Document:

<TABLE>
<CAPTION>

Name                                       Dated           Amount       Maturity Date       Deb. No.
---------------------------------------    ------------    -----------  ---------------     --------------
<S>                                        <C>             <C>          <C>                 <C>
Canadian Advantage Limited Partnership*    Nov. 26, 1997   $  500,000   Nov 26, 1999        NOV-1997-103
Dominion Capital Fund, Ltd.                Nov. 26, 1997   $2,190,000   Nov 26, 1999        NOV-1997-102
Sovereign Partners LP                      Nov. 26, 1997   $1,000,000   Nov 26, 1999        NOV-1997-101

*    This document has been filed.

</TABLE>

<PAGE>

                                FORM OF DEBENTURE

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

ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

CONVERTIBLE DEBENTURE DUE                                      November 26, 1999

                                                               November 26, 1997
$500,000.00
Number            NOV-1997-103

          FOR  VALUE  RECEIVED,   SWISSRAY  INTERNATIONAL,   INC.,  a  New  York
          corporation  (the  "Company"),  hereby  promises  to pay  to  Canadian
          Advantage Limited  Partnership or registered assigns (the "Holder") on
          November 26, 1999, (the "Maturity Date"), the principal amount of Five
          Hundred Thousand  Dollars  ($500,000) U.S., and to pay interest on the
          principal  amount hereof,  in such amounts,  at such times and on such
          terms and conditions as are specified herein.

Article 1. Interest

         The Company shall pay interest on the unpaid  principal  amount of this
Debenture  (the  "Debenture")  at the rate of Eight  Percent  (8.0%)  per  year,
payable at the time of each conversion until the principal amount hereof is paid
in full or has been converted.  Interest shall be computed on the basis of a 360
day year of 12, 30 day months.  Each payment  shall be paid in cash or in freely
trading Common Stock of the Company,  at the Company's option. If paid in Common
Stock,  the number of shares of the Company's  Common Stock to be received shall
be  determined  by  dividing  the  dollar  amount  of the  interest  by the then
applicable  Market Price as of the interest  payment date.  "Market Price" shall
mean 75% of the average of the 5 day closing bid prices,  as reported by Nasdaq,
or whatever primary

                                       1

<PAGE>   2

exchange  the  Company's  Common  Stock may be traded on, for the 5 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  Holder,  or per  Holder's  instructions,  within 8
business days of the date of conversion. The Debentures are subject to automatic
conversion  at the end of two years from the date of  issuance at which time all
Debentures  outstanding will be  automatically  converted based upon the formula
set forth in Section  3.2. The closing  shall be deemed to have  occurred on the
date the funds are received by the Company or its Counsel (the "Closing Date").

Article 2. Method of Payment

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

Article 3.  Conversion

         Section 3.1. Conversion Privilege

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

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

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

         Section 3.2. Conversion Procedure.

                                       2

<PAGE>   3

         (a) Debentures.  Upon receipt by the Company or its designated attorney
of a  facsimile  or original of Holder's  signed  Notice of  Conversion  and the
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 this  Debenture 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,  this Debenture to be converted
together with a facsimile or original of the signed  Notice of Conversion  which
evidences Holder's intention to convert the Debenture  indicated.  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 after 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  after  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 after 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 Holder has  delivered to the Company
or its  designated  attorney a facsimile  or  original  of the signed  Notice of
Conversion, as long as the original Debenture(s) to be converted are received by
the Company or its designated attorney within 5 business days thereafter. Unless
otherwise  notified  by the  Company  in writing  via  facsimile  the  Company's
designated  attorney is Gary B. Wolff,  Esq., 474 Third Avenue,  25th Floor, New
York, New York 10017, (P) 212-644-6446, (F) 212-644-6498.

         (c) Common  Stock to be Issued  Without  Restrictive  Legend.  Upon the
conversion of any  Debentures and upon receipt by the Company or its attorney of
a facsimile or original of Holder's  signed Notice of Conversion (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 Holder (or its nominee) and in such denominations to be specified at
conversion  representing the number of shares of Common Stock issuable upon such
conversion,  as applicable.  Seller  warrants that no  instructions,  other than
these  instructions,  have been given or will be given to the transfer agent and
that the Common Stock shall  otherwise be freely  transferable  on the books and
records of Seller, except as may be set forth herein.

