Document:

EXHIBIT 10.29
                             Subscription Agreement

<TABLE>
<CAPTION>
Name                                       Dated           Amount         Signatory
---------------------------------------    ------------    ----------     ---------------
<S>                                        <C>             <C>            <C>
Atlantis Capital fund, Ltd.                Mar.  , 1998    $    26,000    Mark Valentine
Canadian Advantage Limited Partnership *   Mar.  , 1998    $   124,200    Mark Valentine
Dominion Capital Fund Ltd.                 Mar.  , 1998    $   315,400    Mark Valentine
Sovereign Partners LP.                     Mar.  , 1998    $   534,400    Mark Valentine

Atlantis Capital fund, Ltd.                Aug.  , 1998    $   191,642    See Above
Canadian Advantage Limited Partnership     Aug.  , 1998    $   421,613    See Above
Dominion Capital Fund Ltd.                 Aug.  , 1998    $ 1,226,512    See Above
Dominion Capital Fund Ltd.                 Aug.  , 1998    $ 1,155,500    See Above
Sovereign Partners LP.                     Aug.  , 1998    $ 1,993,082    See Above
Sovereign Partners LP.                     Aug.  , 1998    $ 1,155,500    See Above
</TABLE>
*    This document has been filed.
<PAGE>

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

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

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

                          Maximum Offering: $6,143,849

   This offering consists of $6,143,849 of Convertible Debentures of Swissray
                              International, Inc.

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

                             SUBSCRIPTION AGREEMENT

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

                             SUBSCRIPTION PROCEDURES

         Convertible Debentures of SWISSRAY INTERNATIONAL, INC.. (the "Company")
are being offered in an aggregate amount not to exceed $6,143,849 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  $6,143,849  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
an 5% cumulative interest payable annually,  in cash or in freely trading Common
Stock of the Company,  at the Company's  option, at the time of each conversion.
If paid in Common Stock,  the number of shares of the Company's  Common Stock to
be received shall be determined by dividing the dollar amount of the dividend by
the then  applicable  Market Price,  as of the interest  payment  date.  "Market
Price" shall mean the lesser of (a) 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 or (b) $1.00 (each being  referred
to as 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  which the  undersigned  has
         requested  includes 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 registered
                  pursuant to the Registration Rights Agreement, shall be
                  stamped or otherwise imprinted with a legend substantially in
                  the following form:

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

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

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

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

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

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

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

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

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

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

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

         3.       SELLER REPRESENTATIONS.

                  (a) Concerning the Securities. The issuance, sale and delivery
of the Debentures have been duly authorized by all required  corporate action on
the part of Seller,  and when issued,  sold and delivered in accordance with the
terms  hereof and thereof for the  consideration  expressed  herein and therein,
will be duly and validly issued and  enforceable in accordance with their terms,
subject to the laws of bankruptcy and creditors' rights generally. At least 200%
of the number of shares of Common  Stock  issuable  upon  conversion  of all the
Debentures  issued pursuant to this Offering have been duly and validly reserved
for  issuance,  or  alternative  arrangements  agreed to in writing to cover the
contingency of their being insufficient  reserved shares 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 $7,500,000 in Regulation S and Regulation
D offerings.

         (l)      Current Authorized Shares. As of August 31, 1998 there were
50,000,000 authorized shares of Common Stock of which approximately 41,436,813
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
subsequnetly  amended,  the  Company  is not in default  in the  performance  or
observance  of  any  material  obligation,   agreement,  covenant  or  condition
contained in any indenture, mortgage, deed of trust or other material instrument
or agreement to which it is a party or by which it or its property is bound, and
neither  the  execution  of,  nor  the  delivery  by the  Company  of,  nor  the
performance  by the Company of its  obligations  under,  this  Agreement  or the
Debentures,  other than the conversion provision thereof,  will conflict with or
result in the  breach or  violation  of any of the  terms or  provisions  of, or
constitute  a default or result in the  creation  or  imposition  of any lien or
charge on any  assets or  properties  of the  Company  under,  (i) any  material
indenture, mortgage, deed of trust or other material agreement applicable to the
Company or  instrument  to which the Company is a party or by which it is bound,
(ii)  any  statute  applicable  to  the  Company  or  its  property,  (iii)  the
Certificate  of  Incorporation  or  ByLaws  of the  Company,  (iv) any  decree ,
judgment,  order, rule or regulation of any court or governmental agency or body
having  jurisdiction  over the Company or its  properties,  or (v) the Company's
listing agreement 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 Purchaser has been advised that the Company has entered
into a consulting agreement with Net Financial International, Ltd. pursuant to
which it will pay a fee of  $250,000 from the gross proceeds of this Offering.

