Document:

Name                                       Dated           Amount      Signatory
---------------------------------------    ------------    ----------  ---------

Southshore Capital, Ltd.*                  July , 1999     $1,148,000

*    This document has been filed.
<PAGE>

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

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

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

                          Maximum Offering: $1,148,400

      This offering consists of $1,148,400 of Convertible Debentures of Swissray
International, Inc.

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

                        CONTINGENT SUBSCRIPTION AGREEMENT

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

                             SUBSCRIPTION PROCEDURES

         Convertible Debentures of SWISSRAY INTERNATIONAL, INC.. (the "Company")
are  being  offered  in  an  aggregate  amount  not  to  exceed  $2,000,000  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 comple Internal Revenue Service
Form W-9 and any other forms that may be required).

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

         If and to the extent that there are any  discrepancies  or  differences
between the Term Sheet and the underlying documents consisting of the Promissory
Note, Contingent  Subscription  Agreement,  Convertible Debenture,  Registration
Rights Agreement and Warrants,  the terms contained in the Term Sheet shall take
precedence over those contained in the underlying  documents.  For instance (but
by no means limited to) if the Term Sheet  indicates  interest at the rate of 8%
per annum and the underlying  documents refer to interest at a different rate or
on a  different  basis,  then those  terms  contained  in the Term  Sheet  shall
control. In the event that the Term Sheet is silent as to any specific terms and
conditions,  then in that  event  the  terms and  conditions  in the  underlying
documents (absent any contradictions in the aforesaid Term Sheet) shall control.

<PAGE>

                        CONTINGENT SUBSCRIPTION AGREEMENT

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

To:      Swissray International, Inc.

         This  Subscription  Agreement is made between  Swissray  International,
Inc.,  ("Company"  or  "Seller")  a New York  corporation,  and the  undersigned
prospective purchaser  ("Purchaser") who is subscribing hereby for the Company's
Convertible Debentures (the "Debentures").  The Debentures being offered will be
separately  transferable,  to the extent that any such  transfer is permitted by
law. The  conversion  terms of the  Debentures  are set forth in Section 4. This
subscription is submitted to you in accordance with and subject to the terms and
conditions  described in this Subscription  Agreement together with any Exhibits
thereto,  relating  to an  offering  (the  "Offering")  of up to  $1,148,400  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  $1,148,400 of the Company's  Debentures.  The Purchaser  entering into
this  Contingent  Subscription  Agreement  shall pay the purchase  price for the
Debentures  by  delivering  immediately  available  good funds in United  States
Dollars to the escrow agent. (Said amount shall be deemed to have been delivered
to the Company upon non-payment of the full amount of principal and interest due
on the Promissory Note dated July 9, 1999 between the Company and the Purchaser.
The  fully  executed  Contingent  Subscription  Agreement,  Registration  Rights
Agreement  and  Debenture  shall be held by the  escrow  agent and shall only be
delivered to the Purchaser upon  non-payment of the full amount of principal and
interest  due on the  Promissory  Note on its "Due Date".  The "Due Date" of the
Promissory Note assuming  non-payment of the Promissory  Note, shall mean August
24, 1999. The Debentures shall pay a 5% cumulative interest payable annually, in
cash or in freely trading Common Stock of the Company,  at the Company's option,
at the time of each conversion. If paid in Common Stock, the number of shares of
the  Company's  Common Stock to be received  shall be determined by dividing the
dollar amount of the dividend by the then  applicable  Market  Price,  as of the
interest  payment  date.  "Market  Price"  shall mean 80% of the 10-day  average
closing bid price,  as reported by Bloomberg,  LP, for the ten (10)  consecutive
trading days  immediately  preceding  the date of  conversion  (the  "Conversion
Price").  If the  interest is to be paid in cash,  the  Company  shall make such
payment within 5 business days of the date of conversion.  If the interest is to
be paid in Common Stock,  said Common Stock shall be delivered to the Purchaser,
or  per  Purchaser's  instructions,  within  5  business  days  of the  date  of
conversion. The Debentures are subject to automatic conversion at the end of two
years from the date of issuance at which time all Debentures outstanding will be
automatically  converted  based upon the formula set forth in Section 4(d).  The
closing  shall be  deemed  to have  occurred  on the Due  Date,  as that term is
defined above.

