Document:

COFFEE HOLDING CO., INC.

                             1998 STOCK OPTION PLAN

      The purpose of the 1998 Stock Option Plan (the "Plan") is to assist COFFEE
HOLDING CO., INC.  (the  "Company")  to attract and retain  qualified  officers,
employees,  directors and consultants of the Company, a Subsidiary,  or a Parent
of the Company, by enabling them to acquire common stock of the Company and thus
providing  incentive  for them to expend  maximum  effort for the success of the
Company's  business.  The Plan  provides  for the  issuance of  incentive  stock
options   ("Incentive   Stock   Options')   pursuant  to  Section  5(a)  and  of
non-qualified  options  ("Non-Qualified  Options") pursuant to Section 5(b). The
Incentive  Stock  Options  granted under Section 5(a) are intended to qualify as
incentive stock options under Section 422 of the Internal  Revenue Code of 1986,
as amended (the "Code").  Non-Qualified Options granted pursuant to Section 5(b)
are intended to be options which do not satisfy the  requirements of Section 422
of the Code.  All  references to "options" in the Plan shall  include  Incentive
Stock Options and Non-Qualified Options.

      The  options  offered  pursuant  to the  Plan  are a  matter  of  separate
inducement  to the persons who receive them and are not in lieu of any salary or
other compensation for the services of such persons.

      The  Company by means of the Plan seeks to retain the  services of persons
now serving the Company or any Subsidiary or Parent of the Company and to secure
the services of additional  persons capable of providing  services  important to
the welfare of the Company or any Subsidiary or Parent of the Company.

      To assist in meeting the objectives  described  above,  the Company hereby
adopts the Plan.

      1. Amount and Source of Stock.  The  aggregate  number and class of shares
which may be the subject of options  granted  pursuant to the Plan is  2,000,000
shares of common  stock of the Company,  par value $.0001 per share,  subject to
adjustment  as provided in Section 9 of the Plan.  Such shares may be authorized
but  unissued  shares of common stock of the Company or may be shares held in or
acquired for the treasury of the  Company.  Any shares of common stock  reserved
for  issuance  or  transfer  under an option  which for any  reason  terminates,
expires or is  canceled  unexercised  as to such  shares,  may be  reserved  for
issuance or transfer  under another option granted under the Plan. The aggregate
fair market value  (determined  at the time the option is granted) of the shares
as to  which  Incentive  Stock  Options  may be  granted  to any  option  holder
("Optionee")  under this Plan or any other plan of the Company or any Subsidiary
or  Parent  of the  Company  which are  exercisable  for the first  time by such
Optionee during any calendar year shall not exceed $100,000.

      2. Administration of the Plan.

            (a) The Plan shall be  administered by the Board of Directors of the
Company,  which, to the extent it shall determine,  may delegate its powers with
respect  to  administration  of  the  Plan  to  a  committee  (the  "Committee")
consisting  of not  less  than  three  members.  The  Board

<PAGE>

of Directors shall determine, within the limits of the express provisions of the
Plan, those directors,  employees, and officers who are to receive options under
the Plan and the number of shares of common stock to be subject to such options.
Options granted under the Plan shall, subject to the provisions of Section 5 and
11 hereof and the following sentence, be in such form as determined and approved
by the Board of  Directors.  The Board of Directors  shall  interpret  the Plan,
prescribe,  amend  and  rescind  rules  and  regulations,   forms,  notices  and
agreements relating to it and make all determinations necessary or advisable for
its administration, all such actions as approved by the Board of Directors to be
final and conclusive.

            (b) The Board of Directors may from time to time appoint  members of
the Committee in addition to or in substitution for members previously appointed
and may fill any vacancies in the  Committee.  The Committee  shall elect one of
its members as Chairman,  and may appoint a secretary,  who need not be a member
of the Committee or a director of the Company,  to keep minutes of its meetings.
Meetings  of the  Committee  shall be held at such  times and places as it shall
deem advisable.  A majority of the members of the Committee  shall  constitute a
quorum.  All action of the Committee shall be by a majority of its members.  Any
action may be taken by unanimous written consent setting forth the action taken,
signed by all of the  members of the  Committee,  and action so taken shall have
the same effect as if it had been taken by unanimous vote at a meeting duly held
and called.  The  Committee  shall report its action at meetings or by unanimous
written consent to the Board of Directors.

            (c) At any time prior to the appointment of the Committee and at any
time thereafter when the Committee shall not be duly  constituted and subject to
all eligibility  limitations  which would otherwise apply to the Plan, the Board
of Directors shall exercise all the functions of the Committee under the Plan.

      3. Effective  Date and Term of Plan. The Plan as originally  adopted shall
become  effective when adopted by the Board of Directors of the Company,  except
that unless the Plan is authorized by the  affirmative  vote of the holders of a
majority of the  outstanding  shares of common  stock of the  Company  within 12
months  after its adoption by the Board of  Directors,  the Plan and all options
outstanding  under the Plan shall  terminate at the  expiration of such 12 month
period.  The  solicitation of such approval shall be in accordance with the laws
of the State of Nevada and, if applicable,  in accordance  with Section 14(a) of
the  Securities  Exchange  Act of 1934.  Options  may be granted  under the Plan
within 10 years from the date of its adoption by the Board of Directors, but not
thereafter.

      4.  Eligible  Participants.   Only  officers,  directors,   employees  and
consultants  of the Company or a Subsidiary  or a Parent of the Company  shall b
eligible to receive  options  under the Plan. An employee who is also a director
of the Company or a Subsidiary  or a Parent of the Company  shall be eligible to
participate  under the Plan.  Except as provided in Section  5(a)(v)  below,  no
Incentive Stock Option shall be granted to a non-employee director,  consultant,
or an individual who, immediately before the granting of the option, owns (or is
deemed to own) stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or a Parent or Subsidiary of the Company.

                                     - 2 -
<PAGE>

      5. Grant and Terms of Options. The Board of Directors may grant options at
any time for from time to time prior to the  termination of the Plan, and except
as hereinafter  provided,  such options shall be subject to the following  terms
and conditions:

            (a) Incentive Stock Options.

                  (i) Purchase  Price.  The purchase  price provided for in each
Incentive  Stock Option granted  pursuant to this Section 5(a) of the Plan shall
be determined by the Board of Directors, provided that in no instance shall such
price be less than the fair market value of the shares subject to such option on
the date on which the Incentive Stock Option is granted.

                  (ii) Duration of Option.  Each Incentive  Stock Option granted
pursuant  to the Plan will  terminate  no later  than 10 years  from the date on
which it is granted, unless it is terminated earlier under Section 7 or 8.

                  (iii)  Transferability  of Option.  No Incentive  Stock Option
shall be  transferable by the employee in whole or in part other than by will or
the laws of descent and distribution, and each such option shall be exercisable,
during the lifetime of the employee, only by him or her.

                  (iv)  Exercise of Option.  Subject to the  provisions  of this
Section  5(a),  the  Board  of  Directors  shall  have  absolute  discretion  in
determining  whether any  Incentive  Stock  Option  granted  hereunder  shall be
exercisable  in whole at one time or in part from  time to time and,  if in part
from time to time,  the rate at which  such  option  shall be  exercisable  on a
cumulative or  non-cumulative  basis.  Except as provided in Section 7 and 8, no
Incentive  Stock  Option may be  exercised at a time when the Optionee is not an
employee of the Company or a Subsidiary or a Parent of the Company.

