AGREEMENT

         This  Agreement (the  "Agreement")  is made and entered into as of this
17th day of  September,  2000  (the  "Effective  Date")  by and  between  Amerex
Bandwidth,  Ltd. ("ABI"), a limited partnership  organized under the laws of the
State of Texas, and RateXchange Corporation ("RTX"), a Delaware corporation.

         WHEREAS  ABI is  presently  engaged in the  business  of  brokering  of
bandwidth  capacity and related  bandwidth  products  between and among  various
interested parties;

         WHEREAS   RTX  is  engaged  in  the   business  of   providing   online
telecommunications  e-commerce  services  through the ETS (as defined in Section
1.1);

         WHEREAS  ABI and RTX  wish to  provide  for  ABI  Broker  Trades  to be
processed  through  the  ETS,  and  for ABI and  RTX to  share  in the  revenues
generated by the ETS.

         NOW,  THEREFORE,  in  consideration  of the foregoing and of the mutual
covenants and agreements  hereinafter set forth, the parties hereto hereby agree
as follows:

                                    ARTICLE I

                                   DEFINITIONS

1.1 Certain  Definitions.  In this  Agreement,  the following  terms and phrases
shall have the following meanings:

"ABI" shall have the meaning ascribed to such term in the recitals.

"ABI Actual  Costs"  shall mean the direct  costs  related to the ABI  brokerage
operations, including, without limitation, salaries of the ABI Brokers, computer
hardware  and  software,   telephones,   general  and  administrative  expenses,
reasonable travel and entertainment  expenses and reasonable benefits,  that are
actually incurred by ABI.

"ABI  Brokers"  shall mean  Brokers  working  for ABI to  facilitate  ABI Broker
Trades.

"ABI Broker  Trades"  shall mean Trades  executed  through ABI, its employees or
representatives, as a Broker, that are executed on the ETS, via Broker-to-Broker
or Broker-to-Screen (Screen-to-Screen transactions shall not be considered to be
ABI Broker Trades).  ABI Broker Trades shall also mean  Broker-to-Broker  Trades
that are not executed on the ETS, but that are billed and  collected by RTX, and
paid to ABI per this Agreement.  However,  Broker-to-Broker  Trades that are not
executed  on the ETS and not  billed  or  collected  by RTX  shall not be an ABI
Broker-to-Broker  Trade, noting that ABI will use its best efforts to facilitate
ABI Broker Trades to be effected  over and posted on the ETS in accordance  with
Section 3.2 of this Agreement.

"ABI Cost  Difference"  shall mean the  difference  between  the  Estimated  ABI
Monthly Costs less the Actual ABI Costs, during the Initial Term, which may be a
positive or a negative number.

"ABI  Original  Commission"  shall  have the  meaning  ascribed  to such term in
Section 8.2(a).

"ABI Subsequent Commission" shall mean:

(a)  one hundred (100%) percent of the  commissions  received by RTX and paid to
     ABI from Broker-to-Broker ABI Broker Trades; plus

(b)  fifty (50%) percent of the commissions received by RTX and paid to ABI from
     Broker-to-Screen ABI Broker Trades; plus

<PAGE>

(c)  a  percent  of the  commissions  received  by RTX and  paid to ABI from its
     Screen-to-Screen  transactions,  which  percentage shall equal: (i) fifteen
     (15%)  percent in the year  following  the  Initial  Term (or if changed as
     provided  in  Section  8.4(b));  (ii) ten (10%)  percent  in the third year
     following  the Launch  Date;  (iii) five (5%) percent in each of the fourth
     and fifth  years  following  the Launch  Date;  and (iv) five (5%)  percent
     during any Renewal Term.

"Agency  Affidavit" shall mean an affidavit executed by ABI and/or other Brokers
and delivered to RTX substantially in the form attached hereto as Schedule D.

"Agreement Term" shall have the meaning ascribed to such term in Section 9.1.

"Alliance  Board"  shall  consist of two senior  representatives  of RTX and ABI
each. The Alliance Board shall determine,  among other things as mutually agreed
to by RTX and ABI,  adjustments  to the  Estimated ABI Monthly Cost payments and
Data use.