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

2.       REPRESENTATIONS AND WARRANTIES.

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

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

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

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

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

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

                  (f)      Legends.

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

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

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

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

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

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

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

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

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

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

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

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

         3.       SELLER REPRESENTATIONS.

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

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

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

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

         (d) Company  Compliance.  The Company  represents and warrants that the
Company  and  its  subsidiaries  are:  (i) in  full  compliance,  to the  extent
applicable,  with all reporting  obligations under either Section 13(a) or 15(d)
of the Securities Exchange Act of 1934;  excepting that the Company acknowledges
that it did not  timely  file its Form 10-K for its  fiscal  year ended June 30,
1998, and its Form 10-Q for the fiscal quarter ended September 30, 1998, both of
which were subsequently  filed on December 3, 1998, (ii) not in violation of any
term or provision of its Certificate of Incorporation  or by-laws;  (iii) not in
default  in the  performance  or  observance  of any  obligation,  agreement  or
condition contained in any bond,  debenture (excepting for reservation of number
of shares  required if all  Debentures  were to be converted  and  excepting for
registration  of underlying  shares as same relates to preexisting  debentures),
note or any other evidence of  indebtedness  or in any mortgage,  deed of trust,
indenture or other  instrument  or  agreement to which they are a party,  either
singly  or  jointly,  by which it or any of its  property  is bound or  subject.
Furthermore,  the  Company  is not  aware of any other  facts,  which it has not
disclosed which could have a material adverse effect on the business, condition,
(financial  or  otherwise),  operations,  earnings,  performance,  properties or
prospects of the Company and its subsidiaries taken as a whole.

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

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

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

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

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

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

         (k) Prior Shares Issued Under Regulation S or Regulation D. In the past
nine  months  the  Company  raised  $17,043,449 in Regulation S and Regulation D
offerings, including redemptions and rollovers.

         (l) Current Authorized Shares. As of July 9, 1999 there were 50,000,000
authorized  shares  of  Common  Stock of which approximately 5,051,722 shares of
Common Stock were deemed issued and outstanding on a fully diluted basis.

         (m)  Disclosure  Documents.   The  Disclosure  Documents  are  all  the
documents (other than preliminary  materials) that the Company has been required
to file with the SEC from June 30, 1997,  to the date hereof,  exclusive of such
registration   statements  as  have  been  filed  in  accordance   with  certain
registration rights  agreeements.  As of their respective dates, and/or dates of
amended filings with respect thereto, none of the Disclosure Documents contained
any  untrue  statement  of a material  fact or omitted to state a material  fact
required  to be stated  therein  or  necessary  in order to make the  statements
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading,  and no material  event has occurred  since the Company's  filing on
Form 10-K and 10-K/A for the year ended June 30, 1998 and Form 10-Q for quarters
ended  September  30,  1998 and  December  31,  1998 which could make any of the
disclosures   contained  therein  (as  subsequently   amended  and/or  restated)
misleading  The financial  statements of the Company  included in the Disclosure
Documents have been prepared in accordance  with generally  accepted  accounting
principles  applied on a consistent basis during the periods involved (except as
may be indicated in the audit  adjustments) the consolidated  financial position
of the Company and its consolidated subsidiaries as at the dates thereof and the
consolidated  results of their operations and changes in financial  position for
the periods then ended.

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

         (o) Delivery Instructions. On the Due Date, assuming non-payment of the
Promissory  Note,  the Debentures being purchased hereunder which are being held
in  escrow  by  Joseph  B. LaRocco, Esq. as Escrow Agent, at which time shall be
delivered to the Purchaser, per the  Purchaser's instructions.