                  (v) Special Ten Percent  Shareholder Rule. Sections 4, 5(a)(i)
and 5(a)(ii)  notwithstanding,  an  Incentive  Stock Option may be granted to an
individual who immediately before the granting of such option owns (or is deemed
to own) stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or a Subsidiary  or a Parent of the Company,  if
at the time such  option is granted,  (i) such option  price is at least 110% of
the fair market value of the stock subject to such option,  and (ii) such option
by its terms may not be exercised  after the expiration of 5 years from the date
on which it was granted.

            (b) Non-Qualified Stock Options.

                  (i)  Purchase   Price.   The  purchase   price   provided  for
Non-Qualified  Option granted pursuant to this Section 5(b) of the Plan shall be
determined by the Board of Directors.

                  (ii) Duration of Option.  Each  Non-Qualified  Option  granted
pursuant  to the Plan will  terminate  no later  than 10 years  from the date on
which it is  granted,  unless  it is  terminated  earlier  under  Section 7 or 8
hereof.

                                     - 3 -
<PAGE>

                  (iii) Transferability of Option. No Non-Qualified Option shall
be  transferable  by the  employee,  director or  consultant in whole or in part
other than by will or the laws of descent or distribution,  and each such option
shall  be  exercisable,  during  the  lifetime  of  the  employee,  director  or
consultant, only by him or her.

                  (iv)  Exercise of Option.  Subject to the  provisions  of this
Section  5(b),  the  Board  of  Directors  shall  have  absolute  discretion  in
determining  whether  any  Non-Qualified   Option  granted  hereunder  shall  be
exercisable  in whole at one time or in part from  time to time and,  if in part
from time to time,  the rate at which  such  option  shall be  exercisable  on a
cumulative or  non-cumulative  basis.  Except as provided in Section 7 and 8, no
Non-Qualified  Option may be  exercised  at a time when the  Optionee  is not an
employee  or a  director  of the  Company  or a  Subsidiary  or a Parent  of the
Company. A Non-Qualified  Option granted to a consultant may be exercised as the
Board of Directors determines in its sole discretion.

      6. Manner of Exercise of Options.

            (a) Unless the Board of  Directors  shall  otherwise  determine,  an
option,  to the extent  exercisable under the Plan, may be exercised by delivery
to the Secretary of the Company,  at its principal  office, of a written notice,
signed by the person  entitled to exercise the option,  specifying the number of
shares  purchasable under the option which the Optionee then wishes to purchase,
together  with a certified or bank  cashier's  check payable to the order of the
Company,  in the amount of the aggregate  option price for such number of shares
and  any  withholding  tax due or  such  other  consideration  as the  Board  of
Directors agrees to accept.

            (b) Unless the shares to be acquired upon exercise of an option may,
at the time of such  acquisition,  be lawfully  resold in accordance with a then
currently effective registration statement or post-effective amendment under the
Securities  Act of 1933, as amended,  the Board of Directors  may provide,  as a
condition  to the delivery of any shares to be  purchased  upon  exercise of the
option,  that the Company  receive  appropriate  evidence  that the  Optionee is
acquiring the shares for investment and not with a view to the  distribution  or
public  offering  of  the  shares,  or  any  interest  in  the  shares,   and  a
representation  to the  effect  that the  Optionee  shall  make no sale or other
disposition  of the shares unless (a) the Company shall have received an opinion
of  counsel  satisfactory  to it in form  and  substance  that the sale or other
disposition  may  be  made  without   registration  under  the  then  applicable
provisions of the Securities Act of 1933, as amended,  and the related rules and
regulations of the Securities and Exchange Commissions,  or (b) the shares shall
be included in a currently  effective  registration  statement or post-effective
amendment under the Securities Act of 1933, as amended.  In no event shall stock
be issued or  certificates  be  delivered  until full payment as required by the
Plan shall have been  received by the Company,  nor shall the Optionee  have any
right or status as a  shareholder  prior to such  payment.  In no event  shall a
fraction of a share be purchased or issued under the Plan.

            (c) If at any time the Board of  Directors  shall  determine  in its
discretion that the listing, registration or qualification of the shares covered
by the Plan upon any national  securities exchange or under any state or federal
law, or the consent or approval of any

                                     - 4 -
<PAGE>

governmental regulatory body, is necessary or desirable as a condition of, or in
connection  with,  the sale or purchase of shares  subject to the Plan,  no such
shares  shall  be  delivered  unless  and  until  such  listing,   registration,
qualification,  consent or approval  shall have been  effected or  obtained,  or
otherwise  provided for, free of any  conditions  not acceptable to the Board of
Directors.

      7.  Termination  of  Employment.  In the event that the  employment of any
employee  or  tenure  as a  director  of  an  Optionee  shall  be  involuntarily
terminated  other  than  for  cause  or by  reason  of the  death  or  permanent
disability of the  Optionee,  the option may be exercised by the Optionee to the
extent  that he or she was  entitled to do so at the  termination  of his or her
employment  or tenure,  at any time within three months after such  termination,
but in no event  may an  option  be  exercised  after the date on which it would
otherwise  terminate.  In the event that the  employment  of any employee or the
tenure of a director  shall be  voluntarily  terminated or terminated for cause,
any option held by the employee or a director  under the Plan, to the extent not
previously  exercised,  shall forthwith  terminate.  Normal  retirement or early
retirement  with the consent of the Company or a  Subsidiary  or a Parent of the
Company  pursuant  to any  retirement  plan  shall not  constitute  a  voluntary
termination of employment or a termination of employment for cause, but shall be
considered  for this  purpose to be an  involuntary  termination  other than for
cause. The Board of Directors shall determine, in its sole discretion, the terms
of the  exercise  of an option  granted  to a  consultant  with  respect  to the
termination  of the  consultant.  Nothing in the Plan or in any  option  granted
pursuant to the Plan shall confer on any individual any right to continue in the
employ or as a  director,  or as a  consultant  of the  Company or a Parent or a
Subsidiary of the Company, or interfere in any way with the right of the Company
or a Parent or a Subsidiary of the Company to terminate  his or her  employment,
tenure as a director or engagement as a consultant.

      8. Death or Disability of an Optionee.

            (a) If an  Optionee  shall die while  employed  by or  serving  as a
director of the Company or a Subsidiary  or a Parent of the Company,  the option
may be exercised (i) to the extent that the employee or director was entitled to
do so at the date of his or her death,  and (ii) to the  additional  extent that
the employee or director  would have been  entitled to do so had the option been
exercisable   with  respect  to  the  number  of  shares  covered  by  the  next
installment,  if any,  of the option,  by a legatee or legatees of the  Optionee
under  his or her  last  will  or by his  or  her  personal  representatives  or
distributees  at any time  within  one year  after the date of death,  but in no
event may the  option be  exercised  after the date on which it would  otherwise
terminate.

            (b)  If  an  Optionee  shall  die  within  three  months  after  the
involuntary termination, other than for cause, of his or her employment by or of
his or her service as a director of the Company or a  Subsidiary  or a Parent of
the  Company,  the option may be  exercised,  to the extent that the employee or
director was entitled to do so at the date of his or her death,  by a legatee or
legatees of the  Optionee  under his or her last will or by his or her  personal
representative  or  distributees  at any time  within one year after the date of
death,  but in no event may the option be  exercised  after the date on which it
would otherwise expire.

                                     - 5 -
<PAGE>

            (c) If an  Optionee  is a  consultant  and he or she shall die,  the
option may be exercised (i) to the extent that the consultant was entitled to do
so at the date of his or her death,  and (ii) to the additional  extent that the
consultant  would have been  entitled to do so had the option  been  exercisable
with respect to the number of shares covered by the next installment, if any, of
the option,  by a legatee or legatees of the Optionee under his or her last will
or by his or her personal representatives or distributees at any time within one
year after the date of death,  but in no event may the option be exercised after
the date on which it would otherwise terminate.