         4.       TERMS OF CONVERSION.

                  (a) Debentures.  Upon receipt by the Company or its designated
attorney of a facsimile or original of  Purchaser's  signed Notice of Conversion
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  six (6) months  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 six
(6) months  following  the Closing  Date, at the lesser of (a) 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 or (b) $1.00
(each being  referred to as the  "Conversion  Price").  No fractional  shares or
scrip  representing  fractions of shares will be issued on  conversion,  but the
number of shares  issuable  shall be rounded up or down,  as the case may be, to
the nearest whole share.

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

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

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

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

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

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

                  (h)  The  Company   shall  at  all  times   reserve  (or  make
alternative  written  arrangements  for reservation or contribution of shares 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) During the remainder of 1998, the Purchaser agrees to make
up to an  additional  $3,000,000  in  financing  available  to the Company  upon
mutually  agreeable  terms.  In the event the Company  receives  any  additional
financing  from the  Purchaser  or other  investor(s)  the six (6) month  period
restricting  conversions  shall terminate and the Purchaser shall be entitled to
convert any or all of the  Debentures,  even though the  Registration  Statement
covering those Debentures may not have been declared  effective at that time, in
which  case  the  Purchaser  shall  receive  legended  Common  Stock  until  the
Registration  Statement is declared effective or in the written opinion of legal
counsel the legend may be removed.

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

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

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

5.       LIMITS ON AMOUNT OF CONVERSION AND OWNERSHIP.

         Notwithstanding  the provisions  hereof or of the  Debenture(s),  in no
event except (i) with respect to a conversion  pursuant to redemption or (ii) if
the  Company  is in  default  of any of its  obligations  under  the  Debenture,
Subscription  Agreement,  or the Registration Rights Agreement and the Purchaser
has  asserted  such  default)  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
9.99% 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 9(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: Canadian Advantage Limited Partnership

         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 1996  and 1997 and who reasonably expects an
individual income in excess of $200,000 in 1998; 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 1996 and 1997 and who reasonably  expects  a
joint income in excess of $300,000 during 1998; 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: Canadian Advantage Limited Partnership

Principal Place of Business:  Toronto, Canada___________________________________
365 Bay Street, 10th Floor, Toronto Ontario M5H-2V2
--------------------------------------------------------------------------------

Address for Correspondence (if different):             SAME

                                          --------------------------------------
                                                (Number and Street)

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

Telephone Number:___________________(416) 860-8313______________________________
                        (Area Code)       (Number)

Jurisdiction of Incorporation:_______________Toronto, Canada____________________

Date of Formation:_________________________N/A__________________________________

Taxpayer Identification Number:_________________________________________________

Number of Shareholders:______________UNLIMITED__________________________________

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

Name:_________________________________________Mark Valentine____________________

Position or Title:___________________________General Partner____________________

<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 ofCanadian  Advantage  Limited  Partnership  and,  further,  that Mark
Valentine has all requisite  authority to purchase the Debentures and enter into
this Subscription Agreement.

$421,613
-------------------------------           ------------------------------
Amount of Debentures subscribed for                                 Date
                                          Canadian Advantage Limited Partnership
                                          ------------------------------
                                                (Purchaser)

                                         By: _/s/ Mark Valentine________________
                                                (Signature)

                                         Name: ______Mark Valentine_____________
                                                (Please Type or Print)

                                         Title: _____General Partner____________
                                                (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 __________, 1998

SWISSRAY INTERNATIONAL, INC.

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

<PAGE>

                                    Exhibit D

                              NOTICE OF CONVERSION

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

         The undersigned hereby irrevocably  elects, as of ______________,  199_
to convert  $__________ of Convertible  Debentures into Common Stock of SWISSRAY
INTERNATIONAL,  INC.(the "Company") according to the conditions set forth in the
Subscription Agreement dated September ____, 1998.