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

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

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

         (s) The Company hereby represents that it shall be paying consultant  a
fee of $80,000 from the gross proceeds of this Offering, which fee shall be paid
out of escrow by the Escrow Agent

         4.       TERMS OF CONVERSION.

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

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

         (c) Common Stock to be Issued.Upon the conversion of any Debentures and
upon  receipt  by  the  Company  or  its  designated  attorney of a facsimile or
original of Purchaser's signed Notice of Conversion (see Exhibit D) Seller shall
instruct Seller's transfer

agent to issue Stock  Certificates  without  restrictive legend or stop transfer
instructions,  if at that  time  the  Registration  Statement  has  been  deemed
effective (or with proper restrictive  legend if the Registration  Statement has
not as yet been declared  effective),  in the name of Purchaser (or its nominee)
and in such denominations to be specified at conversion  representing the number
of shares of Common Stock issuable upon such conversion,  as applicable.  Seller
warrants that no instructions, other than these instructions, have been given or
will be given to the transfer agent and that the Common Stock shall otherwise be
freely  transferable  on the books and  records of Seller,  except as may be set
forth herein.

         (d) (i)  Conversion  Rate.  Purchaser  is entitled,  at its option,  to
convert  the face  amount of each  Debenture,  plus  accrued  interest,  anytime
following  the Due Date,  at 80% of the 10 day  average  closing  bid price,  as
reported  by  Bloomberg,  LP for the 10  consecutive  trading  days  immediately
preceding the applicable Conversion Date (the "Conversion Price"). No fractional
shares or scrip  representing  fractions of shares will be issued on conversion,
but the number of shares  issuable  shall be rounded up or down, as the case may
be, to the nearest whole share.

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

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

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

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

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

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

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

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

         (i) The  Purchaser  shall  be  entitled  to  convert  any or all of the
Debentures, even though the Registration Statement covering those Debentures may
not have been declared effective at that time, in which case the Purchaser shall
receive  legended  Common  Stock until the  Registration  Statement  is declared
effective or in the written opinion of legal counsel the legend may be removed.

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

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

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

5.       LIMITS ON AMOUNT OF CONVERSION AND OWNERSHIP.

         Notwithstanding  the provisions  hereof or of the  Debenture(s),  in no
event  except (i) with  respect to a conversion  pursuant to  redemption  by the
Company  or (ii) if there is (a) a public  announcement  that 50% or more of the
Company is being acquired,  (b) a public  announcement that the Company is being
merged,  or (c) a change in control,  shall the Purchaser be entitled to convert
any  Debentures to the extent that,  after such  conversion,  the sum of (1) the
number of shares of Common Stock  beneficially  owned by the  Purchaser  and its
affiliates  (other than shares of Common Stock which may be deemed  beneficially
owned through the ownership of the unconverted  portion of the Debentures),  and
(2) the number of shares of Common Stock  issuable  upon the  conversion  of the
Debentures  with  respect to which the  determination  of this  proviso is being
made,  would result in beneficial  ownership by the Purchaser and its affiliates
of more than 4.99% of the outstanding  shares of Common Stock (after taking into
account  the shares to be issued to the  Purchaser  upon such  conversion).  For
purposes  of the  proviso  to the  immediately  preceding  sentence,  beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"),  except as otherwise provided
in  clause  (1) of  such  proviso.  The  Purchaser  further  agrees  that if the
Purchaser  transfers  or assigns any of the  Debentures  to a party who or which
would not be considered such an affiliate, such assignment shall be made subject
to  the  transferee's  or  assignee's  specific  agreement  to be  bound  by the
provisions of this Section as if such transferee or assignee were a signatory to
the  Subscription  Agreement.  Furthermore,  the  Company  shall not permit such
conversions  that would violate the provisions of this Section 5, unless amended
in writing upon mutual consent of the parties.

6.       DELIVERY INSTRUCTIONS.

         Prior to or on the Due Date the  Company  shall  deliver  to the Escrow
Agent an opinion  letter  signed by counsel for the Company in the form attached
hereto as Exhibit E. Also, prior to or on the Due Date the Company shall deliver
to the Escrow Agent a signed  Registration Rights Agreement in the form attached
hereto as Exhibit B. The Debentures being purchased hereunder shall be delivered
to Joseph B. LaRocco,  Esq. as Escrow Agent, who will hold them in escrow and if
Promissory Note is not paid, credit  outstanding  principal and interest towards
Debentures  at which  time the  Escrow  Agent  shall  then  have the  Debentures
delivered to the Purchaser, per the Purchaser's instructions.