            (d) If an Optionee  shall become  permanently  disabled  (within the
meaning of  Section  22(e)(3)  of the Code)  while  employed  by or serving as a
director of the Company or a Subsidiary  or a Parent of the Company,  the option
may be exercised by the Optionee to the extent that he or she was entitled to do
so at the  termination of his or her employment or tenure as a director,  at any
time  within one year after such  termination,  but in no event may an option be
exercised after the date on which it would otherwise expire.

            (e) If an  Optionee  is a  consultant  and he or  she  shall  become
permanently  disabled  (within the meaning of 22(e)(3) of the Code),  the option
may be exercised by the Optionee to the extent that he or she was entitled to do
so upon the  termination of his or her  engagement,  at any time within one year
after such  termination,  but in no event may an option be  exercised  after the
date on which it would otherwise expire.

      9. Adjustment of Number and Price of Shares Subject to Options.

            (a) If the outstanding shares of the common stock of the Company are
subdivided, consolidated,  increased, decreased, changed into or exchanged for a
different  number  or  kind of  shares  or  securities  of the  Company  through
reorganization, merger, recapitalization,  reclassification,  capital adjustment
or otherwise, or if the Company shall issue common stock as a dividend or upon a
stock split,  then the number and kind of shares  available  for purposes of the
Plan and all shares subject to the unexercised portion of any options previously
granted and the exercise price of those options shall be appropriately adjusted.
However,  no such adjustment shall change the total exercise price applicable to
the unexercised portion of any outstanding option.

            (b)  Adjustments  under this Section 9 shall be made by the Board of
Directors,  whose  determination as to what  adjustments  shall be made shall be
final and  binding.  In  computing  any  adjustment  under  this  Section 9, any
fractional  share which might  otherwise  become  subject to an option  shall be
eliminated.

      10. Change of Control.

            (a) In no event of a Change of Control (as herein  defined),  unless
otherwise  determined  by the Board of Directors or the Committee at the time of
grant or by amendment (with the holder's consent) of such grant, all outstanding
options awarded under the Plan shall become fully exercisable and vested.

                                     - 6 -
<PAGE>

            (b) A "Change of Control"  shall be deemed to occur on the date that
any of the following events occur:

                  (i)  any  person  or  persons  acting   together  which  would
constitute a "group" for purposes of Section  13(d) of the  Securities  Exchange
Act of 1934,  as  amended  ("Exchange  Act"),  other  than the  Company  and any
subsidiary,  shall  beneficially  own (as defined in Rule 13d-3 of the  Exchange
Act),  directly or  indirectly,  at least 20% of the total  voting  power of all
classes  of capital  stock of the  Company  entitled  to vote  generally  in the
election of the Board;

                  (ii) either (A) Current  Directors (as herein  defined)  shall
cease for any reason to  constitute  at least a majority  of the  members of the
Board (for these  purposes,  a "Current  Director"  shall mean any member of the
Board as of the  effective  date of the  Plan,  and any  successor  of a Current
Director   whose   election,   or  nomination  for  election  by  the  Company's
shareholders,  was approved by at least two-thirds of the Current Directors then
on the Board) or (B) at any meeting of the  shareholders  of the company  called
for the purpose of electing  directors,  a majority of the persons  nominated by
the Board for election as directors shall fail to be elected;

                  (iii) the  shareholders  of the Company  approve (A) a plan of
complete  liquidation  of the  Company,  or (B) an agreement  providing  for the
merger or  consolidation  of the  Company  (i) in which the  Company  is not the
continuing or surviving corporation (other than a consolidation or merger with a
wholly  owned  subsidiary  of the Company in which all shares of common stock of
the  Company  outstanding  immediately  prior to the  effectiveness  thereof are
changed into or exchanged for the same  consideration) or (ii) pursuant to which
the shares of common stock of the Company are converted into cash, securities or
other property,  except as  consolidation  or merger of the Company in which the
holders  of  the  common  stock  of  the  Company   immediately   prior  to  the
consolidation or merger have, directly or indirectly, at least a majority of the
common stock of the continuing or surviving  corporation  immediately after such
consolidation or merger or in which the Board immediately prior to the merger or
consolidation would, immediately after the merger or consolidation, constitute a
majority of the board of directors of the continuing or surviving  corporations;
or

                  (iv) the  shareholders of the Company approve an agreement (or
agreements) providing for the sale or other disposition (in one transaction or a
series  of  transactions)  of all or  substantially  all  of the  assets  of the
Company.

      11. Liquidation,  Merger or Consolidation. In the event of the dissolution
or liquidation of the Company,  or in the event of a merger or  consolidation in
which (i) the Company is a party and (ii) the  agreements  governing such merger
or  consolidation  do not provide for the issuance of substitute  options or the
assumption of the options issued  hereunder (as issuing and assuming are defined
in Code Section 424(a)),  with  substantially  equivalent terms as determined by
the Board of Directors in lieu of the options  granted under the Plan or for the
express assumption of such outstanding options by the surviving corporation, the
Board of Directors  shall declare that each option  granted under the Plan shall
terminate as of a date to be fixed by the Board of Directors  (the  "Termination
Date"), provided that the Board of Directors

                                     - 7 -
<PAGE>

shall cause to be mailed  thirty (30) days before the  Termination  Date written
notice of the  Termination  Date to each Optionee,  and each Optionee shall have
the right,  during the period  between the receipt of the written notice and the
Termination Date to exercise his option, in whole or in part, whether or not all
or any part of such option  would not  otherwise be  exercisable.  The notice of
exercise  must be received by the Company on or prior to the  Termination  Date.
Any then  outstanding  option not  exercised  in its entirety on or prior to the
Termination  Date  specified  by the Board of  Directors  and any and all rights
thereunder shall terminate as of said date.

      12. Amendment or Discontinuance of Plan. The Board of Directors may alter,
suspend or discontinue the Plan at any time,  except that no action of the Board
may, without appropriate  shareholder  action,  materially increase the benefits
accruing to the  participants  under the Plan,  materially  increase the maximum
number  of shares  subject  to the Plan  (except  as  provided  in  Section  9),
materially modify the requirements for eligibility under the Plan, implement any
change requiring shareholder approval under the Code or any other applicable law
and,  without the consent of the Optionee,  no such action shall alter the terms
of, or impair the rights of the  Optionee  under any option  previously  granted
pursuant to the Plan.  Unless  sooner  terminated,  the Plan shall  terminate as
provided in Section 3. An option may not be granted  while the Plan is suspended
or after it is terminated.  The rights and obligations  under any option granted
while the Plan is in effect may not be  altered or  impaired  by  suspension  or
termination  of the Plan,  except  upon the  consent  of the  person to whom the
option  was  granted.  The  power of the  Board of  Directors  to  construe  and
administer  any options  granted prior to the  termination  or suspension of the
Plan shall nevertheless continue after and survive such termination and continue
during such suspension.

      13. Miscellaneous Provisions.

            (a)  Subsidiary.  As used herein,  the term  "subsidiary"  means any
"subsidiary corporation" within the meaning of Section 424(f) of the Code.

            (b) Parent.  As used  herein,  the term  "parent"  means any "parent
corporation" within the meaning of Section 424(e) of the Code.

            (c)  Permanently  Disabled.  As used herein,  the term  "permanently
disabled" means "permanently disabled" within the meaning of Section 22(e)(3) of
the Code.

            (d)  Governing  Law.  The Plan shall be  governed by the laws of the
State of Nevada.