Date of Conversion_________________________________________

Applicable Conversion Price_________________________________

Number of Shares Issuable upon this conversion______________

Signature___________________________________________________
                           [Name]

Address_____________________________________________________

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

Phone______________________   Fax___________________________

<PAGE>
                       AMENDMENT TO SUBSCRIPTION AGREEMENT

THIS AMENDMENT TO SUBSCRIPTION AGREEMENT ("Amendment") is made as of March 17,
1999, by and between DOMINION CAPITAL FUND, LTD. ("Purchaser") and SWISSRAY
INTERNATIONAL, INC. (the "Company"), (Collectively the "Parties").

WHEREAS,  the Parties  entered into a Subscription  Agreement  dated on or about
September 28, 1998, relating to a Regulation D private placement offering in the
aggregate  amount of $2,940,000 (the  "Offering") of which Purchaser  subscribed
for $1,440,000 of the Company's convertible debentures; and

WHEREAS,  in connection  with said  Offering,  the parties desire to correct and
amend  a  certain  section  in the  Subscription  Agreement  which  contained  a
typographical  error and was  overlooked by the Parties at the time the Offering
closed.

NOW  THEREFORE,  in  consideration  of the  covenants and  agreements  contained
herein, the parties agree to amend the Subscription Agreement as follows:

         AMENDMENT.

         A.  Section 1, SUBSCRIPTION, Subsection (a) is hereby corrected and
amended to read as follows:

         The  undersigned  hereby  irrevocably  subscribes  for  and  agrees  to
         purchase $1,440,000 of the Company's  Debentures.  The Debentures shall
         pay an 5% cumulative  interest payable  annually,  in cash or in freely
         trading Common Stock of the Company,  at the Company's  option,  at the
         time of each conversion.  If paid in Common Stock, the number of shares
         of the  Company's  Common Stock to be received  shall be  determined by
         dividing  the  dollar  amount of the  dividend  by the then  applicable
         Market Price,  as of the interest  payment date.  "Market  Price" shall
         mean 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. Section 4, TERMS OF CONVERSION, Subsection (d)(i) Conversion
          Rate is hereby corrected and amended to read as follows:

          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"). 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.

         C.  SECTION 5 LIMITS ON AMOUNT OF CONVERSION AND OWNERSHIP is hereby
         corrected and amended to read as follows:

         The  Purchaser is limited in the amount of Debenture it may convert and
         own. Other than the mandatory  conversion  provisions contained in this
         Agreement,  which are not limited by the following,  in no event except
         (i) with respect to a conversion  pursuant to redemption by the Company
         or (ii) if there is (a) a public  announcement  that 50% or more of the
         Company is being acquired,  (b) a public  announcement that the Company
         is being  merged,  or (c) a change in control,  shall the  Purchaser be
         entitled  to convert  any  Debentures  to the extent  that,  after such
         conversion,   the  sum  of  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  or
         unexercised  Warrants),  and (2) the  number of shares of Common  Stock
         issuable upon the  conversion of the  Debentures  with respect to which
         the  determination  of this  proviso  is being  made,  would  result in
         beneficial  ownership by the Purchaser and its  affiliates of more than
         4.99% of the  outstanding  shares of Common  Stock  (after  taking into
         account the shares to be issued to the Purchaser upon such conversion).
         For  purposes of the  proviso to the  immediately  preceding  sentence,
         beneficial  ownership  shall be determined  in accordance  with Section
         13(d) of the  Securities  Exchange  Act of 1934,  as amended (the "1934
         Act"), except as otherwise provided in clause (1) of such proviso.  The
         Purchaser further agrees that if the Purchaser transfers or assigns any
         of the Debentures to a party who or which would not be considered  such
         an affiliate, such assignment shall be made subject to the transferee's
         or assignee's  specific agreement to be bound by the provisions of this
         Section as if such  transferee  or  assignee  were a  signatory  to the
         Subscription Agreement.  Furthermore, the Company shall not process any
         conversions that would result in beneficial  ownership by the Purchaser
         and its  affiliates  of more  than  4.9% of the  outstanding  shares of
         Common Stock of the Company.