"Amerex" shall mean all of the Amerex companies combined.

"Broker"  shall mean a third  party  intermediary  that has  executed  an Agency
Affidavit and that facilitates Trades on behalf of other counterparty principles
to a Trade, including, but not limited to, Members.

"Business  Arbitration"  shall have the meaning ascribed to such term in Section
12.1.

"Calculation  Period"  shall have the  meaning  ascribed to such term in Section
8.4(a).

"Commission  Pool" shall mean, with respect to any period,  the aggregate amount
of all commissions and similar fees paid to or collected by RTX from Members, as
the  case  may be  (including,  without  limitation,  under  Article  8 of  this
Agreement), for Trades or commercial activities that are transacted on the ETS.

"Data"  shall  mean all data  commingled  through  the ETS,  including,  without
limitation, trade indications,  completed transactions, contact information, and
general trade information.

"Delta  Flyer",  or other name given to Delta Flyer  Versions 1.0 and 2.0, is an
ETS software system, and shall have the meaning ascribed to such term in Section
2.1.

"Documentation"  shall mean user guides and  manuals  relating to the use of the
ETS made available for use by Members.

"Effective Date" shall have the meaning ascribed to such term in the recitals.

"Escalation  Procedures"  shall  mean  that  any  issue  in  dispute  by lack of
agreement of the Management  Team that is subject to this  Escalation  Procedure
will first be brought to the Alliance Board who will have ten (10) calendar days
to consider and attempt to resolve any such issues.  If unsuccessful,  the issue
will then be considered for resolution over another ten (10) calendar day period
by the CEOs of ABI and RTX.  If this is  unsuccessful,  the  issue  will then be
subject to the business arbitration rules outlined in Section 12.1.

"ETS" shall mean the RTX online exchange, trading and auction system, which uses
the software  developed and operated by RTX and which  facilitates  the purchase
and   sale,   of  among   other   things,   Internet   Protocol   products   and
telecommunications  capacity, as such system may be modified by RTX from time to
time.

"ETS Upgrade"  shall mean a software  functionality  improvement to existing ETS
software.  ETS  Upgrades  that the ETS  Management  Team is  responsible  for as
outlined in Section 6.1 must be approved by the unanimous vote of the Management
Team. If the Management  Team cannot reach an unanimous  agreement on any issue,
either  party can choose to have the  matter  become  subject  to an  escalation
procedure  that is specific to ETS Upgrades as follows.  The issue in dispute by
lack of agreement of the Management Team on an ETS Upgrade will first be brought
to the  Alliance  Board which will have ten (10)  calendar  days to consider and
attempt to resolve  any such  issues.  If


<PAGE>

unsuccessful,  the issue will then be considered for resolution over another ten
(10)  calendar day period by the CEOs of ABI and RTX. If the CEOs cannot reach a
resolution,  then the RTX Board of  Directors  has the sole right to resolve the
matter  in  twenty  (20)  days.  However,  in the case  where  the RTX  Board of
Directors   makes  a  decision  and  such  decision  is  deemed  by  ABI  to  be
unacceptable,  then ABI has the option to terminate  this Agreement and if it so
decides, it must give ten (10) days prior written notice to RTX.

"ETS Upgrade Test" shall have the meaning ascribed to such term in Schedule B.

"Estimated  ABI Monthly  Cost" shall mean an estimate by ABI of the direct costs
related to the ABI brokerage operations, including, without limitation, salaries
of the ABI Brokers,  computer  hardware and  software,  telephones,  general and
administrative  expenses,  reasonable  travel  and  entertainment  expenses  and
reasonable  benefits,  that are incurred by ABI in connection with its brokerage
operation. See Schedule G.

"Initial Term" shall mean the first twelve (12) months after the Launch Date.

"Internet  Protocol"  shall  mean that part of the  TCP/IP  family of  protocols
describing  software that tracks the Internet address of nodes,  routes outgoing
messages and recognizes incoming messages.

"Launch Date" shall have the meaning ascribed to such term in Section 2.3.

"Management  Contacts" shall mean the two (2) management level  individuals from
both RTX and ABI that represent the parties on the Management Team.