7.       UNDERSTANDINGS.

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

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

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

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

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

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

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

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

         (h)      NASAA UNIFORM LEGEND

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

9.       Litigation.

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

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

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

10.      MISCELLANEOUS.

         (a) All pronouns and any variations thereof used herein shall be deemed
to  refe   to  the  masculine,  feminine, impersonal, singular or plural, as the
identity of the person or persons may require.  Wherever the term "Closing Date"
is used herein it shall have the same meaning as "Due Date".

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

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

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

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

11.      SIGNATURE.

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

                  [BALANCE OF PAGE INTENTIONALLY LEFT BLANK)

<PAGE>

                           SWISSRAY INTERNATIONAL, INC.

                                        CORPORATION QUESTIONNAIRE
                                      Investor Name: _______________

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

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

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

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

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

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

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

                      the    shareholder   is   a  natural  person  who  had  an
individual  income*  in  excess  of  $200,000  in each of 1997  and 1998 and who
reasonably expects an individual income in excess of $200,000 in 1999; or

                      Each  of  the  shareholders of the undersigned CORPORATION
is able to certify that such shareholder is a natural person who, together  with
his or her spouse,  has had a joint income in excess of $300,000 in each of 1997
and 1998 and who reasonably  expects a joint income in excess of $300,000 during
1999; and the  undersigned  CORPORATION  has its principal place of business  in
___________________.

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

                  3.       The undersigned CORPORATION is:

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

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

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

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

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

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

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

II.      OTHER CERTIFICATIONS.

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

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

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

III.     GENERAL INFORMATION

         (a)      PROSPECTIVE PURCHASER (THE CORPORATION)

Name:

Principal Place of Business:  ________________________________________

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

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

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

Telephone Number:________________________________________________
                                    (Area Code)                        (Number)

Jurisdiction of Incorporation:_________________________________________

Date of Formation:_________________________________________________

Taypayer Identification Number:______________________________________

Number of Shareholders:____________________________________________

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

Name:___________________________________________________________

Position or Title:__________________________________________________

<PAGE>

                          SWISSRAY INTERNATIONAL, INC.
                           CORPORATION SIGNATURE PAGE

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

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

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

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

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

                                                     (Purchaser)

                                                     By: _______________________
                                                        (Signature)

                                                     Name: ____________________
                                                          (Please Type or Print)

                                                     Title: ____________________
                                                          (Please Type or Print)

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

                             COMPANY ACCEPTANCE PAGE

This Subscription Agreement accepted
and agreed to this ____ day of __________, 1999

SWISSRAY INTERNATIONAL, INC.

BY___/s/Ruedi G. Lauppe__________________
     Ruedi G. Laupper, its Chairman and President
     duly authorized

<PAGE>

                                    Exhibit D

                              NOTICE OF CONVERSION

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

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

Date of Conversion_________________________________________

Applicable Conversion Price_________________________________

Number of Shares Issuable upon this conversion______________

Signature___________________________________________________
                           [Name]

Address_____________________________________________________

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

Phone______________________   Fax___________________________

                                            Exhibit E

_______________, 1999

Purchasers of [Company] [Describe Securities]

Re:                                                  [Company]

Ladies and Gentlemen:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                                      Very truly yours,

                                                      By: _____________________Name                                       Dated           Signatory
---------------------------------------    ------------    ----------

Southshore Capital, Ltd.*                  July , 1999

*    This document has been filed.
<PAGE>
                          REGISTRATION RIGHTS AGREEMENT

         THIS REGISTRATION  RIGHTS  AGREEMENT,  dated as of July 9, 1999, ("this
Agreement"),  is made by and  between  SWISSRAY  INTERNATIONAL,  INC. a New York
corporation (the  "Company"),  and the person named on the signature page hereto
(the "Initial Investor").

