,  such  Investor  will  immediately   discontinue   disposition  of
Registrable  Securities  pursuant to the  Registration  Statement  covering such
Registrable  Securities  until  such  Investor's  receipt  of the  copies of the
supplemented or amended prospectus  contemplated by Section 3(e) or 3(f) and, if
so directed by the Company,  such investor  shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate  of
destruction)  all  copies  in  such  Investor's  possession,  of the  prospectus
covering  such  Registrable  Securities  current  at the time of receipt of such
notice.

                                       7

<PAGE>   8

         5.  EXPENSES  OF  REGISTRATION.  All  reasonable  expenses,  other than
underwriting   discounts   and   commissions   incurred   in   connection   with
registrations,  filing or  qualifications  pursuant to Section 3, but including,
without  limitations,  all  registration,   listing,  and  qualifications  fees,
printers and  accounting  fees,  the fees and  disbursements  of counsel for the
Company, shall be borne by the Company.

         6.  INDEMNIFICATION.  In  the  event  any  Registrable  Securities  are
included in a Registration Statement under this Agreement:

         (a) To the extent permitted by law, the Company will indemnify and hold
harmless each Investor who holds such Registrable Securities,  the directors, if
any, of such Investor,  the officers, if any, of such Investor,  each person, if
any, who controls any Investor  within the meaning of the  Securities Act or the
Exchange  Act (each,  an  "Indemnified  Person"),  against any  losses,  claims,
damages,  liabilities  or expenses  (joint or several)  incurred  (collectively,
"Claims") to which any of them may become subject under the Securities  Act, the
Exchange Act or  otherwise,  insofar as such Claims (or actions or  proceedings,
whether  commenced or threatened,  in respect thereof) arise out of or are based
upon  any  of  the  following   statements,   omissions  or  violations  of  the
Registration   Statement  or  any  post-effective   amendment  thereof,  or  any
prospectus  included  therein:  (i)  any  untrue  statement  or  alleged  untrue
statement  of a material  fact  contained in the  Registration  Statement or any
post-effective  amendment thereof or any prospectus  included  therein:  (i) any
untrue statement or alleged untrue statement of a material fact contained in the
Registration  Statement or any post-effective  amendment thereof or the omission
or alleged  omission  to state  therein a material  fact  required  to be stated
therein or necessary to make the  statements  therein not  misleading,  (ii) any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary  prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented,  if
the Company files any amendment  thereof or supplement  thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein,  in light of the circumstances under which the
statements  therein were made,  not misleading or (iii) any violation or alleged
violation by the Company of the  Securities  Act,  the  Exchange  Act, any state
securities law or any rule or regulation  under the Securities Act, the Exchange
Act or any state  securities  law (the  matters  in the  foregoing  clauses  (i)
through (iii) being,  collectively,  "Violations").  The Company shall reimburse
the  Investors,  promptly as such expenses are incurred and are due and payable,
for any reasonable legal fees or other reasonable  expenses  incurred by them in
connection  with  investigating  or  defending  any such Claim.  Notwithstanding
anything  to  the  contrary  contained  herein,  the  indemnification  agreement
contained in this Section 6(a) shall not (i) apply to a Claim  arising out of or
based upon a Violation  which  occurs in reliance  upon and in  conformity  with
information  furnished  in  writing  to  the  Company  by or on  behalf  of  any
Indemnified  Person  expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof

                                       8

<PAGE>   9

or  supplement  thereto,  if such  prospectus  was timely made  available by the
Company  pursuant to Section 3(b) hereof;  (ii) with respect to any  preliminary
prospectus,  inure  to the  benefit  of any such  person  from  whom the  person
asserting  any such Claim  purchased  the  Registrable  Securities  that are the
subject thereof (or to the benefit of any person controlling such person) if the
untrue  statement  or omission of material  fact  contained  in the  preliminary
prospectus was corrected in the prospectus, as then amended or supplemented,  if
such  prospectus  was timely made  available by the Company  pursuant to Section
3(b)  hereof;  (iii) be available to the extent such Claim is based on a failure
of the  Investor  to  deliver  or  cause to be  delivered  the  prospectus  made
available by the Company;  or (iv) apply to amounts  paid in  settlement  of any
Claim if such  settlement is effected  without the prior written  consent of the
Company,  which consent shall not be unreasonably  withheld.  Each Investor will
indemnify the Company,  its officers,  directors and agents (including  Counsel)
against  any claims  arising out of or based upon a  Violation  which  occurs in
reliance upon and in  conformity  with  information  furnished in writing to the
Company, by or on behalf of such Investor,  expressly for use in connection with
the preparation of the Registration  Statement,  subject to such limitations and
conditions as are applicable to the  Indemnification  provided by the Company to
this Section 6. Such indemnity shall remain in full force and effect  regardless
of any  investigation  made by or on behalf of the Indemnified  Person and shall
survive the transfer of the Registrable  Securities by the Investors pursuant to
Section 9.