                                     - 8 -EXHIBIT 10.1
------------

                          EXCHANGE AGREEMENT
                          ------------------

     EXCHANGE AGREEMENT (the "Agreement"), dated as of October 24, 2000,
by and among Entrade Inc., a Pennsylvania corporation, with headquarters
located at 500 Central Avenue, Northfield, Illinois 60093 (the "Company"),
and the investors listed on the Schedule of Investors attached hereto
(individually, an "Investor" and collectively, the "Investors").

                               WHEREAS:

     A.    The Company and certain investors, including the Investors,
have entered into that certain Securities Purchase Agreement, dated as of
March 24, 2000, (the "Securities Purchase Agreement"), pursuant to which
certain investors, including the Investors, purchased from the Company
shares of the Company's Series A Convertible Preferred Stock and warrants
(the "Old Warrants") to purchase shares of the Company's common stock, no
par value per share (the "Common Stock");

     B.    The number of shares of Common Stock for which each Investor's
Old Warrant may be exercised is set forth opposite its name on the Schedule
of Investors;

     C.    The Company and each Investor wish to exchange, upon the terms
and conditions stated in this Agreement, the Old Warrants issued to such
Investor pursuant to the Securities Purchase Agreement for a new warrant,
in substantially the form attached hereto as Exhibit A  (the "Exchange
Warrants"), to purchase the same number of shares of Common Stock (the
"Exchange Warrant Shares") as are currently covered by the Old Warrant held
by such Investor (the Exchange Warrants and the Exchange Warrant Shares,
collectively are referred to herein as the "Securities"); and

     D.    The exchange of the Old Warrants for the Exchange Warrants is
being made in reliance upon the exemption from registration provided by
Section 3(a)(9) of the Securities Act of 1933, as amended (the "1933 Act").

     NOW THEREFORE, the Company and the Investor hereby agree as follows:

     1.    EXCHANGE AND ISSUANCE OF EXCHANGE WARRANTS.

           a.    Exchange of Old Warrants.  Subject to satisfaction (or
waiver) of the conditions set forth in Sections 6 and 7, the Company shall
issue to each Investor, and each Investor severally agrees to exchange its
Old Warrant for, an Exchange Warrant to purchase a number of Exchange
Warrant Shares equal to the number of shares of Common Stock covered by the
Old Warrant being exchanged by such Investor (the "Closing").  The date of
the Closing (the "Closing Date") shall be the date which is five (5)
Business Days after the date of this Agreement, or such earlier or later
date as the Company and each Investor may agree.  "Business Day" means any
day other than Saturday, Sunday or other day on which commercial banks in
the city of New York are authorized or required by law to remain closed.

           b.    The Closing Date.  The time of the Closing shall be 10:00
a.m., Eastern Time, on the Closing Date, subject to satisfaction (or
waiver) of the conditions to the Closing set forth in Sections 6 and 7 (or
such later date as is mutually agreed to by the Company and each of the
Investors).  The Closing shall occur on the Closing Date at the offices of
Katten Muchin  Zavis, 525 West Monroe Street, Suite 1600, Chicago, Illinois
60661-3693.

<PAGE>

     2.    INVESTOR'S REPRESENTATIONS AND WARRANTIES.

           Each Investor represents and warrants with respect to only
itself that:

           a.    Reliance on Exemptions.  Such Investor understands that
the Securities are being offered and sold to it in reliance on specific
exemptions from the registration requirements of United States federal and
state securities laws and that the Company is relying in part upon the
truth and accuracy of, and such Investor's compliance with, the
representations, warranties, agreements, acknowledgments and understandings
of such Investor set forth herein in order to determine the availability of
such exemptions and the eligibility of such Investor to receive such
Securities.

           b.    No Governmental Review.  Such Investor understands that
no United States federal or state agency or any other government or
governmental agency has passed on or made any recommendation or endorsement
of the Securities or the fairness or suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits of
the offering of the Securities.

           c.    Transfer or Resale.  Such Investor understands that: (i)
the Securities have not been and are not being registered under the 1933
Act or any state securities laws, and may not be offered for sale, sold,
assigned or transferred unless (A) subsequently registered thereunder, (B)
such Investor shall have delivered to the Company an opinion of counsel, in
a form reasonably satisfactory to the Company, to the effect that such
Securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration, or (C) such
Investor provides the Company with reasonable assurance that such
Securities can be sold, assigned or transferred pursuant to Rule 144
promulgated under the 1933 Act (or a successor rule thereto) ("Rule 144");
(ii) any sale of the Securities made in reliance on Rule 144 may be made
only in accordance with the terms of Rule 144 and further, if Rule 144 is
not applicable, any resale of the Securities under circumstances in which
the seller (or the person through whom the sale is made) may be deemed to
be an underwriter (as that term is defined in the 1933 Act) may require
compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any
other person is under any obligation to register such Securities under the
1933 Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.  Notwithstanding the foregoing, the
Securities may be pledged in connection with a bona fide margin account or
other loan secured by the Securities.

           d.    Legends.  Such Investor understands that the certificates
or other instruments representing the Exchange Warrants and, until such
time as the sale of the Exchange Warrant Shares have been registered under
the 1933 Act, the stock certificates representing the Exchange Warrant
Shares, except as set forth below, shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):

     THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS.  SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL, IN A FORM REASONABLY SATISFACTORY TO THE
ISSUER, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
NOTWITHSTANDING THE FOREGOING, SUCH SECURITIES MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

<PAGE>

The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which
it is stamped, if (i) such Securities are registered for sale under the
1933 Act, (ii) in connection with a sale, assignment or transfer of  such
Securities, such holder provides the Company with an opinion of counsel, in
a form reasonably satisfactory to the Company, to the effect that such
sale, assignment or transfer of such Securities may be made without
registration under the 1933 Act, or (iii) such Investor provides the
Company with reasonable assurances that such Securities can be sold
pursuant to Rule 144. Such Investor acknowledges, covenants and agrees to
sell Securities represented by a certificate(s) from which the legend has
been removed, only pursuant to (i) a registration statement effective under
the 1933 Act, or (ii) advice of counsel to such holder that such sale is
exempt from the registration requirements of Section 5 of the 1933 Act.

           e.    Authorization; Enforcement.  This Agreement has been duly
and validly authorized, executed and delivered on behalf of such Investor
and is a valid and binding agreement of such Investor enforceable against
such Investor in accordance with its terms, subject as to enforceability to
general principles of equity and to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to,
or affecting generally, the enforcement of applicable creditors' rights and
remedies.

           g.    Residency.  Such Investor is a resident of that
jurisdiction specified on the Schedule of Investors.

     3.    REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

           The Company represents and warrants to each of the Investors
that:

           a.    Organization and Qualification.  The Company is a
corporation duly organized and validly existing under the laws of the
jurisdiction in which it is incorporated, the Company is in good standing
under the laws of the jurisdiction in which it is incorporated, and the
Company has the requisite corporate power and authorization to own
properties and to carry on its business as now being conducted.  The
Company is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which its ownership of property or
the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be
in good standing would not have a Material Adverse Effect.  As used in this
Agreement, "Material Adverse Effect" means any material adverse effect on
the business, properties, assets, operations, results of operations or
financial condition of the Company and its subsidiaries taken as a whole,
or on the transactions contemplated hereby or by the agreements and
instruments to be entered into in connection herewith, or on the authority
or ability of the Company to perform its obligations under the Transaction
Documents (as defined below).

