Document:

<TABLE>
<CAPTION>
Name                                       Dated           Amount         Maturity Date
---------------------------------------    ------------    ----------     ---------------
<S>                                        <C>             <C>            <C>
Dominion Capital Fund Ltd.*                Dec. 14, 1998    $    25,000    May 13,2003
Sovereign Partners LP.                     Dec. 14, 1998    $    25,000    May 13,2003
</TABLE>

*    This document has been filed.
<PAGE>

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

                      WARRANT TO PURCHASE 25,000 SHARES OF
                  COMMON STOCK OF SWISSRAY INTERNATIONAL, INC.

                    Exercisable Commencing December 14, 1998;
                          Void after December 14, 2003

         THIS  CERTIFIES  that, for value received  Dominion Capital Fund Ltd.
or its  registered  assigns (the  "Warrantholder")  is entitled,  subject to the
terms and  conditions  set forth in this  Warrant,  to  purchase  from  SWISSRAY
INTERNATIONAL,  INC., a New York corporation (the "Company"), 25,000 fully paid,
duly authorized and nonassessable  shares (the "Shares"),  of Common Stock, $.01
par value per share, of the Company (the "Common Stock"), at any time commencing
December 14, 1998 and  continuing up to 5:00 p.m. New York City time on December
14, 2003 at an exercise price of $.375 subject to adjustment pursuant to Section
8 hereof.

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

         Section 1.        Transferability.

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

         1.2      Transfer.  This Warrant shall be transferable only on the
books of the Company maintained at its principal executive offices upon
surrender thereof for registration of transfer duly endorsed by the
Warrantholder or by its duly authorized
<PAGE>

attorney or representative, or accompanied by proper evidence of succession,
assignment or authority to transfer.  Upon any registration of transfer, the
Company shall execute and deliver a new Warrant or Warrants in appropriate
denominations to the person or persons entitled thereto.

         1.3      Legend on Warrant Shares.  Each certificate for Shares
initially issued upon exercise of a Warrant, unless at time of exercise such
Shares are registered under the Securities Act of 1933, as amended (the
"Securities Act"), shall bear the following legend:

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

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

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

         Section 3.        Terms of Warrants: Exercise of Warrants.

         (a) Subject to the terms of this Warrant,  the Warrantholder shall have
the right,  at any time after  December 14, 1998, but before 5:00 p.m., New York
City time on December 14, 2003 (the  "Expiration  Time"),  to purchase  from the
Company up to the number of Shares  which the  Warrantholder  may at the time be
entitled to purchase  pursuant to the terms of this Warrant,  upon  surrender to
the Company at its principal  executive  office,  of the certificate  evidencing
this Warrant to be exercised,  together  with the attached  Election to Exercise
form duly filled in and signed,  and upon  payment to the Company of the Warrant
Price (as defined in and determined in accordance with the provisions of Section
7 and 8 hereof) for the number of Shares with  respect to which such  Warrant is
then  exercised.  Payment of the aggregate  Warrant Price shall be made in cash,
wire transfer or by cashier's check or any combination thereof.

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

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

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

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

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

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

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

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

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

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

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

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

         Section 7. Warrant Price.  From December 14, 1998 through 5:00 p.m. New
York City time on December 14, 2003,  the price per Share (the "Warrant  price")
at which Shares shall be purchasable  upon the exercise of this Warrant shall be
equal to closing bid price on December 14, 1998 subject to  adjustment  pursuant
to Section 8 hereof.

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

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

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

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

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

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

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

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

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

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

         Section  10. No  Rights as  Stockholders:  Notices  to  Warrantholders.
Nothing  contained in this Warrant  shall be  construed as  conferring  upon the
Warrantholder  or its  transferees  any rights as a stockholder  of the Company,
including the right to vote, receive dividends,  consent or receive notices as a
stockholder  with  respect to any meeting of  stockholders  for the  election of
directors of the Company or any other matter. If, however,  at any time prior to
5:00 p.m., New York City time, on December 14, 2003, (the "Expiration Time") and
prior to the exercise of this Warrant, any of the following events shall occur:

         (a)      any action which would require an adjustment pursuant to
Section 8.1; or

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

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

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

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

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

         Section 15.       Definitions.

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

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

                                            SWISSRAY INTERNATIONAL , INC.