"Management Team" shall mean the four (4) individuals,  two (2) management level
representatives  from RTX and two (2) management level  representatives from ABI
that are responsible for the interaction of the parties, as stated in Article 6.

"Member" shall mean a client of the ETS that enters (i) indications to buy, (ii)
indications to sell, or (iii) executes a Trade over the ETS.

"Next  Generation",  or other name given to Next Generation 1.0 and ETS Upgrades
to 1.0,  is the next  version of RTX ETS  software,  and shall have the  meaning
ascribed to such term in Section 2.2.

"OTC" shall mean Over-the-Counter  markets.  Over-the-Counter  markets are those
markets   where  no  entity   governs  or  regulates   Trade   activity  of  the
counterparties in the market.  Amerex and RTX are conducting  business in an OTC
market.

"Renewal Term" shall have the meaning ascribed to such term in Section 9.1.

"RTX" shall have the meaning ascribed to such term in the recitals.

"RTX Commission" shall have the meaning ascribed to such term in Section 8.2(c).

"Share  Trading  Deficiency"  shall have the  meaning  ascribed  to such term in
Section 8.7.

"Side  Letter"  shall  mean the letter  between  RTX and ABI  regarding  various
management  issues in the form  attached  hereto as Schedule E, which shall only
become effective as of the Launch Date.

"Total  Estimated  ABI Monthly  Costs" shall mean the sum of all  Estimated  ABI
Monthly Costs from the Launch  Date."Trade"  shall mean an executed  transaction
for the sale or  purchase  of  Internet  Protocol  products,  telecommunications
capacity and/or other telecommunications-related  products that occur either via
Broker-to-Broker, Broker-to-Screen or Screen-to-Screen.

"True-Up Process" shall mean the true-up process referred to in Section 8.4.


<PAGE>

"Warrants" shall mean the five separate warrants in the forms attached hereto as
Schedule F to be issued by RTX to ABI on the Effective  Date. Both parties agree
that a claim arising under the Warrants or with respect to any matter covered by
the Warrants shall not be subject to the limitation on liability in Section 11.2
or to Section 13.3.

1.2 Schedules.  The following schedules ("Schedules") are annexed hereto and are
incorporated herein by reference and shall be a part of this Agreement:

         Schedule A   -   ETS Upgrades
         Schedule B   -   ETS Upgrades Testing Process
         Schedule C   -   ETS Upgrade Test Approval
         Schedule D       Form of Agency Affidavit
         Schedule E   -   Form of Side Letter
         Schedule F   -   Forms of Warrants
         Schedule G   -   Estimated ABI Monthly Cost

                                   ARTICLE II
                             ETS UPGRADES AND LAUNCH

2.1 ETS Upgrade  "Delta  Flyer".  RTX hereby  agrees to make ETS Upgrades to its
current ETS,  hereby  called Delta Flyer  version  1.0,  which  through such ETS
Upgrades  becomes  Delta Flyer 2.0. RTX shall make these ETS Upgrades at its own
expense in accordance with the  requirements and timetable set out in Schedule A
and any amendment to Schedule A. The parties acknowledge and agree that such ETS
Upgrades to Delta Flyer are the ETS Upgrades that are necessary in order to make
the Delta Flyer  commercially  viable as a electronic  trading system that meets
the requirements of the OTC bandwidth  market,  and to conduct ABI Broker Trades
over the ETS. ABI hereby agrees that it shall provide RTX with market knowledge,
ETS  functionality  experience,  and ETS  functionality  knowledge  for such ETS
Upgrades, including any ABI-specific tasks that are described in Schedule A.

2.2 ETS "Next  Generation".  RTX hereby  agrees to build,  at its own expense in
accordance  with the  requirements  and  timetable set out in Schedule A and any
amendment  to Schedule A, the next  version of the ETS,  called Next  Generation
1.0.  RTX shall  provide  functionality  in Next  Generation  1.0 and future ETS
Upgrades to Next Generation 1.0 that make it commercially competitive with other
electronic  trading  systems  in the  bandwidth  and other  similar  OTC  market
electronic  trading systems that Amerex conducts  business in. ABI hereby agrees
that it shall provide RTX with market knowledge,  ETS functionality  experience,
and ETS functionality knowledge to assist RTX in Next Generation,  including any
ABI-specific  tasks that are described in Schedule A, and any mutually agreed to
amendment to Schedule A.