                                       3

<PAGE>   4

         (d) (i) Conversion Rate.  Holder is entitled,  at its option to convert
twenty-five  percent  (25%) of the face amount of this  Debenture,  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").  Holder is  entitled,  at its  option to  convert an
additional  twenty-five percent (25%), fifty percent (50%) cumulatively,  of the
face amount of this Debenture,  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. Holder is entitled,
at its option, to convert an additional twenty-five percent (25%),  seventy-five
percent (75%) cumulatively,  of the face amount of this Debenture,  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.  Holder is entitled,  at its option,  to convert an additional
twenty-five percent (25%), one hundred percent (100%) cumulatively,  of the face
amount of this Debenture,  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 (130th) day following the Closing Date it shall
pay the Holder,  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 Holder by facsimile at the number listed
in the Subscription  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 Holder 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 than 10 business days following the date the Company notifies
the Holder by

                                       4

<PAGE>   5

facsimile  of the  redemption.  The  Company  shall  give the  Holder at least 2
business day's notice of the above  information.  On or before the date by which
the Holder is to deliver  the  original  Debentures  to the  Escrow  Agent,  the
Company  shall wire to the Escrow Agent that amount  necessary to pay the Holder
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 Holder and  deliver to the Company
the original Debentures via overnight courier.  The Holder 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 Holder's  conversion of all the  Debentures,  the Company raises money under
either  Regulation D or Regulation S on terms that are more favorable than those
terms set forth in this  Debenture,  then in such event,  the Holder at its sole
option shall be entitled to completely  replace the terms of this Debenture with
the terms of the more beneficial Debenture as to that balance, including accrued
interest and any accumulated liquidated damages,  remaining on Holder's original
investment.  The  Debentures  are subject to a  mandatory,  24 month  conversion
feature at the end of which all  Debentures  outstanding  will be  automatically
converted,  upon the  terms  set forth in this  section  ("Mandatory  Conversion
Date").

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

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

         (g) Within five (5) business  days after  receipt of the  documentation
referred to above in Section  3.2(b),  the Company shall deliver a  certificate,
without  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,

                                       5

<PAGE>   6

including the cost for delivery of an opinion letter to the transfer  agent,  if
so required.  The person in whose name the  certificate of Common Stock is to be
registered  shall be  treated  as a  shareholder  of  record  on and  after  the
conversion  date.  Upon surrender of any Debentures  that are to be converted in
part,  the  Company  shall  issue  to the  Holder a new  Debenture  equal to the
unconverted amount, if so requested in writing by Holder.

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

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

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

         The Company shall make any payments  incurred under this Section 3.2(g)
in immediately available funds within five (5) business days from the Conversion

                                       6

<PAGE>   7

Date if late.  Nothing  herein  shall  limit a Holder's  right to pursue  actual
damages or cancel the conversion for the Company's  failure to issue and deliver
Common Stock to the Holder within 8 business days after the Conversion Date.

         (h) The  Company  shall at all times  reserve  and have  available  all
Common Stock  necessary to meet  conversion of the  Debentures by all Holders of
the entire amount of Debentures then outstanding. If, at any time Holder submits
a Notice of Conversion and the Company does not have  sufficient  authorized but
unissued  shares of Common Stock  available to effect,  in full, a conversion of
the Debentures (a "Conversion Default",  the date of such default being referred
to herein as the  "Conversion  Default  Date"),  the Company  shall issue to the
Holder all of the shares of Common Stock which are available,  and the Notice of
Conversion as to any Debentures requested to be converted but not converted (the
"Unconverted  Debentures"),  upon Holder's  sole option,  may be deemed null and
void. The Company shall provide notice of such  Conversion  Default  ("Notice of
Conversion  Default")  to all existing  Holders of  outstanding  Debentures,  by
facsimile,  within three (3)  business  day of such  default  (with the original
delivered by overnight or two day courier),  and the Holder shall give notice to
the Company by facsimile  within five  business  days of receipt of the original
Notice of Conversion  Default  (with the original  delivered by overnight or two
day  courier)  of its  election  to either  nullify  or  confirm  the  Notice of
Conversion.