                              W I T N E S S E T H:

         WHEREAS, upon the terms and subject to the conditions of the Contingent
Subscription  Agreement,  dated as of July 9, 1999, between the Initial Investor
and the Company (the "Subscription Agreement"),  the Company has agreed to issue
and sell to the Initial  Investor 5% Convertible  Debentures of the Company (the
"Debentures"),  which will be convertible into shares of the common stock,  $.01
par value (the "Common Stock"),  of the Company (the  "Conversion  Shares") upon
the terms and subject to the conditions of such Debentures; and

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

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

         I.       Definitions.

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

         (i)     "Due Date" means August 23, 1999.

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

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

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

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

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

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

         2.       Registration.

         (a) Mandatory Registration. The Company shall prepare and file with the
SEC,  no later  than  forty-five  (45)  calendar  days  after  the Due  Date,  a
Registration Statement covering 200% of the number of shares of Common Stock for
the Initial  Investors  into which the  $1,148,400 of  Debentures,  plus accrued
interest,  in  the  total  offering  would  be  convertible.  In the  event  the
Registration  Statement is not filed within  forty-five (45) calendar days after
the Due Date,  then in such event the Company  shall pay the  Investor 2% of the
face amount of each Debenture for each 30 day period, or portion thereof,  after
forty-five  (45)  calendar  days  following  the Due Date that the  Registration
Statement is not filed.  The Investor is also  granted  Piggy-back  registration
rights on any other Registration Statement filings made by the Company exclusive
of  Registration  Statements  on Form S-8 and so long as  permissible  under the
Securities Act. Such Registration Statement shall state that, in accordance with
the  Securities  Act,  it also covers such  indeterminate  number of  additional
shares of Common Stock as may become issuable to prevent dilution resulting from
Stock splits, or stock dividends.  If at any time the number of shares of Common
Stock into which the Debenture(s) may be converted  exceeds the aggregate number
of shares of Common Stock then  registered,  the Company shall,  within ten (10)
business  days after  receipt of written  notice from any  Investor,  either (i)
amend the Registration  Statement filed by the Company pursuant to the preceding
sentence, if such Registration  Statement has not been declared effective by the
SEC at that  time,  to  register  all  shares of  Common  Stock  into  which the
Debenture(s) may be converted,  or (ii) if such Registration  Statement has been
declared  effective  by the SEC at that  time,  file with the SEC an  additional
Registration  Statement on such form as is  applicable to register the shares of
Common Stock into which the Debenture may be converted that exceed the aggregate
number of  shares of Common  Stock  already  registered  which new  Registration
Statement  shall be filed within 45 days. The above damages shall continue until
the  obligation is fulfilled and shall be paid within 5 business days after each
30 day period,  or portion thereof,  until the Registration  Statement is filed.
Failure of the  Company to make  payment  within  said 5 business  days shall be
considered a default.

         The Company  acknowledges  that its failure to file with the SEC,  said
Registration Statement no later than forty-five (45) calendar days after the Due
Date will cause the Initial Investor to suffer damages in an amount that will be
difficult to ascertain. Accordingly, the parties agree that it is appropriate to
include in this  Agreement  a  provision  for  liquidated  damages.  The parties
acknowledge  and agree that the liquidated  damages  provision set forth in this
section  represents  the parties' good faith effort to qualify such damages and,
as such,  agree  that  the  form  and  amount  of such  liquidated  damages  are
reasonable and will not constitute a penalty.  The payment of liquidated damages
shall not relieve the Company from its  obligations to register the Common Stock
and  deliver  the Common  Stock  pursuant  to the terms of this  Agreement,  the
Subscription Agreement and the Debenture.