                                            By:/s_Ruedi G. Lauper______
                                  Ruedi G. Laupper its Chairman and President

<PAGE>

                          SWISSRAY INTERNATIONAL, INC.

                              ELECTION TO EXERCISE

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

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

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

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

Dated:________, 19___

Name of Warrantholder of
Assignee (Please Print)_____________________________________________

Address:_________________________________________________________

Signature:________________________________________________________

Signature Guaranteed:______________________________________________
                                    Signature of Guarantor

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

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

                               FORM OF ASSIGNMENT

                 (To be signed only upon assignment of Warrant)*

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

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

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

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

Dated:______________, 19____

                                            ________________________________**
                                            Signature of Registered Holder

Signature Guaranteed: ________________________________
                                    Signature of Guarantor

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

**       Note:  The signature of this assignment must correspond with the name
     as it appears upon the face of the Warrant certificate in every particular,
     without alteration or enlargement or any change whatever.Name                                       Dated           Amount      Signatory
---------------------------------------    ------------    ----------  ---------

Dominion Capital Fund Ltd.*                Jan. , 1999    $   292,500
Dominion Investment Fund LLC.              Jan. , 1999    $   292,500
Sovereign Partners LP.                     Jan. , 1999    $   585,000

*    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: $1,700,000

        This offering consists of $1,700,00 of Convertible Debentures of
       Swissray International, Inc. and Warrants to Purchase 58,500 shares
                     Of the Company's Common Stock at $1.00.

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

                             SUBSCRIPTION AGREEMENT

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

<PAGE>

                             SUBSCRIPTION PROCEDURES

         Convertible Debentures of SWISSRAY INTERNATIONAL, INC.. (the "Company")
are being offered in an aggregate amount not to exceed $1,700,000  The
Debentures will be transferable to the extent that any such transfer is
permitted by law.  This offering is being made in accordance with the exemption
from registration under Section 4(2) of the Securities Act of 1933, as amended
(the "Act") and Rule 506 of Regulation D promulgated under the Act (the
"Regulation D Offering").

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

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

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

         Payment must be made by wire transfer as provided below:

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

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

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

                             SUBSCRIPTION AGREEMENT

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

To:      Swissray International, Inc.

         This  Subscription  Agreement is made between  Swissray  International,
Inc.,  ("Company"  or  "Seller")  a New York  corporation,  and the  undersigned
prospective purchaser  ("Purchaser") who is subscribing hereby for the Company's
Convertible Debentures (the "Debentures").  The Debentures being offered will be
separately  transferable,  to the extent that any such  transfer is permitted by
law. The  conversion  terms of the  Debentures  are set forth in Section 4. This
subscription is submitted to you in accordance with and subject to the terms and
conditions  described in this Subscription  Agreement together with any Exhibits
thereto,  relating  to an  offering  (the  "Offering")  of up to  $1,700,000  of
Debentures.  This  Offering is  comprised  of an offering of the  Debentures  to
accredited  investors  (the  "Regulation  D Offering")  in  accordance  with the
exemption from registration under Section 4(2) of the Securities Act of 1933, as
amended (the "Act"),  and Rule 506 of  Regulation  D  promulgated  under the Act
("Regulation D").

1.       SUBSCRIPTION.

         (a) The  undersigned  hereby  irrevocably  subscribes for and agrees to
purchase  $________  of the  Company's  Debentures.  The  Debentures  shall  pay
interest  in cash or in  freely  trading  Common  Stock of the  Company,  at the
Company's option, at the time of each conversion.  Interest shall be as follows:
3% per each 30-day period,  on a pro rata basis,  for the first ninety (90) days
following  the  Closing;  3 1/2 % for each 30-day  period,  on a pro rata basis,
beginning from the  ninety-first  (91st) day after the Closing and ending on the
one hundred and twentieth  (120th) day  following  the Closing Date;  and 4% per
each  30-day  period,  on a pro rata basis,  beginning  from the one hundred and
twenty-first (121st) day following the Closing.