2.3 ETS "Delta Flyer" Testing and Approval  Process.  The Parties agree that the
Management  Team must give  unanimous  consent  in order  for the  approval  and
release of ETS  Upgrades,  subject to the  Escalation  Procedures  if  unanimous
consent  by the  Management  Team  is not  reached.  Once  the  Management  Team
determine  and approves  that the ETS  Upgrades to Delta  Flyer,  as required in
Section 2.1, are sufficiently  complete to enable Delta Flyer to be commercially
viable as a electronic  trading  system that meets the  requirements  of the OTC
bandwidth  market and to conduct ABI Broker  Trades,  RTX shall provide ABI with
access to the ETS, together with any applicable Documentation for the purpose of
conducting  test of the ETS  Upgrades.  The testing of the ETS Upgrades to Delta
Flyer  described  in  Schedule  A, and any  amendment  to  Schedule  A, shall be
conducted in accordance with the testing process described in this Article 2 and
in Schedule B. If ABI does not begin the test of the ETS  Upgrades  within seven
(7) days ABI's  Management  Contacts  shall be deemed to have  accepted such ETS
Upgrades.   Both  parties  hereby  agree  that  the  date  the  Management  Team
unanimously  executes the  acknowledgement  contained in Schedule C shall be the
"Launch Date" for Delta Flyer 2.0.

2.4 Next  Generation  Testing and Approval  Process.  Once the  Management  Team
determine  and  approves  that Next  Generation  is  sufficiently  complete,  as
required  in  Section  2.2,  to  enable  the  Next  Generation  software  to  be
commercially  competitive with other electronic trading systems in the bandwidth
market and other  similar  OTC market  electronic  trading  systems  that Amerex
conducts  business  in, RTX shall  provide ABI with access to the ETS,  together
with any  applicable  Documentation  for the purpose of conducting a test of the
ETS. The testing of Next


<PAGE>

Generation  described  in Schedule A, and any  amendment to Schedule A, shall be
conducted in accordance with the testing process described in this Article 2 and
Schedule B. If ABI does not begin the test of the ETS Upgrades  within seven (7)
days  ABI's  Management  Contact  shall  be  deemed  to have  accepted  such ETS
Upgrades.  Both parties hereby agree that the date that Management Team executes
the  acknowledgement  contained  in  Schedule  C  shall  be  the  approval  date
("Approval Date") for release of the Next Generation software of the ETS.

2.5 Failure of Delta Flyer and Next Generation to Meet Upgrade and Functionality
Requirements.  In the event that RTX fails to complete the upgrade  requirements
to Delta Flyer, Next Generation, and future product ETS Upgrades, as required in
Sections 2.1, 2.2, 2.3, and 2.4, and the Management  Team does not approve Delta
Flyer for release,  the resolution of such matter will be conducted  through the
Escalation  Procedures.  If under the  Escalation  Procedures  it is  ultimately
determined by arbitration that a party can terminate,  such party shall have the
right (as such party's sole remedy) to  terminate  this  Agreement  upon written
notice to the other party per Section  9.3.  Further,  in  conjunction  with the
Escalation Procedures:  (i) RTX may not terminate this Agreement if such upgrade
delivery  failure is a result of RTX's  failure to attempt in good faith to make
such ETS  Upgrades and product  releases;  and (ii) ABI may not  terminate  this
Agreement  if such  failure  is as a result of ABI's  failure  to assist  RTX as
required pursuant to Sections 2.1 and 2.2.

2.6 Events upon  Termination.  Upon  termination of this  Agreement  pursuant to
Section 2.5: (a) RTX shall not register  additional  Warrants  issued to ABI per
this  Agreement;  (b) the Side  Letter  shall be of no force or effect;  (c) RTX
shall  pay to ABI all  payments  earned  and owed per this  agreement  up to the
Termination Date.

2.7 Event  Upon  Launch  Date.  Upon the  occurrence  of the  Launch  Date,  ABI
Commissions  shall  begin to  accumulate,  and  payments  under  Article 8 shall
commence.