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

         (c) Payment by the Company. If the Registration  Statement covering the
Registrable  Securities  required to be filed by the Company pursuant to Section
2(a) hereof is not declared  effective  within one hundred twenty (120) calendar
days following the Due Date, then the Company shall pay the Initial  Investor 2%
of the  purchase  price  paid  by  the  Initial  Investor  for  the  Registrable
Securities  pursuant to the Subscription  Agreement for every thirty day period,
or portion  thereof,  following the one hundred twenty (120) calendar day period
until the  Registration  Statement is declared  effective.  Notwithstanding  the
foregoing,  the amounts payable by the Company  pursuant to this provision shall
not be payable to the extent any delay in the  effectiveness of the Registration
Statement  occurs  because of an act of, or a failure to act or to act timely by
the Initial Investor or its counsel.  The above damages shall continue until the
obligation  is fulfilled  and shall be paid within 5 business days after each 30
day period,  or portion thereof,  until the  Registration  Statement is declared
effective.  Failure of the Company to make payment  within said 5 business  days
shall be considered a default.

         The  Company  acknowledges  that its  failure to have the  Registration
Statement  declared  effective within said one hundred twenty (120) calendar day
period following the Due Date, will cause the Initial Investor to suffer damages
in an amount that will be difficult to ascertain. Accordingly, the parties agree
that it is  appropriate  to include in this Agreement a provision for liquidated
damages. The parties acknowledge and agree that the liquidated damages provision
set forth in this section  represents the parties' good faith effort to 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
register the Common Stock and deliver the Common Stock  pursuant to the terms of
this Agreement, the Subscription Agreement and the Debenture.

         3.       Obligation of the Company. In connection with the registration
of the Registrable Securities, the Company shall do each of the following:

         (a) Prepare promptly, and file with the SEC within forty-five (45) days
of the Due Date,  a  Registration  Statement  with  respect to not less than the
number of Registrable Securities provided in Section 2(a), above, and thereafter
use  its  best  efforts  to  cause  such  Registration   Statement  relating  to
Registrable Securities to become effective the earlier of (i) five business days
after notice from the Securities and Exchange  Commission that the  Registration
Statement may be declared effective,  or (b) one hundred twenty (120) days after
the Due Date, and keep the Registration  Statement  effective at all times until
the earliest (the "Registration Period") of (i) the date that is two years after
the Due Date  (ii)  the  date  when  the  Investors  may  sell  all  Registrable
Securities  under Rule 144 or (iii) the date the  Investors no longer own any of
the  Registrable   Securities,   which  Registration  Statement  (including  any
amendments or supplements thereto and prospectuses  contained therein) shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated  therein or necessary to make the statements  therein,  in
light of the circumstances in which they were made, not misleading;

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

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

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

         (e) As  promptly as  practicable  after  becoming  aware of such event,
notify  each  Investor  of the  happening  of any event of which the Company has
knowledge,  as a result of which the  prospectus  included  in the  Registration
Statement,  as then in effect,  includes any untrue statement of a material fact
or omits to state a material fact required to be stated  therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and uses its best efforts promptly to prepare a supplement
or amendment to the Registration  Statement or other appropriate filing with the
SEC to correct such untrue statement or omission, and deliver a number of copies
of such supplement or amendment to each Investor as such Investor may reasonably
request;

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

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

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

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

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

         4.       Obligations  of  the  Investors.  In   connection   with   the
registration  of  the  Registrable  Securities,  the  Investors  shall  have the
following obligations;