         (b) Promptly  after  receipt by an  Indemnified  Person or  Indemnified
Party  under  this  Section  6 of  notice  of the  commencement  of  any  action
(including any  governmental  action),  such  Indemnified  Person or Indemnified
Party  shall,  if a  Claim  in  respect  thereof  is  to  be  made  against  any
indemnifying  party under this  Section 6, deliver to the  indemnifying  party a
written notice of the commencement thereof and the indemnifying party shall have
the right to  participate  in,  and,  to the  extent the  indemnifying  party so
desires,  jointly with any other indemnifying party similarly noticed, to assume
control  of the  defense  thereof  with  counsel  mutually  satisfactory  to the
indemnifying  party and the Indemnified  Person or the Indemnified Party, as the
case may be; provided,  however, that an Indemnified Person or Indemnified Party
shall  have the right to retain its own  counsel  with the  reasonable  fees and
expenses to be paid by the indemnifying  party, if, in the reasonable opinion of
counsel retained by the indemnifying  party, the  representation by such counsel
of the Indemnified  Person or Indemnified Party and the indemnifying party would
be inappropriate  due to actual or potential  differing  interests  between such
Indemnified  Person or Indemnified Party and any other party represented by such
counsel in such  proceeding.  In such event,  the Company shall pay for only one
separate legal counsel for the  Investors;  such legal counsel shall be selected
by the Investors  holding a majority in interest of the  Registrable  Securities
included in the Registration  Statement to which the Claim relates.  The failure
to deliver written notice to the indemnifying  party within a reasonable time of
the commencement of

                                       9

<PAGE>   10

any such action shall not relieve such  indemnifying  party of any  liability to
the Indemnified  Person or Indemnified Party under this Section 6, except to the
extent that the  indemnifying  party is prejudiced in its ability to defend such
action. The indemnification required by this Section 6 shall be made by periodic
payments  of the  amount  thereof  during  the  course of the  investigation  or
defense,  as such expense,  loss, damage or liability is incurred and is due and
payable.

         7. CONTRIBUTION.  To the extent any  indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable  under  Section  6 to the  fullest  extent  permitted  by law;  provided,
however,  that (a) no contribution shall be made under  circumstances  where the
maker would not have been liable for  indemnification  under the fault standards
set  forth in  Section  6; (b) no  seller of  Registrable  Securities  guilty or
fraudulent  misrepresentation  (within  the  meaning  of  Section  11(f)  of the
Securities Act) shall be entitled to contribution from any seller of Registrable
Securities  who was not  guilty of such  fraudulent  misrepresentation;  and (c)
contribution by any seller of Registrable  Securities shall be limited in amount
to the net amount of  proceeds  received  by such  seller  from the sale of such
Registrable Securities.

         8. REPORTS UNDER  EXCHANGE ACT. With a view to making  available to the
Investors the benefits of Rule 144  promulgated  under the Securities Act or any
other  similar  rule or  regulation  of the SEC that may at any time  permit the
Investors to sell  securities of the Company to the public without  registration
("Rule 144"), the Company agrees to use its reasonable best efforts to:

         (a) make and keep  public  information  available,  as those  terms are
understood and defined in Rule 144;

         (b)  file  with  the SEC in a  timely  manner  all  reports  and  other
documents required of the Company under the Securities Act and the Exchange Act;
and

         (c) furnish to each Investor so long as such Investor owns  Registrable
Securities,  promptly upon request,  (i) a written statement by the Company that
it has complied with the reporting  requirements of Rule 144, the Securities Act
and the Exchange Act, (ii) a copy of the most recent annual or quarterly  report
of the Company and such other  reports and documents so filed by the Company and
(iii)  such  other  information  as may be  reasonably  requested  to permit the
Investors to sell such securities pursuant to Rule 144 without registration.

         9.  ASSIGNMENT  OF THE  REGISTRATION  RIGHTS.  The  rights  to have the
Company  register  Registrable  Securities  pursuant to this Agreement  shall be
automatically  assigned by the Investors to any transferee of in excess of fifty
(50%) percent or more of the  Registrable  Securities  (or all or any portion of
any Debenture of the Company which is convertible into such securities) only if:
(a) the Investor

                                       10

<PAGE>   11

agrees in writing with the  transferee or assignee to assign such rights,  and a
copy of such  agreement  is furnished  to the Company  within a reasonable  time
after such  assignment,  (b) the Company is, within a reasonable time after such
transfer  or  assignment,  furnished  with  written  notice  of (i) the name and
address of such  transferee or assignee and (ii) the securities  with respect to
which  such  registration   rights  are  being  transferred  or  assigned,   (c)
immediately  following  such transfer or assignment  the further  disposition of
such securities by the transferee or assignee is restricted under the Securities
Act and  applicable  state  securities  laws,  and (d) at or before the time the
Company received the written notice  contemplated by clause (b) of this sentence
the transferee or assignee agrees in writing with the Company to be bound by all
of the  provisions  contained  herein.  In the  event of any  delay in filing or
effectiveness of the Registration Statement as a result of such assignment,  the
Company  shall not be liable for any damages  arising  from such  delay,  or the
payments set forth in Section 2(c) hereof.