If paid in Common Stock,  the number of shares of the Company's  Common Stock to
be received shall be determined by dividing the dollar amount of the interest by
the then  applicable  Market Price,  as of the interest  payment  date.  "Market
Price" shall mean 82% of the 10-day  average  closing bid price,  as reported by
Bloomberg,  LP, for the ten (10) consecutive trading days immediately  preceding
the date of conversion (the "Conversion  Price").  If the interest is to be paid
in cash,  the Company shall make such payment within 5 business days of the date
of conversion.  If the interest is to be paid in Common Stock, said Common Stock
shall be delivered to the Purchaser, or per Purchaser's  instructions,  within 5
business days of the date of conversion. The Debentures are subject to automatic
conversion  at the end of two years from the date of  issuance at which time all
Debentures  outstanding will be  automatically  converted based upon the formula
set forth in Section  4(d).  The closing shall be deemed to have occurred on the
date the funds are  received  by the  Company or its  designated  attorney  (the
"Closing Date").

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

2.       REPRESENTATIONS AND WARRANTIES.

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

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

                  (b) The undersigned acknowledges that all documents,  records,
         and books  pertaining to this investment  including Form 10-KSB for the
         fiscal year ended June 30, 1997  inclusive of 10-KSB/A1,  10-KSB/A2 and
         10-KSB/A3  and Form 10-Q for the  quarters  ended  September  30, 1997,
         December 31, 1997 and March 31, 1998 inclusive of 10-Q/A1 for September
         30, 1997 and December 31, 1997 (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 registred
                  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 or stockholder approval
to  authorize  additional  shares as described  in the proxy  statement  for the
August 31, 1998 meeting has or will be obtained 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 for the purpose of  authorizing  additional
shares of  Common  Stock to  facilitate  the  conversions.  In such an event the
Company  shall  recommend to all  shareholders  to vote their shares in favor of
increasing the authorized  number of shares of Common Stock.  Seller  represents
and warrants  that under no  circumstances  will it deny or prevent  Purchaser's
right  to  convert  the  Debentures  as  permitted   under  the  terms  of  this
Subscription  Agreement or the Registration  Rights  Agreement.  Nothing in this
Section shall limit the obligation of the Company to make the payments set forth
in Section 4(h).

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

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

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

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

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

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

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

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

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

         (k)      Prior Shares Issued Under Regulation S or Regulation D.  In
the past six months the Company raised $13,643,849 in Regulation S and
Regulation D offerings, including redemptions and rollovers.
                  ------------------------------------------------------

         (l)      Current Authorized Shares. As of January 25, 1999 there were
50,000,000 authorized shares of Common Stock of which approximately ___________
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  initial
filing  on Form  10-KSB  for the year  ended  June 30,  1997 (or the  filing  of
necessary  amendments thereto so as to restate certain financial  statements for
fiscal  years  ended  June  30,  1997  and  1996 so as to  properly  record  the
accounting treatment of certain beneficial conversion features and debt issuance
cost of  convertible  debentures  issued during the year ended June 30, 1997 and
the auditing for the value of stock  options  granted  during the years June 30,
1997 and 1996),  which could make any of the disclosures  contained  therein (as
subsequently  amended and restated)  misleading The financial  statements of the
Company  included in the  Disclosure  Documents have been prepared in accordance
with generally  accepted  accounting  principles  applied on a consistent  basis
during  the  periods   involved  (except  as  may  be  indicated  in  the  audit
adjustments)  the  consolidated  financial  position  of  the  Company  and  its
consolidated  subsidiaries as at the dates thereof and the consolidated  results
of their  operations  and changes in  financial  position  for the periods  then
ended.

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

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

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

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

         (r)      Use of Proceeds.          The Company represents that the net
proceeds of this offering will be primarily used for the purposes set forth on
page 4 of the term sheet under the caption "Closing Proceeds".

         (s)      The Company hereby represents that it shall be paying
consultant  a fee of  $100,000 from the gross proceeds of this Offering, which
fee shall be paid out of escrow by the Escrow Agent

         4.       TERMS OF CONVERSION.

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

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

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

                     (d)   (i)  Conversion Rate. Purchaser is entitled, at its
option, to convert the face amount of each Debenture, plus accrued interest,
anytime following the Closing Date at 82% of the 10 day average closing bid
price, as reported by Bloomberg, LP for the 10 consecutive trading
days  immediately  preceding the  applicable  Conversion  Date (the  "Conversion
Price").  The date on which the Notice of Conversion  is effective  ("Conversion
Date") shall be deemed to be the date on which the  Purchaser  has  delivered to
the Company a facsimile or original of the signed Notice of Conversion,  as long
as the original  Debentures  to be converted  are received by the Company or its
designated  attorney within 5 business days thereafter.  No fractional shares or
scrip  representing  fractions of shares will be issued on  conversion,  but the
number of shares  issuable  shall be rounded up or down,  as the case may be, to
the nearest whole share.