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

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

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

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

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

         (a) To the extent permitted by law, the Company will indemnify and hold
harmless each Investor who holds such Registrable Securities,  the directors, if
any, of such Investor,  the officers, if any, of such Investor,  each person, if
any, who controls any Investor  within the meaning of the  Securities Act or the
Exchange  Act (each,  an  "Indemnified  Person"),  against any  losses,  claims,
damages,  liabilities  or expenses  (joint or several)  incurred  (collectively,
"Claims") to which any of them may become subject under the Securities  Act, the
Exchange Act or  otherwise,  insofar as such Claims (or actions or  proceedings,
whether  commenced or threatened,  in respect thereof) arise out of or are based
upon  any  of  the  following   statements,   omissions  or  violations  of  the
Registration   Statement  or  any  post-effective   amendment  thereof,  or  any
prospectus  included  therein:  (i)  any  untrue  statement  or  alleged  untrue
statement  of a material  fact  contained in the  Registration  Statement or any
post-effective  amendment  thereof  or any  prospectus  included  therein or the
omission or alleged  omission to state  therein a material  fact  required to be
stated therein or necessary to make the statements therein not misleading,  (ii)
any untrue statement or alleged untrue statement of a material fact contained in
any  preliminary  prospectus  if  used  prior  to the  effective  date  of  such
Registration  Statement,  or  contained in the final  prospectus  (as amended or
supplemented,  if the Company files any amendment thereof or supplement  thereto
with the SEC) or the omission or alleged  omission to state therein any material
fact  necessary  to  make  the  statements   made  therein,   in  light  of  the
circumstances  under which the  statements  therein were made, not misleading or
(iii) any violation or alleged  violation by the Company of the Securities  Act,
the Exchange Act, any state  securities law or any rule or regulation  under the
Securities Act, the Exchange Act or any state securities law (the matters in the
foregoing  clauses (i) through  (iii) being,  collectively,  "Violations").  The
Company shall  reimburse the  Investors,  promptly as such expenses are incurred
and are due and  payable,  for any  reasonable  legal  fees or other  reasonable
expenses incurred by them in connection with investigating or defending any such
Claim.   Notwithstanding   anything  to  the  contrary   contained  herein,  the
indemnification  agreement contained in this Section 6(a) shall not (i) apply to
a Claim  arising out of or based upon a Violation  which occurs in reliance upon
and in conformity with information  furnished in writing to the Company by or on
behalf  of any  Indemnified  Person  expressly  for use in  connection  with the
preparation  of the  Registration  Statement  or any such  amendment  thereof or
supplement  thereto, if such prospectus was timely made available by the Company
pursuant  to  Section  3(b)  hereof;   (ii)  with  respect  to  any  preliminary
prospectus,  inure  to the  benefit  of any such  person  from  whom the  person
asserting  any such Claim  purchased  the  Registrable  Securities  that are the
subject thereof (or to the benefit of any person controlling such person) if the
untrue  statement  or omission of material  fact  contained  in the  preliminary
prospectus was corrected in the prospectus, as then amended or supplemented,  if
such  prospectus  was timely made  available by the Company  pursuant to Section
3(b)  hereof;  (iii) be available to the extent such Claim is based on a failure
of the  Investor  to  deliver  or  cause to be  delivered  the  prospectus  made
available by the Company;  or (iv) apply to amounts  paid in  settlement  of any
Claim if such  settlement is effected  without the prior written  consent of the
Company,  which consent shall not be unreasonably  withheld.  Each Investor will
indemnify the Company,  its officers,  directors and agents (including  Counsel)
against  any claims  arising out of or based upon a  Violation  which  occurs in
reliance upon and in  conformity  with  information  furnished in writing to the
Company, by or on behalf of such Investor,  expressly for use in connection with
the preparation of the Registration  Statement,  subject to such limitations and
conditions as are applicable to the  Indemnification  provided by the Company to
this Section 6. Such indemnity shall remain in full force and effect  regardless
of any  investigation  made by or on behalf of the Indemnified  Person and shall
survive the transfer of the Registrable  Securities by the Investors pursuant to
Section 9.