           b.    Authorization; Enforcement; Compliance with Other
Instruments.  The Company has the requisite corporate power and authority
to enter into and perform its obligations under this Agreement, the
Irrevocable Transfer Agent Instructions (as defined in Section 5), the
Exchange Warrants and each of the other agreements entered into by the
parties hereto in connection with the transactions contemplated by this
Agreement (collectively, the "Transaction Documents"), and to issue the
Securities in accordance with the terms hereof and thereof.  The execution
and delivery of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby,
including without limitation the issuance of the Exchange Warrants and the
reservation for issuance and the issuance of the Exchange Warrant Shares
issuable upon exercise thereof, have been duly authorized by the Executive
Committee of the Company's Board of Directors which authority has been duly

<PAGE>

delegated to the Executive Committee by the Company's Board of Directors
and no further consent or authorization is required by the Company, its
Board of Directors or its stockholders.  The Transaction Documents have
been duly executed and delivered by the Company.  This Agreement and, when
executed and delivered, the other Transaction Documents, constitute the
valid and binding obligations of the Company enforceable against the
Company in accordance with their terms, except as such enforceability may
be limited by general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of creditors' rights
and remedies.

           c.    Charter and Securities Documents.  The Company has
furnished to the Buyer true and correct copies of the Company's Articles of
Incorporation, as amended and as in effect on the date hereof (the
"Articles of Incorporation"), and the Company's By-laws, as in effect on
the date hereof (the "By-laws"), and the terms of all securities
convertible into or exercisable for Common Stock and the material rights of
the holders thereof in respect thereto.

           d.    Issuance of Securities.  At least 340,359 shares of
Common Stock (subject to adjustment pursuant to the Company's covenant set
forth in Section 4(f) below) have been duly authorized and reserved for
issuance upon exercise of the Exchange Warrants.  Upon exercise in
accordance with the Exchange Warrants, the Exchange Warrant Shares will be
validly issued, fully paid and nonassessable and free from all taxes, liens
and charges with respect to the issuance thereof, with the holders being
entitled to all rights accorded to a holder of Common Stock.  The issuance
by the Company of the Securities is exempt from registration under the 1933
Act.  The offer and sale by the Company of the Exchange Warrants is being
made in reliance upon the exemption from registration set forth in Section
3(a)(9) of the 1933 Act and similar exemptions under state law.

           e.    No Conflicts.  The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including,
without limitation, the reservation for issuance and issuance of the
Exchange Warrant Shares) will not (i) result in a violation of the Articles
of Incorporation, any Statement with Respect to Shares of any outstanding
series of preferred stock of the Company or the By-laws; (ii) conflict
with, or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its subsidiaries is
a party; or (iii) result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations and the rules and regulations of the principal market or
exchange on which the Common Stock is traded or listed) applicable to the
Company or any of its subsidiaries or by which any property or asset of the
Company or any of its subsidiaries is bound or affected.  Neither the
Company nor its subsidiaries is in violation of any term of its Articles of
Incorporation, any Statement with Respect to Shares of any outstanding
series of preferred stock or its By-laws or their organizational charter or
by-laws, respectively.  The Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any
court or governmental agency, any regulatory or self-regulatory agency or
any other person or entity in order for it to execute, deliver or perform
any of its obligations under or contemplated by the Transaction Documents
in accordance with the terms hereof or thereof.  Neither the Company nor
any of its subsidiaries nor any of their officers, directors, employees or
agents have provided any of the Investors with any material, nonpublic
information.

<PAGE>

           f.    No Integrated Offering.  Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf has, directly
or indirectly, made any offers or sales of any security or solicited any
offers to buy any security, under circumstances that would require
registration of any of the Securities under the 1933 Act or cause this
offering of Securities to be integrated with prior offerings by the Company
for purposes of the 1933 Act or any applicable stockholder approval
provisions, including, without limitation, under the rules and regulations
of  NYSE, nor will the Company or any of its subsidiaries take any action
or steps that would require registration of the Securities under the 1933
Act or cause the offering of the Securities to be integrated with other
offerings.

           g.    Dilutive Effect.  The Company acknowledges that its
obligation to issue the Exchange Warrant Shares in accordance with this
Agreement and the Exchange Warrants is, in each case, absolute and
unconditional regardless of the dilutive effect that such issuance may have
on the ownership interests of other stockholders of the Company.

           h.    Rights Agreement.  The Company has not adopted a
shareholder rights plan or similar arrangement relating to accumulations of
beneficial ownership of Common Stock or a change of control of the Company.

     4.    COVENANTS.

           a.    Best Efforts.  Each party hereto shall use its best
efforts to satisfy timely each of the conditions to be satisfied by it as
provided in Sections 6 and 7 of this Agreement.

           b.    Blue Sky.  The Company shall, on or before the Closing
Date, take such action as the Company shall reasonably determine is
necessary to qualify the Securities for, or obtain exemption for the
Securities for, sale to the Investors at the Closing pursuant to this
Agreement under applicable securities or "Blue Sky" laws of the states of
the United States, and shall provide evidence of any such action so taken
to the Investors on or prior to the Closing Date.  The Company shall make
all filings and reports relating to the offer and sale of the Securities
required under applicable securities or "Blue Sky" laws of the states of
the United States following the Closing Date.

           c.    Reporting Status.  Until the later of (i) the date which
is one year after the date on which each Investor may sell all of the
Exchange Warrant Shares without restriction pursuant to Rule 144(k)
promulgated under the 1933 Act (or successor thereto) and (ii) the date on
which (A) the Investors shall have sold all the Exchange Warrant Shares and
(B) none of the Exchange Warrants is outstanding (the "Reporting Period"),
the Company shall file all reports required to be filed with the SEC
pursuant to the 1934 Act, and the Company shall not terminate its status as
an issuer required to file reports under the 1934 Act even if the 1934 Act
or the rules and regulations thereunder would otherwise permit such
termination.

           d.    Rule 144.  The Company shall not, directly or indirectly,
dispute or otherwise interfere with any claim by a holder of the Exchange
Warrants that such holder's holding period of any Exchange Warrants for
purposes of Rule 144 promulgated under the 1933 Act (or a successor rule
thereto) ("Rule 144") relates back (i.e., tacks) to the holding period for
the Old Warrants.  The Company agrees and acknowledges that under Rule 144
and no-action letters issued by the SEC, such tacking is permitted.

           e.    Financial Information.  The Company agrees to send the
following to each Investor during the Reporting Period: (i)  unless filed
and available through the SEC's EDGAR system, within two (2) Business Days
after the filing thereof with the SEC, a copy of its Annual Reports on Form
10-K, its Quarterly Reports on Form 10-Q, any Current Reports on Form 8-K
and any registration statements (other than on Form S-8) or amendments
thereto filed pursuant to the 1933 Act; (ii) on the same day as the release

<PAGE>

thereof, facsimile copies of all press releases issued by the Company or
any of its subsidiaries (or the day after, if released through a recognized
wire service) and (iii) copies of any notices and other information made
available or given to the stockholders of the Company generally,
contemporaneously with the making available or giving thereof to the
stockholders.

           f.    Reservation of Shares.  The Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, no less than 100% of the number of shares of Common Stock needed
to provide for the issuance of the Exchange Warrant Shares (without regard
to any limitations on exercise thereof).

           g.    Expenses.  Subject to Section 9(l) below, at the Closing,
the Company shall pay to Fisher Capital Ltd. and Wingate Capital Ltd. (each
an Investor) or their designee an aggregate expense allowance of $10,000.

           h.    Listing.  The Company shall promptly secure the listing
of all of the Exchange Warrant Shares upon each national securities
exchange (including The New York Stock Exchange, Inc. ("NYSE")) and
automated quotation system, if any, upon which shares of Common Stock are
then listed (subject to official notice of issuance) and shall maintain, so
long as any other shares of Common Stock shall be so listed, such listing
of Exchange Warrant Shares from time to time issuable under the terms of
the Transaction Documents.  The Company shall maintain the Common Stock's
authorization for listing on the Nasdaq National Market or the NYSE.
Neither the Company nor any of its subsidiaries shall take any action which
may result in the delisting or suspension of the Common Stock on the Nasdaq
National Market or the NYSE (other than to switch listings from the NYSE to
the Nasdaq National Market).  The Company shall pay all fees and expenses
in connection with satisfying its obligations under this Section 4(h).