         10. AMENDMENT OF REGISTRATION  RIGHTS.  Any provision of this Agreement
may be amended and the observance  thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively),  only with the
written  consent of the Company and investors who hold a majority in interest of
the Registrable Securities.  Any amendment or waiver effected in accordance with
this Section 10 shall be binding upon each Investor and the Company.

         11. MISCELLANEOUS.

         (a) A  person  or  entity  is  deemed  to be a  holder  of  Registrable
Securities  whenever  such  person or entity  owns of  record  such  Registrable
Securities.  If  the  Company  received  conflicting  instructions,  notices  or
elections

from two or more  persons  or  entities  with  respect  to the same  Registrable
Securities,  the  Company  shall act upon the basis of  instructions,  notice or
election received from the registered owner of such Registrable Securities.

         (b) Notices  required or  permitted to be given  hereunder  shall be in
writing and shall be deemed to be sufficiently  given when personally  delivered
(by  hand,  by  courier,  by  telephone  line  facsimile  transmission,  receipt
confirmed,  or other means) or sent by certified mail, return receipt requested,
properly  addressed and with proper postage pre-paid (i) if to the Company,  C/O
Gary B. Wolff,  Esq., 747 Third Avenue,  25th Floor, New York, NY 10017; (ii) if
to the  Initial  Investor,  at the  address  set  forth  under  its  name in the
Subscription  Agreement,  with a copy to its designated attorney and (iii) if to
any other  Investor,  at such address as such  Investor  shall have  provided in
writing to the Company, or at such other address as each such party furnishes by
notice given in accordance with this Section 11(b), and shall be effective, when
personally delivered, upon receipt and, when so sent by certified mail, four (4)
business days after deposit with the United States Postal

                                       11

<PAGE>   12

Service.

         (c)  Failure of any party to  exercise  any right or remedy  under this
Agreement or otherwise,  or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.

         (d) This Agreement  shall be governed by the  interpreted in accordance
with the laws of the State of  Delaware.  Each of the  parties  consents  to the
jurisdiction  of the  state and  federal  courts  of the  State of  Delaware  in
connection with any dispute  arising under this Agreement and hereby waives,  to
the maximum  extent  permitted by law, any  objection,  including  any objection
based on forum non  coveniens,  to the bringing of any such  proceeding  in such
jurisdictions.  A facsimile transmission of this signed Agreement shall be legal
and binding on all parties  hereto.  This Agreement may be signed in one or more
counterparts,  each of which shall be deemed an  original.  The headings of this
Agreement are for convenience of reference and shall not form part of, or affect
the interpretation of, this Agreement.  If any provision of this Agreement shall
be  invalid  or   unenforceable   in  any   jurisdiction,   such  invalidity  or
unenforceability  shall  not  effect  the  validity  or  enforceability  of  the
remainder of this Agreement or the validity or  enforceability of this Agreement
in any other  jurisdiction.  This Agreement may be amended only by an instrument
in writing  signed by the party to be charged with  enforcement.  This Agreement
supersedes all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof.

         (e) This Agreement  constitutes the entire  agreement among the parties
hereto with respect to the subject  matter  hereof.  There are no  restrictions,
promises, warranties or undertakings,  other than those set forth or referred to
herein. This Agreement  supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof.

         (f) Subject to the  requirements  of Section 9 hereof,  this  Agreement
shall inure to the benefit of and be binding upon the  successors and assigns of
each of the parties hereto.

         (g) All pronouns and any  variations  thereof  refer to the  masculine,
feminine or neuter, singular or plural, as the context may require.

         (h) The headings in this  Agreement  are for  convenience  of reference
only and shall not limit or otherwise affect the meaning thereof.

         (i) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall  constitute one and the
same agreement.  This Agreement,  once executed by a party,  may be delivered to
the other party hereto by telephone  line  facsimile  transmission  of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.

                                       12

<PAGE>   13

                  (REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

                                       13

<PAGE>   14

         IN WITNESS  WHEREOF,  the parties have caused this Agreement to be duly
executed by their  respective  officers  thereunto duly authorized as of the day
and year first above written.

                               SWISSRAY INTERNATIONAL, INC.

                           By: ____________________________________
                           Name: Ruedi G. Laupper
                           Title:    President and Chairman of the Board

                           ---------------------------------------
                           (Name of Initial Investor)

                           By: ____________________________________
                           Name:

                           Title:

                                       14

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