         The  Company  agrees to pay to all  Holders of  outstanding  Debentures
payments for a Conversion Default  ("Conversion Default Payments") in the amount
of  (N/365)  x (.24) x the  initial  issuance  price of the  outstanding  and/or
tendered but not converted  Debentures  held by each Holder where N = the number
of days from the Conversion Default Date to the date (the "Authorization  Date")
that the Company  authorizes  a  sufficient  number of shares of Common Stock to
effect  conversion  of all remaining  Debentures.  The Company shall send notice
("Authorization   Notice")  to  each  Holder  of  outstanding   Debentures  that
additional shares of Common Stock have been authorized,  the Authorization  Date
and the amount of Holder's  accrued  Conversion  Default  Payments.  The accrued
Conversion  Default  shall be paid in cash or shall be  convertible  into Common
Stock at the Conversion Rate, at the Holder's option, payable as follows: (i) in
the event Holder  elects to take such payment in cash,  cash  payments  shall be
made to such Holder of outstanding  Debentures by the fifth day of the following
calendar  month,  or (ii) in the event  Holder  elects to take such  payment  in
stock,  the Holder may convert  such  payment  amount  into Common  Stock at the
conversion  rate set forth in section  4(d) at anytime  after the 5th day of the
calendar  month  following  the  month in which  the  Authorization  Notice  was
received, until the expiration of the mandatory 24 month conversion period.

         The company  acknowledges  that its  failure to  maintain a  sufficient
number of  authorized  but  unissued  shares of Common Stock to effect in full a
conversion  of the  Debentures  will  cause the  Holder to suffer  damages in an
amount that will be difficult to ascertain.  Accordingly, the parties agree that
it is appropriate to include

                                       7

<PAGE>   8

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 Holder's right to pursue actual damages
for the Company's  failure to maintain a sufficient  number of authorized shares
of Common Stock.

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

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

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

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

                                       8

<PAGE>   9

         Section 3.5.  Company to Reserve  Stock.  The Company shall reserve the
number of shares of Common  Stock  required  pursuant  to and upon the terms set
forth in Section 3(a) of the  Subscription  Agreement dated November of 1997, to
permit the conversion of this Debenture. All shares of Common Stock which may be
issued upon the conversion  hereof shall upon issuance be validly issued,  fully
paid and nonassessable  and free from all taxes,  liens and charges with respect
to the issuance thereof.

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

         Section 3.7.  Mergers,  Etc. If the Company merges or consolidates with
another corporation or sells or transfers all or substantially all of its assets
to another  person and the holders of the Common  Stock are  entitled to receive
stock,  securities  or property in respect of or in exchange  for Common  Stock,
then as a condition of such merger, consolidation, sale or transfer, the Company
and any such  successor,  purchaser or transferee  shall amend this Debenture to
provide  that it may  thereafter  be  converted  on the terms and subject to the
conditions  set forth  above  into the kind and amount of stock,  securities  or
property  receivable  upon such  merger,  consolidation,  sale or  transfer by a
holder of the number of shares of Common Stock into which this  Debenture  might
have been  converted  immediately  before such  merger,  consolidation,  sale or
transfer,  subject to adjustments  which shall be as nearly equivalent as may be
practicable to adjustments provided for in this Article 3.

Article 4.  Mergers

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

Article 5.  Reports

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

                                       9

<PAGE>   10

Article 6.  Defaults and Remedies

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

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

Article 7.  Registered Debentures

         Section 7.1.  Series.  This  Debenture  is one of a numbered  series of
Debentures  having an  aggregate  principal  amount of not more than  $3,800,000
which are  identical  except as to the  principal  amount  and date of  issuance
thereof and as to any  restriction  on the  transfer  thereof in order to comply
with  the  Securities  Act of 1933 and the  regulations  of the  Securities  and
Exchange  Commission  promulgated  thereunder.  Such  Debentures are referred to
herein collectively as the "Debentures". The Debentures shall be issued in whole
multiples of $5,000.

                                       10

<PAGE>   11

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

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

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

Article 8.  Notices

         Any notice  which is  required  or  convenient  under the terms of this
Debenture  shall be duly given if it is in writing  and  delivered  in person or
mailed by first class

                                       11

<PAGE>   12

mail, postage prepaid and directed to the Holder of the Debenture at its address
as it appears on the Register or if to the Company to its principal executive
offices, with a copy by fax to Gary B. Wolff, Esq. 747 Third Avenue, New York,
NY 10017. The time when such notice is sent shall be the time of the giving of
the notice.