         (b) Promptly  after  receipt by an  Indemnified  Person or  Indemnified
Party  under  this  Section  6 of  notice  of the  commencement  of  any  action
(including any  governmental  action),  such  Indemnified  Person or Indemnified
Party  shall,  if a  Claim  in  respect  thereof  is  to  be  made  against  any
indemnifying  party under this  Section 6, deliver to the  indemnifying  party a
written notice of the commencement thereof and the indemnifying party shall have
the right to  participate  in,  and,  to the  extent the  indemnifying  party so
desires,  jointly with any other indemnifying party similarly noticed, to assume
control  of the  defense  thereof  with  counsel  mutually  satisfactory  to the
indemnifying  party and the Indemnified  Person or the Indemnified Party, as the
case may be; provided,  however, that an Indemnified Person or Indemnified Party
shall  have the right to retain its own  counsel  with the  reasonable  fees and
expenses to be paid by the indemnifying  party, if, in the reasonable opinion of
counsel retained by the indemnifying  party, the  representation by such counsel
of the Indemnified  Person or Indemnified Party and the indemnifying party would
be inappropriate  due to actual or potential  differing  interests  between such
Indemnified  Person or Indemnified Party and any other party represented by such
counsel in such  proceeding.  In such event,  the Company shall pay for only one
separate legal counsel for the  Investors;  such legal counsel shall be selected
by the Investors  holding a majority in interest of the  Registrable  Securities
included in the Registration  Statement to which the Claim relates.  The failure
to deliver written notice to the indemnifying  party within a reasonable time of
the commencement of any such action shall not relieve such indemnifying party of
any liability to the Indemnified  Person or Indemnified Party under this Section
6, except to the extent that the indemnifying party is prejudiced in its ability
to defend such action. The  indemnification  required by this Section 6 shall be
made by  periodic  payments  of the  amount  thereof  during  the  course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.

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

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

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

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

         9.  Assignment  of the  Registration  Rights.  The  rights  to have the
Company  register  Registrable  Securities  pursuant to this Agreement  shall be
automatically  assigned by the Investors to any transferee of in excess of fifty
(50%) percent or more of the  Registrable  Securities  (or all or any portion of
any Debenture of the Company which is convertible into such securities) only if:
(a) the  Investor  agrees in writing with the  transferee  or assignee to assign
such rights,  and a copy of such  agreement is furnished to the Company within a
reasonable time after such  assignment,  (b) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (i) the
name and address of such  transferee  or assignee and (ii) the  securities  with
respect to which such registration rights are being transferred or assigned, (c)
immediately  following  such transfer or assignment  the further  disposition of
such securities by the transferee or assignee is restricted under the Securities
Act and  applicable  state  securities  laws,  and (d) at or before the time the
Company received the written notice  contemplated by clause (b) of this sentence
the transferee or assignee agrees in writing with the Company to be bound by all
of the  provisions  contained  herein.  In the  event of any  delay in filing or
effectiveness of the Registration Statement as a result of such assignment,  the
Company  shall not be liable for any damages  arising  from such  delay,  or the
payments set forth in Section 2(c) hereof.

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

         11.      Miscellaneous.

         (a) A  person  or  entity  is  deemed  to be a  holder  of  Registrable
Securities  whenever  such  person or entity  owns of  record  such  Registrable
Securities.  If  the  Company  received  conflicting  instructions,  notices  or
elections  from  two or more  persons  or  entities  with  respect  to the  same
Registrable  Securities,  the Company shall act upon the basis of  instructions,
notice  or  election  received  from the  registered  owner of such  Registrable
Securities.

         (b) Notices  required or  permitted to be given  hereunder  shall be in
writing and shall be deemed to be sufficiently  given when personally  delivered
(by  hand,  by  courier,  by  telephone  line  facsimile  transmission,  receipt
confirmed,  or other means) or sent by certified mail, return receipt requested,
properly  addressed  and with proper  postage  pre-paid  (i) if to the  Company,
SWISSRAY  International,  Inc.,  200 East 32nd Street,  Suite 34B, New York, New
York 10016 with copy by fax and mail to Gary B. Wolff,  P.C.,  747 Third Avenue,
25th Floor, New York, NY 10017; (ii) if to the Initial Investor,  at the address
set  forth  under  its name in the  Subscription  Agreement,  with a copy to its
designated attorney and (iii) if to any other Investor,  at such address as such
Investor shall have provided in writing to the Company, or at such other address
as each such party  furnishes  by notice given in  accordance  with this Section
11(b), and shall be effective, when personally delivered, upon receipt and, when
so sent by certified  mail, four (4) business days after deposit with the United
States Postal Service.

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

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

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

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

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

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

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

                  (REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

<PAGE>

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

                               SWISSRAY INTERNATIONAL, INC.

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

                           SOUTHSHORE CAPITAL, LTD.

                           By: ____________________________________
                           Name:
                           Title:

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