           i.    Filing of Form 8-K. On or before the second (2nd)
Business Day following the Closing Date, the Company shall file a Form 8-K
with the SEC describing the terms of the transaction contemplated by the
Transaction Documents and consummated at the Closing, in the form required
by the 1934 Act, and attaching as exhibits to such Form 8-K copies of this
Agreement and the form of Exchange Warrant.

           j.    Corporate Existence.  So long as any Investor
beneficially owns any Exchange Warrants, the Company shall maintain its
corporate existence and shall not sell all or substantially all of the
Company's assets, except in the event of a merger or consolidation or sale
of all or substantially all of the Company's assets, where the surviving or
successor entity in such transaction (i) assumes the Company's obligations
hereunder and under the agreements and instruments entered into in
connection herewith and (ii) is a publicly traded corporation whose common
stock is listed for trading on the Nasdaq National Market or NYSE.

<PAGE>

     5.    TRANSFER AGENT INSTRUCTIONS.

           The Company shall issue irrevocable instructions to its
transfer agent, and any subsequent transfer agent, to issue certificates,
registered in the name of each Investor or its respective nominee(s), for
the Exchange Warrant Shares in such amounts as specified from time to time
by each Investor to the Company upon exercise of the Exchange Warrants (in
the form attached hereto as Exhibit B, the "Irrevocable Transfer Agent
Instructions") unless such issuance is prohibited by Section 2(g) of the
Exchange Warrants.  Prior to registration of the Exchange Warrant Shares
under the 1933 Act, all such certificates shall bear the restrictive legend
specified in Section 2(g) of this Agreement.  The Company warrants that no
instruction other than the Irrevocable Transfer Agent Instructions referred
to in this Section 5, and stop transfer instructions to give effect to
Section 2(f) hereof will be given by the Company to its transfer agent with
respect to the Exchange Warrant Shares and that the Securities shall
otherwise be freely transferable on the books and records of the Company as
and to the extent provided in this Agreement.  If an Investor provides the
Company with an opinion of counsel, in a form reasonably satisfactory to
the Company, that registration of a resale by such Investor of any of such
Securities is not required under the 1933 Act or such Investor provides the
Company with reasonable assurances that the Securities can be sold pursuant
to Rule 144, the Company shall permit the transfer, and, in the case of the
Exchange Warrant Shares, promptly instruct its transfer agent to issue one
or more certificates in such name and in such denominations as specified by
such Investor and without any restrictive legends.  The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the affected Investor by vitiating the intent and
purpose of the transaction contemplated hereby.  Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under
this Section 5 would be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Section 5, that
the Investors shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach and requiring immediate
issuance and transfer, without the necessity of showing economic loss and
without any bond or other security being required.

     6.    CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING.  The
obligation of the Company hereunder to issue the Exchange Warrants to each
Investor at the Closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion by providing each Investor with
prior written notice thereof:

           (i)   Such Investor shall have executed this Agreement and
delivered the same to the Company.

           (ii)  Such Investor shall have delivered to the Company the
original Old Warrant issued to such Investor pursuant to the Securities
Purchase Agreement.

           (iii) The representations and warranties of such Investor
contained herein shall be true and correct as of the date when made and as
of the Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date), and such Investor shall
have performed, satisfied and complied with the covenants, agreements and
conditions required by the Transaction Documents to be performed, satisfied
or complied with by such Investor at or prior to the Closing Date.

     7.    CONDITIONS TO EACH INVESTOR'S OBLIGATIONS AT CLOSING.  The
obligation of each Investor hereunder to exchange its Old Warrant for the
Exchange Warrant at the Closing is subject to the satisfaction, at or
before the Closing Date, of each of the following conditions, provided that
these conditions are for such Investor's sole benefit and may be waived by
such Investor at any time in its sole discretion by providing the Company
and each Investor with prior written notice thereof:

<PAGE>

           (i)   The Company shall have executed this Agreement and
delivered the same to such Investor.

           (ii)  The Common Stock shall have been listed on the NYSE since
August 20, 1999, shall not have been suspended from trading on or delisted
from such exchange nor shall delisting or suspension by such exchange have
been threatened either (A) in writing by such exchange or (B) by falling
below the minimum listing maintenance requirements of such exchange.  The
Company shall have complied with the listing requirements of the NYSE for
the Exchange Warrant Shares issuable upon exercise of the Exchange
Warrants.

           (iii) The representations and warranties of the Company
contained herein shall be true and correct as of the date when made and as
of the Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied with the covenants, agreements and
conditions required by the Transaction Documents to be performed, satisfied
or complied with by the Company at or prior to the Closing Date.  Such
Investor shall have received a certificate, executed by the Chief Executive
Officer of the Company or Peter Harvey, Vice Chairman of the Company, dated
as of the Closing Date, to the foregoing effect and as to such other
matters as such Investor may reasonably request, including, without
limitation, an update as of the Closing Date regarding the representation
contained in Section 3(c) above.

           (iv)  Such Investor shall have received the opinion of Kwiatt &
Ruben, Ltd. dated as of the Closing Date, in substantially the form of
Exhibit C, attached hereto.

           (v)   The Company shall have executed and delivered to such
Investor the Exchange Warrant to be issued to such Investor (as set forth
in Section 1(a)) at the Closing.

           (vi)  The Board of Directors of the Company shall have adopted
resolutions consistent with Section 3(b) above in a form reasonably
acceptable to such Investor (the "Resolutions").

           (vii) As of the Closing Date, the Company shall have reserved
out of its authorized and unissued Common Stock, solely for the purpose of
effecting the exercise of the Exchange Warrants, at least 340,359 shares of
Common Stock.

           (viii)     The Irrevocable Transfer Agent Instructions, in the
form of Exhibit B attached hereto, shall have been delivered to and
acknowledged in writing by the Company's transfer agent.

           (ix)  The Company shall have delivered to such Investor a
secretary's certificate, dated as of the Closing Date, certifying as to (A)
the Resolutions, (B) the Articles of Incorporation and (C) the By-laws,
each as in effect at the Closing Date.

           (x)   The Company shall have delivered to the Investors such
other documents relating to the transactions contemplated by the
Transaction Documents as the Investors or their counsel may reasonably
request.

     8.    INDEMNIFICATION.  In consideration of each Investor's execution
and delivery of the Transaction Documents and in addition to all of the
Company's other obligations under the Transaction Documents, the Company
shall defend, protect, indemnify and hold harmless each Investor and each
other holder of the Securities and all of their stockholders, officers,
directors, employees and direct or indirect investors and any of the
foregoing persons' agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated

<PAGE>

by this Agreement) (collectively, the "Indemnitees") from and against any
and all actions, causes of action, suits, claims, losses, costs, penalties,
fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for
which indemnification hereunder is sought), and including reasonable
attorneys' fees and disbursements (the "Indemnified Liabilities"), incurred
by any Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument
or document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction
Documents or any other certificate, instrument or document contemplated
hereby or thereby or (c) any cause of action, suit or claim brought or made
against such Indemnitee (other than a cause of action, suit or claim which
is (x) brought or made by the Company and (y) is not a shareholder
derivative suit) and arising out of or resulting from (i) the execution,
delivery, performance or enforcement of the Transaction Documents, (ii) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities or (iii)
solely from the status of such Investor or holder of the Securities as an
investor in the Company.  To the extent that the foregoing undertaking by
the Company may be unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.