Article 9.  Time

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

Article 10.  Waivers

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

Article 11.  Rules of Construction

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

Article 12.  Governing Law

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

                                       12

<PAGE>   13

Article 13. Litigation

         (a) Forum Selection and Consent to  Jurisdiction.  Any litigation based
thereon,  or arising out of, under, or in connection with, this agreement or any
course of conduct,  course of dealing,  statements  (whether oral or written) or
actions of the Company or Holder shall be brought and maintained  exclusively in
the  courts  of  the  State  of  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 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.

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

                                    SWISSRAY INTERNATIONAL, INC.

                                       13

<PAGE>   14

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

                                       14

<PAGE>   15

                                    Exhibit A

                              NOTICE OF CONVERSION

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

         The undersigned hereby irrevocably  elects, as of ______________,  199_
to convert $_________________ of the Debentures into Shares of Common Stock (the
"Shares")  of SWISSRAY  INTERNATIONAL,  INC.  (the  "Company")  according to the
conditions set forth in the Subscription Agreement dated November ____, 1997.

Date of Conversion_________________________________________

Applicable Conversion Price_________________________________

Number of Shares Issuable upon this conversion______________

Signature___________________________________________________
                           [Name]

Address_____________________________________________________

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

Phone______________________   Fax___________________________

                                       15

<PAGE>   16

                             Assignment of Debenture

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

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

                  (name, address and SSN or EIN of assignee)

                                                     Dollars ($                )
--------------------------------------------------------------------------------
(principal amount of Debenture, $10,000 or integral multiples of $10,000)

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

Date:_____________________ Signed:______________________________________________
                                    (Signature must conform in all

                                     respects to name of Holder shown
                                     of face of Debenture)

Signature Guaranteed:

                                       16<TABLE>
<CAPTION>
Name                                       Dated           Amount       Signatory
---------------------------------------    ------------    -----------  ---------------
<S>                                        <C>             <C>          <C>
Canadian Advantage Limited Partnership     Nov. 26, 1997   $  500,000
Dominion Capital Fund, Ltd.                Nov. 26, 1997   $2,190,000
Sovereign Partners LP                      Nov. 26, 1997   $1,000,000

*    This document has been filed.

</TABLE>

<PAGE>

                                                                   EXHIBIT 10.20

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

                          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  not  more  than  $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 __________ __, 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").

1.       SUBSCRIPTION.

         (a) The  undersigned  hereby  irrevocably  subscribes for and agrees to
purchase  $________ of the Company's  Debentures,  which amount  represents  the
unconverted portion of Purchaser's investment, with agreed upon interest, in the
Company's August,  1997,  Regulation D offering.  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.

                                       4

<PAGE>   5

"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:

                  (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

                                       5

<PAGE>   6

         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  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.

                                       6

<PAGE>   7

                  (f)      Legends.

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

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

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

                           (ii) The Common  Stock issued upon  conversion  shall
                  contain the following legend:

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

                                       7

<PAGE>   8

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

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

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

                  (j) The undersigned or the undersigned's  representatives,  as
         the case may be, has such  knowledge and  experience in financial,  tax
         and  business  matters so as to enable the  undersigned  to utilize the
         information  made available to the  undersigned in connection  with the
         Offering to

                                       8

<PAGE>   9

         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
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

                                       9

<PAGE>   10

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. 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

                                       10

<PAGE>   11

its subsidiaries, (iii) no injunction,  restraining order or order of any nature
by a  federal,  state  or  foreign  court  or  Governmental  Body  of  competent
jurisdiction  to which the Company or any of its  subsidiaries is subject issued
that,  in the case of  clauses  (i),  (ii) and (iii)  above,  (x) is  reasonably
likely,  singly or in the aggregate,  to result in a material  adverse effect on
the  business,  condition,  (financial  or  otherwise),   operations,  earnings,
performance,  properties or prospects of the Company, and its subsidiaries taken
as a whole or (y) would  interfere with or adversely  affect the issuance of the
Debentures or would be reasonably likely to render this  Subscription  Agreement
or the Debentures, or any portion thereof, invalid or unenforceable.

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

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

                                       11

<PAGE>   12

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.

         (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

                                       12

<PAGE>   13

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.

         (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

                                       13

<PAGE>   14

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.

                  (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

                                       14

<PAGE>   15

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.

                  (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

                                       15

<PAGE>   16

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 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").