                  (ii) 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 or
stockholder  approval to authorize  additional  shares as described in the proxy
statement for the August 31, 1998,  meeting) 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) 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.

                  (j)  Redemption:  Company  reserves  the  right,  at its  sole
option,  to call a mandatory  redemption of any percentage of the balance on the
Debentures   during  the  two  year   period   following   the   Closing   Date.
Notwithstanding  the  preceding  sentence,  the Company shall be required to and
herewith  agrees to and shall apply at least 20% of the gross  profits  from the
sale of ddR Multi-Systems for the redemption of the Debentures. The Company will
continue to do so until such time that the Debentures or any unconverted portion
of the Debentures has been fully redeemed.  Redemption payments would be applied
to the  outstanding  balance in the  following  manner:  for example  should the
company wish to redeem a portion after the first 30-day period they would owe 3%
x  $1,000,000  = $30,000  plus some  portion of the  $1,000,000  principle,  say
$100,000. This would mean that if the company paid $130,000 on the 30th day they
would still owe $900,000 on the 31st day.
                           The  redemption  terms shall be based on the interest
rate  applicable to the Debentures as follows:  3% per each 30-day period,  on a
pro rata basis,  for the first ninety (90) days following  closing;  3 1/2 % for
each 30-day period, on a pro rata basis, beginning from the
ninety-first  (91st)  day  after  closing  and  ending  on the one  hundred  and
twentieth (120th) day following closing; and 4% per each 30-day period, on a pro
rata  basis,  beginning  from  the one  hundred  and  twenty-first  (121st)  day
following the closing.

         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.

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

5.       LIMITS ON AMOUNT OF CONVERSION AND OWNERSHIP.

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

6.       DELIVERY INSTRUCTIONS.

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

7.       UNDERSTANDINGS.

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

FOR ALL SUBSCRIBERS:

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

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

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

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

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

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

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

         (h)      NASAA UNIFORM LEGEND

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

9.       Litigation.

         (a) Forum Selection and Consent to  Jurisdiction.  Any litigation based
thereon,  or arising out of, under, or in connection with, this agreement or any
course of conduct,  course of dealing,  statements  (whether oral or written) or
actions of the Company or Holder shall be brought and maintained  exclusively in
the  courts  of  the  State  of New  York.  The  Company  hereby  expressly  and
irrevocably  submits to the  jurisdiction of the state and federal courts of the
State of New York for the purpose of any such  litigation as set forth above and
irrevocably  agrees  to be bound  by any  final  judgment  rendered  thereby  in
connection with such litigation. The Company further irrevocably consents to the
service of process by registered mail,  postage prepaid,  or by personal service
within or  without  the State of New York.  The  Company  hereby  expressly  and
irrevocably

waives,  to the fullest extent permitted by law, any objection which it may have
or hereafter may have to the laying of venue of any such  litigation  brought in
any such court referred to above and any claim that any such litigation has been
brought  in any  inconvenient  forum.  To the  extent  that the  Company  has or
hereafter  may acquire any immunity from  jurisdiction  of any court or from any
legal process (whether through service or notice,  attachment prior to judgment,
attachment  in aid of  execution  or  otherwise)  with  respect to itself or its
property,  the Company hereby irrevocably waives such immunity in respect of its
obligations under this agreement and the other loan documents.

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

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

10.      MISCELLANEOUS.

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

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

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

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

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

11.      SIGNATURE.

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

                  [BALANCE OF PAGE INTENTIONALLY LEFT BLANK)

                           SWISSRAY INTERNATIONAL, INC.

                                        CORPORATION QUESTIONNAIRE
                                      Investor Name: _______________

         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):         SAME
                   (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

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

SRMIDJAN99.SUB   Z/5

<PAGE>

                                    Exhibit D

                              NOTICE OF CONVERSION

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

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

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