     9.    GOVERNING LAW; MISCELLANEOUS.

           a.    Governing Law; Jurisdiction; Jury Trial.  All questions
concerning the construction, validity, enforcement and interpretation of
this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York.  Each party hereby
irrevocably submits to the non-exclusive jurisdiction of the state and
federal courts sitting in the City of New York, borough of Manhattan, for
the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction
of any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper.  Each party hereby irrevocably waives personal service of process
and consents to process being served in any such suit, action or proceeding
by mailing a copy thereof to such party at the address for such notices to
it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof.  Nothing contained
herein shall be deemed to limit in any way any right to serve process in
any manner permitted by law.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING
OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

           b.    Counterparts.  This Agreement may be executed in two or
more identical counterparts, all of which shall be considered one and the
same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other parties; provided that a
facsimile signature shall be considered due execution and shall be binding
upon the signatory thereto with the same force and effect as if the
signature were an original, not a facsimile signature.

           c.    Headings.  The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.

<PAGE>

           d.    Severability.  If any provision of this Agreement shall
be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.

           e.    Entire Agreement; Amendments.  This Agreement supersedes
all other prior oral or written agreements between each Investor, the
Company, their affiliates and persons acting on their behalf with respect
to the matters discussed herein.  This Agreement and the instruments
referenced herein contain the entire understanding of the parties with
respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor any
Investor makes any representation, warranty, covenant or undertaking with
respect to such matters. Notwithstanding the foregoing, Section 8 of the
Securities Purchase Agreement shall remain in full force and effect with
respect to the securities and the transactions contemplated thereby.  No
provision of this Agreement may be amended other than by an instrument in
writing signed by the Company and the Investors which received Exchange
Warrants representing at least two-thirds (?) of the Exchange Warrant
Shares underlying the Exchange Warrants on the Closing Date, or their
assigns or, if prior to the Closing Date, the Investors listed on the
Schedule of Investors as holding at least two-thirds (?) of the shares of
Common Stock underlying the Old Warrants held by all the Investors. No such
amendment shall be effective to the extent that it applies to less than all
of the holders of the Exchange Warrants then outstanding.   No provision
hereof may be waived other than by an instrument in writing signed by the
party against whom enforcement is sought.  No consideration shall be
offered or paid to any person to amend or consent to a waiver or
modification of any provision of any of the Transaction Documents unless
the same consideration also is offered to all of the parties to the
Transaction Documents.

           f.    Notices.  Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered (i)
upon receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or (iii)
one (1) Business Day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive
the same.  The addresses and facsimile numbers for such communications
shall be:

     If to the Company:

           Entrade Inc.
           500 Central Avenue
           Northfield, Illinois 60093
           Telephone: (847) 784-3310
           Facsimile: (847) 441-7652
           Attention: Mark Santacrose, President

     With a copy to:

           Kwiatt & Ruben, Ltd.
           211 Waukegan Road, Suite 300
           Northfield, Illinois 60093
           Telephone: (847) 441-7676
           Facsimile: (847) 441-7696
           Attention: Philip E. Ruben, Esq.

<PAGE>

     If to the Transfer Agent:

           Chase Mellon Shareholder Services, L.L.C.
           111 Founders Plaza, Suite 1100
           East Hartford, Connecticut 06108
           Telephone: (860) 282-3509
           Facsimile: (860) 528-6472
           Attention: Lynore LeConche

     If to an Investor, to it at the address and facsimile number set
forth on the Schedule of Investors, with copies to such Investor's
representatives as set forth on the Schedule of Investors, or at such other
address and/or facsimile number and/or to the attention of such other
person(s) as the recipient party has specified by written notice given to
each other party five days prior to the effectiveness of such change.
Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communications, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date,
recipient facsimile number and an image of the first page of such
transmission or (C) provided by a nationally recognized overnight delivery
service shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from a nationally recognized overnight delivery
service in accordance with clause (i), (ii) or (iii) above, respectively.

           g.    Successors and Assigns.  This Agreement shall be binding
upon and inure to the benefit of the parties and their respective
successors and assigns, including any purchasers of the Exchange Warrants.
The Company shall not assign this Agreement or any rights or obligations
hereunder, including by merger or consolidation, without the prior written
consent of the Investors which received Exchange Warrants representing at
least two-thirds (?) of the Exchange Warrant Shares underlying the Exchange
Warrants on the Closing Date, or their assigns. The rights under this
Agreement are assignable by an Investor without the consent of the Company;
provided, however, that any such assignment shall not release such Investor
from its obligations hereunder unless such obligations are assumed by such
assignee and the Company has consented to such assignment and assumption,
which consent shall not be unreasonably withheld.  Notwithstanding anything
to the contrary contained in the Transaction Documents, Investors shall be
entitled to pledge the Securities in connection with a bona fide margin
account or other loan secured by the Securities.

           h.    No Third Party Beneficiaries.  This Agreement is intended
for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.

           i.    Survival.  Unless this Agreement is terminated under
Section 9(l), the representations and warranties of the Company and each
Investor contained in Sections 2 and 3, the agreements and covenants set
forth in Sections 4, 5 and 9, and the indemnification provisions set forth
in Section 8, shall survive the Closing.  Each Investor shall be
responsible only for its own representations, warranties, agreements and
covenants hereunder.

           j.    Publicity.  The Company and each Investor shall have the
right to approve before issuance any press releases or any other public
statements with respect to the transactions contemplated hereby; provided,
however, that the Company shall be entitled, without the prior approval of
any Investor, to make any press release or other public disclosure with
respect to such transactions as the Company reasonably believes, after
consulting with its counsel, to be required by applicable law and
regulations (although each Investor shall be consulted by the Company in
connection with any such press release or other public disclosure prior to
its release and shall be provided with a copy thereof).

<PAGE>

           k.    Further Assurances.  Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments
and documents, as the other party may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.

           l.    Termination.  In the event that the Closing shall not
have occurred with respect to an Investor on or before the date which is
six (6) Business Days after the date hereof due to the Company's or the
Investor's failure to satisfy the conditions set forth in Sections 6 and 7
above (and the non-breaching party's failure to waive such unsatisfied
condition(s)), the non-breaching party shall have the option to terminate
this Agreement with respect to such breaching party at the close of
business on such date without liability of any party to any other party;
provided, however, that if this Agreement is terminated pursuant to this
Section 9(l), the Company shall be obligated to make the payment described
in Section 4(g) on the date of such termination provided that neither
Fisher Capital Ltd. nor Wingate Capital Ltd. shall have breached this
Agreement.

           m.    Placement Agent.  The Company acknowledges that it has
not engaged any  placement agent in connection with the issuance of the
Exchange Warrants. The Company shall be responsible for the payment of any
placement agent's fees or brokers' commissions relating to or arising out
of the transactions contemplated hereby.  The Company shall pay, and hold
each Investor harmless against, any liability, loss or expense (including,
without limitation, attorneys' fees and out of pocket expenses) arising in
connection with any such claim.

           n.    No Strict Construction.  The language used in this
Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be
applied against any party.

           o.    Remedies.  Each Investor and each holder of the
Securities shall have all rights and remedies set forth in the Transaction
Documents and all rights and remedies which such holders have been granted
at any time under any other agreement or contract and all of the rights
which such holders have under any law.  Any person having any rights under
any provision of this Agreement shall be entitled to enforce such rights
specifically (without posting a bond or other security), to recover damages
by reason of any breach of any provision of this Agreement and to exercise
all other rights granted by law.

           p.    Payment Set Aside.  To the extent that the Company makes
a payment or payments to any Investor hereunder or pursuant to the Exchange
Warrants or such Investor enforces or exercises its rights hereunder or
thereunder, and such payment or payments or the proceeds of such
enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from,
disgorged by or are required to be refunded, repaid or otherwise restored
to the Company or to a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law,
common law or equitable cause of action), then, to the extent of any such
restoration, the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such enforcement or setoff had not
occurred.