II.      EFFECTIVE DATE/PRIOR NEGOTIATIONS.

         This amendment shall relate back to and be effective as of the closing
date of the Offering.  This amendment is intended to correct and amend the
Subscription Agreement to conform to the Parties understanding of the terms of
the offering as negotiated by the Parties.

III.     FACSIMILE AS ORIGINAL.

         This  Amendment  may be executed  in  counterparts,  and the  facsimile
transmission of an executed  counterpart to this Amendment shall be effective as
an original.

         SWISSRAY INTERNATIONAL, INC.

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

         DOMINION CAPITAL FUND, LTD.

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

Atlantis Capital fund, Ltd.                Mar. 16, 1998    Mark Valentine
Canadian Advantage Limited Partnership *   Mar. 16, 1998    Mark Valentine
Dominion Capital Fund Ltd.                 Mar. 16, 1998    Mark Valentine
Sovereign Partners LP.                     Mar. 16, 1998    Mark Valentine

Atlantis Capital fund, Ltd.                Aug. 31, 1998    See Above
Canadian Advantage Limited Partnership     Aug. 31, 1998    See Above
Dominion Capital Fund Ltd.                 Aug. 31, 1998    See Above
Dominion Capital Fund Ltd.                 Aug. 31, 1998    See Above
Sovereign Partners LP.                     Aug. 31, 1998    See Above
Sovereign Partners LP.                     Aug. 31, 1998    See Above

<PAGE>

                          REGISTRATION RIGHTS AGREEMENT

         THIS REGISTRATION  RIGHTS  AGREEMENT,  dated as of September ___, 1998,
("this Agreement"),  is made by and between SWISSRAY  INTERNATIONAL,  INC. a New
York  corporation  (the  "Company"),  and the person named on the signature page
hereto (the "Initial Investor").

                                           W I T N E S S E T H:

         WHEREAS,   upon  the  terms  and  subject  to  the  conditions  of  the
Subscription  Agreement,  dated as of September ___,  1998,  between the Initial
Investor and the Company (the "Subscription Agreement"),  the Company has agreed
to issue and sell to the  Initial  Investor  5%  Convertible  Debentures  of the
Company (the "Debentures"),  which will be convertible into shares of the common
stock,  $.01 par value (the "Common  Stock"),  of the Company  (the  "Conversion
Shares") upon the terms and subject to the conditions of such Debentures; and

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

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

         I.       Definitions.

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

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

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

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

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

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

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

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

         2.       Registration.
         (a) Mandatory Registration. The Company shall prepare and file with the
SEC, no later than  forty-five  (45)  calendar  days after the Closing  Date,  a
Registration  Statement  covering a sufficient  number of shares of Common Stock
for the Initial Investors into which the $6,143,849 of Debentures,  plus accrued
interest,  in  the  total  offering  would  be  convertible.  In the  event  the
Registration  Statement is not filed within  forty-five (45) calendar days after
the Closing  Date,  then in such event the Company  shall pay the Investor 2% of
the face amount of each  Debenture for each 30 day period,  or portion  thereof,
after  forty-five  (45)  calendar  days  following  the  Closing  Date  that the
Registration  Statement is not filed.  The  Investor is also granted  additional
Piggy-back  registration rights on any other Registration Statement filings made
by the Company. Such Registration Statement shall state that, in accordance with
the  Securities  Act,  it also covers such  indeterminate  number of  additional
shares of Common Stock as may become issuable to prevent dilution resulting from
Stock splits, or stock dividends). If at any time the number of shares of Common
Stock into which the Debenture(s) may be converted  exceeds the aggregate number
of shares of Common Stock then  registered,  the Company shall,  within ten (10)
business  days after  receipt of written  notice from any  Investor,  either (i)
amend the Registration  Statement filed by the Company pursuant to the preceding
sentence, if such Registration  Statement has not been declared effective by the
SEC at that  time,  to  register  all  shares of  Common  Stock  into  which the
Debenture(s) may be converted,  or (ii) if such Registration  Statement has been
declared  effective  by the SEC at that  time,  file with the SEC an  additional
Registration  Statement on such form as is  applicable to register the shares of
Common Stock into which the Debenture may be converted that exceed the aggregate
number of shares of Common Stock  already  registered.  The above  damages shall
continue  until the  obligation is fulfilled and shall be paid within 5 business
days  after  each 30 day  period,  or portion  thereof,  until the  Registration
Statement  is filed.  Failure  of the  Company  to make  payment  within  said 5
business days shall be considered a default.