                                       16

<PAGE>   17

                  (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 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
</TABLE>

                                       17

<PAGE>   18

<TABLE>

<S>                                              <C>

         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  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.

                                       18

<PAGE>   19

         The Company agrees to pay to all  Purchasers of outstanding  Debentures
payments for a Conversion Default  ("Conversion Default Payments") in the amount
of  (N/365)  x (.24) x the  initial  issuance  price of the  outstanding  and/or
tendered  but not  converted  Debentures  held by each  Purchaser  where N = the
number of days from the Conversion Default Date to the date (the  "Authorization
Date") that the Company authorizes a sufficient number of shares of Common Stock
to effect conversion of all remaining Debentures.  The Company shall send notice
("Authorization  Notice")  to each  Purchaser  of  outstanding  Debentures  that
additional shares of Common Stock have been authorized,  the Authorization  Date
and the amount of Purchaser's  accrued Conversion Default Payments.  The accrued
Conversion  Default  shall be paid in cash or shall be  convertible  into Common
Stock at the Conversion Rate, at the Purchaser's option, payable as follows: (i)
in the event Purchaser  elects to take such payment in cash, cash payments shall
be made to such  Purchaser  of  outstanding  Debentures  by the fifth day of the
following  calendar month,  or (ii) in the event  Purchaser  elects to take such
payment in stock,  the  Purchaser  may convert such  payment  amount into Common
Stock at the conversion  rate set forth in section 4(d) at anytime after the 5th
day of the calendar month following the month in which the Authorization  Notice
was received, until the expiration of the mandatory 24 month conversion period.

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

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

                  (i) The  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

                                       19

<PAGE>   20

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 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

                                       20

<PAGE>   21

delivered in connection with the transactions  contemplated hereby shall be true
and  correct in all  material  respects on and as of the date of the sale of the
Debentures,  and as of the date of the  conversion and exercise  thereof,  as if
made on and as of such date and shall survive the execution and delivery of this
Subscription Agreement and the purchase of the Debentures.

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

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

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

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

         (h) NASAA UNIFORM LEGEND

         IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THE
OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT
BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE
ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE. THESE SECURITIES ARE SUBJECT

                                       21

<PAGE>   22

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 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.

                                       22

<PAGE>   23

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 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)

                                       23

<PAGE>   24

                          SWISSRAY INTERNATIONAL, INC.

                          CORPORATION QUESTIONNAIRE
                          INVESTOR NAME: _______________

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

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

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

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

/ /

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

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

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

                           (b)      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

                                       24

<PAGE>   25

                           (c)      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 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.

                                       25

<PAGE>   26

II.      OTHER CERTIFICATIONS.

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

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

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

III.     GENERAL INFORMATION

         (a)      PROSPECTIVE PURCHASER (THE CORPORATION)

Name:

Principal Place of Business:  __________________________________________________

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

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

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

Telephone Number:_________________________________________________________
                                    (Area Code)               (Number)

Jurisdiction of Incorporation:__________________________________________________

Date of Formation:______________________________________________________________

Taxpayer Identification Number:_________________________________________________

Number of Shareholders:_________________________________________________________

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

Name:___________________________________________________________________________

Position or Title:______________________________________________________________

                                       26

<PAGE>   27

                          SWISSRAY INTERNATIONAL, INC.

                           CORPORATION SIGNATURE PAGE

         Your  signature  on  this  Corporation  Signature  Page  evidences  the
agreement by the Purchaser to be bound by the QUESTIONNAIRE and the SUBSCRIPTION
AGREEMENT.

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

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

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

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

                                              ----------------------------------
                                                        (Purchaser)

                                              By: ______________________________
                                                        (Signature)

                                              Name: ____________________________
                                                        (Please Type or Print)

                                              Title: ___________________________
                                                        (Please Type or Print)

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

                                       27

<PAGE>   28

                             COMPANY ACCEPTANCE PAGE

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

SWISSRAY INTERNATIONAL, INC.

BY___________________________________________________
         Ruedi G. Laupper, its Chairman and President
         duly authorized

                                       28

<PAGE>   29

                                    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___________________________

                                       29

<PAGE>   30

                                    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 a
corporation in good standing under the laws of the State of __________, is duly

                                       30

<PAGE>   31

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

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

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

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

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

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

                                       31

<PAGE>   32

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: ____________________________

                                       32

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00001-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00001-of-00352.parquet"}]]