<PAGE>

           q.    Mutual General Release.

                 (i)  In consideration of the release set forth in
Section 9(q)(ii), effective at the time of the Closing (the "Effective
Time") each Investor, severally and not jointly, on behalf of itself and
its heirs, executors, administrators, devisees, trustees, partners,
directors, officers, shareholders, employees, consultants, representatives,
predecessors, principals, agents, parents, associates, affiliates,
subsidiaries, attorneys, accountants, successors, successors-in-interest
and assignees (collectively, the "Investor Releasing Persons"), hereby
waives and releases, to the fullest extent permitted by law, but subject to
Section 9(q)(iii) below, any and all claims, rights and causes of action,
whether known or unknown (collectively, the "Investor Claims"), that any of
the Investor Releasing Persons had or currently has against (i) the
Company, (ii) any of the Company's current or former parents, shareholders,
affiliates, subsidiaries, predecessors or assigns, or (iii) any of the
Company's or such other persons' or entities' current or former officers,
directors, employees, agents, principals, investors, signatories, advisors,
consultants, spouses, heirs, estates, executors, attorneys, auditors and
associates and members of their immediate families (collectively, the
"Company Released Persons"), including, without limitation, Investor Claims
arising out of or relating to the Securities Purchase Agreement, the
Registration Rights Agreement (as defined in the Securities Purchase
Agreement), the Certificate of Designations (as defined in the Securities
Purchase Agreement), the Old Warrants (collectively, the "Released
Documents")  (other than arising out of or relating to Section 8 of the
Securities Purchase Agreement or the Transaction Documents).

                 (ii)       In further consideration of the consummation
of the transactions contemplated hereby, effective at the Effective Time
the Company on behalf of itself and its heirs, executors, administrators,
devisees, trustees, partners, directors, officers, shareholders, employees,
consultants, representatives, predecessors, principals, agents, parents,
associates, affiliates, subsidiaries, attorneys, accountants, successors,
successors-in-interest and assignees (collectively, the "Company Releasing
Persons"), hereby waives and releases, to the fullest extent permitted by
law, but subject to Section 9(q)(iii) below, any and all claims, rights and
causes of action, whether known or unknown (collectively, the "Company
Claims"), that any of the Company Releasing Persons had or currently has
against (i) the Investors, (ii) any of the Investors' respective current or
former parents, shareholders, affiliates, subsidiaries, predecessors or
assigns, or (iii) any of the Investors' or such other persons' or entities'
current or former officers, directors, employees, agents, principals,
investors, signatories, advisors, consultants, spouses, heirs, estates,
executors, attorneys, auditors and associates and members of their
immediate families (collectively, the "Investor Released Persons"),
including, without limitation, any Company Claims arising out of or
relating to the Released Documents (other than arising out of or relating
to the Transaction Documents).

                 (iii)      The Company and each of the Investors
acknowledges that the release set forth in Sections 9(q)(i) and 9(q)(ii)
above does not affect any claim which any Company Releasing Person or
Investor Releasing Person may have under this Agreement, any of the other
Transaction Documents or Section 8 of the Securities Purchase Agreement.

                              * * * * * *

<PAGE>

     IN WITNESS WHEREOF, the Investors and the Company have caused this
Exchange Agreement to be duly executed as of the date first written above.

COMPANY:                          INVESTORS:

ENTRADE INC.                      FISHER CAPITAL LTD.

By:  _________________________    By:  _________________________
Name:_________________________    Name:Daniel J. Hopkins
Title:     ___________________    Its: Authorized Signatory

                                  WINGATE CAPITAL LTD.

                                  By:  _________________________
                                  Name:Daniel J. Hopkins
                                  Its: Authorized Signatory

                                  HFTP INVESTMENT L.L.C.

                                  By:  _________________________
                                       Promethean Asset Management,
                                       L.L.C.
                                  Its: Investment Manager

                                  By:  _________________________
                                  Name:James F. O'Brien, Jr.
                                  Its: Managing Member

                                  LEONARDO, L.P.

                                  Angelo, Gordon & Co., L.P.
                                  Its: General Partner

                                  By:  _________________________
                                  Name:John M. Angelo
                                  Its: Chief Executive Officer

<PAGE>

                         SCHEDULE OF INVESTORS

                                    Number
                                    of Old  Investor's Representatives'
Investor Investor Address          Warrant  Address
Name     and Facsimile Number       Shares  and Facsimile Number
-------- --------------------      -------  --------------------------

Fisher
Capital
Ltd.     Citadel Investment        221,232  Katten Muchin Zavis
         Group, L.L.C.                      525 W. Monroe Street
         225 West Washington                Suite 1600
         Street                             Chicago, Illinois 60661
         Chicago, Illinois 60606            Attn: Robert J. Brantman,
         Attn:  Daniel Hopkins              Esq.
         Facsimile: (312)338-0780           Facsimile: (312)902-1061
         Telephone: (312)696-2100           Telephone (312)902-5200
         Residence: Illinois

Wingate
Capital
Ltd.     Citadel Investment Group, 119,127  Katten Muchin Zavis
         L.L.C.                             525 W. Monroe Street
         225 West Washington Street         Suite 1600
         Chicago, Illinois 60606            Chicago, Illinois 60661
         Attention: Daniel Hopkins          Attn: Robert J. Brantman,
         Facsimile: (312)338-0780           Esq.
         Telephone: (312)696-2100           Facsimile: (312)902-1061
         Residence: Illinois                Telephone: (312) 902-5200

HFTP
Invest-
ment     Promethean Asset          340,362  Promethean Asset
L.L.C.   Management, L.L.C.                 Management, L.L.C.
         750 Lexington Avenue               750 Lexington Avenue
         22nd Floor                         22nd Floor
         New York, New York 10022           New York, New York 10022
         Attn: James F. O'Brien, Jr.        Attn:  James F. O'Brien, Jr.
         John M. Floegel                           John M. Floegel
         Telephone: 212-702-5200            Telephone: 212-702-5200
         Facsimile: 212-758-9334            Facsimile: 212-758-9334
         Residence: New York
                                            Katten Muchin Zavis
                                            525 W. Monroe Street
                                            Suite 1600
                                            Chicago, Illinois 60661-3693
                                            Attn: Robert J. Brantman,
                                            Esq.
                                            Facsimile: (312)902-1061
                                            Telephone: (312) 902-5200

Leonardo,
L.P.     Angelo, Gordan            340,359  Angelo, Gordon & Co., L.P.
         & Co., L.P.                        245 Park Avenue
         245 Park Avenue                    26th Floor
         26th Floor                         New York, New York 10167
         New York, New York                 Attn: Gary Wolf
         10167                              or Ari Storch
         Attn: Gary Wolf                    Telephone: 212-692-2035
         or Ari Storch                      Facsimile: 212-867-6449
         Telephone: 212-692-2035
         Facsimile: 212-867-6449
         Residence: Cayman Islands

<PAGE>

                               SCHEDULES

                         Schedule of Investors

<PAGE>

                               EXHIBITS

     Exhibit A   -    Form of Exchange Warrant
     Exhibit B   -    Form of Irrevocable Transfer Agent Instructions
     Exhibit C   -    Form of Company Counsel Opinion

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