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

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

         (c) Payment by the Company. If the Registration  Statement covering the
Registrable  Securities  required to be filed by the Company pursuant to Section
2(a) hereof is not declared effective within ninety (90) calendar days following
the  Closing  Date,  then the Company  shall pay the Initial  Investor 2% of the
purchase  price paid by the  Initial  Investor  for the  Registrable  Securities
pursuant to the Subscription  Agreement for every thirty day period,  or portion
thereof,  following the ninety (90)  calendar day period until the  Registration
Statement is declared  effective.  Notwithstanding  the  foregoing,  the amounts
payable by the Company  pursuant to this  provision  shall not be payable to the
extent  any delay in the  effectiveness  of the  Registration  Statement  occurs
because  of an act of,  or a  failure  to act or to act  timely  by the  Initial
Investor or its counsel.  The above damages shall  continue until the obligation
is fulfilled  and shall be paid within 5 business days after each 30 day period,
or portion  thereof,  until the  Registration  Statement is declared  effective.
Failure of the  Company to make  payment  within  said 5 business  days shall be
considered a default.

         The  Company  acknowledges  that its  failure to have the  Registration
Statement declared  effective within said ninety (90) calendar day period,  will
cause the Initial Investor to suffer damages in an amount that will be difficult
to ascertain.  Accordingly,  the parties agree that it is appropriate to include
in this Agreement a provision for liquidated  damages.  The parties  acknowledge
and agree  that the  liquidated  damages  provision  set  forth in this  section
represents the parties' good faith effort to quantify such damages and, as such,
agree that the form and amount of such  liquidated  damages are  reasonable  and
will not  constitute  a penalty.  The payment of  liquidated  damages  shall not
relieve the  Company  from its  obligations  to  register  the Common  Stock and
deliver  the  Common  Stock  pursuant  to  the  terms  of  this  Agreement,  the
Subscription Agreement and the Debenture.

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

         (a) Prepare promptly, and file with the SEC within forty-five (45) days
of the Closing Date, a Registration  Statement with respect to not less than the
number of Registrable Securities provided in Section 2(a), above, and thereafter
use  its  best  efforts  to  cause  such  Registration   Statement  relating  to
Registrable Securities to become effective the earlier of (i) five business days
after notice from the Securities and Exchange  Commission that the  Registration
Statement may be declared  effective,  or (b) ninety (90) days after the Closing
Date,  and keep the  Registration  Statement  effective  at all times  until the
earliest (the "Registration Period") of (i) the date that is two years after the
Closing  Date  (ii)  the  date  when the  Investors  may  sell  all  Registrable
Securities  under Rule 144 or (iii) the date the  Investors no longer own any of
the  Registrable   Securities,   which  Registration  Statement  (including  any
amendments or supplements thereto and prospectuses  contained therein) shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated  therein or necessary to make the statements  therein,  in
light of the circumstances in which they were made, not misleading;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

         7. Contribution.  To the extent any  indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable  under  Section  6 to the  fullest  extent  permitted  by law;  provided,
however,  that (a) no contribution shall be made under  circumstances  where the
maker would not have been liable for  indemnification  under the fault standards
set  forth in  Section  6; (b) no  seller of  Registrable  Securities  guilty of
fraudulent misrepresentation

(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution  from any seller of  Registrable  Securities  who was not guilty of
such  fraudulent  misrepresentation;  and  (c)  contribution  by any  seller  of
Registrable  Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities.

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

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

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

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

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

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

         11.      Miscellaneous.

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

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

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

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

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

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

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

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

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

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

                               SWISSRAY INTERNATIONAL, INC.

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

                           --Canadian Advantage Limited Partnership-----
                           (Name of Initial Investor)

                           By: __/s/ Mark Valentine___________
                           Name: Mark Valentine
                           Title: General Partner

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