2.8  Ownership  of ETS.  ABI hereby  acknowledges  and agrees  that RTX owns all
right, title and interest in and to the ETS, including, any and all ETS Upgrades
and upgrades  that are made in and to the ETS,  including,  without  limitation,
those made  pursuant to Sections 2.1 and 2.2. The parties  hereby agree that the
ownership of Data shall be governed by Section 5.1.

                                   ARTICLE III
                         ABI BROKER TRADES OVER RTX ETS

3.1 ETS Launch Date.  Commencing on the Launch Date,  RTX shall provide ABI with
access to the ETS for the purposes of executing and assisting Trades.

3.2 Trades. ABI shall use its best efforts to facilitate ABI Broker Trades to be
effected over and posted on the ETS.

                                   ARTICLE IV
                                   EXCLUSIVITY

4.1      Exclusivity.

(a) ABI hereby  agrees that during the  Agreement  Term, it shall not enter into
any other agreement,  relationship, joint venture or investment, either directly
or   indirectly,   which   facilitates   the  execution  or  posting  of  Trades
electronically  in the bandwidth  capacity  market which places ABI in direct or
indirect  competition with the RTX ETS; provided,  however, RTX acknowledges and
grants an exception to this Section 4.1(a) for the continuation of the following
pre-existing bandwidth market relationships, except that if any of the following
enter  into an ETS  that  competes  with the RTX ETS in the  bandwidth  capacity
market, ABI will not facilitate the execution of Trades on any such ETS:

1.   Michael E. Moore is a member of the board of directors of LighTrade, Inc.
2.   Any and all consulting agreements between ABI and LighTrade, Inc.
3.   Michael E. Moore is a member of the advisory board to Electrade, Inc.
<PAGE>

4.   ABI acts as an advisor to Electrade, Inc.
5.   Any and all  alliances  between ABI and Arthur  Andersen  Global  Bandwidth
     Practices
6.   Any and all alliances between ABI and Lucent Technologies.
7.   Any and all alliances between ABI and Kane and Associates.
8.   Any and all alliances between ABI and Electrade.
9.   Any and all alliances between ABI and Universal Access, Inc.
10.  Any and all alliances  between partners of ABI as partners in Amerex Power,
     Amerex Natural Gas, P&G Data or Amerex and Altra Technologies.

(b) RTX hereby  agrees that during the  Agreement  Term, it shall not enter into
any other agreement,  relationship, joint venture or investment, either directly
or   indirectly,   which   facilitates   the  execution  or  posting  of  Trades
electronically  or by voice  brokerage.  RTX agrees that it shall not enter into
any other agreement,  relationship, joint venture or investment, either directly
or indirectly  with another Broker that competes  either  directly or indirectly
with ABI in brokering the bandwidth capacity market without the prior consent of
ABI; provided, however, ABI acknowledges and grants an exception to this Section
4.1(b)  for a  continuation  of  the  following  pre-existing  bandwidth  market
relationships,  except that if any of the  following  enter into an ETS or voice
broker  business that competes with the RTX ETS or ABI voice broker  business in
the bandwidth  capacity market,  RTX will not facilitate the execution of Trades
on any such ETS or voice broker business:

1.   Any and all agreements between RTX and Sam Chiu.
2.   Any and all agreements between RTX and J.P. Crementz.
3.   RTX's consulting practice.
4.   Any and all  agreements  or  alliances  between  RTX and Dow  Jones as such
     agreements or alliances relate to indexes.
5.   Any and all agreements between RTX and SAIC.
6.   ABI acknowledges  that RTX has a business plan to implement RTX's ownership
     and operation of its delivery hubs.

Each of RTX and ABI hereby agree to provide the other party with the appropriate
consents or  resolutions  of its  respective  board of directors or  partnership
relating to the  exceptions  set forth in this Section 4.1 upon written  request
from such other party.

RTX is committed to resolve any conflict  that Arthur  Andersen may have created
by the ABI alliance with Arthur  Andersen  Global  Bandwidth  Practices in ABI's
consulting  business and RTX's  relationship with Arthur Andersen as its outside
auditing firm.  Should this conflict not be resolved,  RTX shall, at the request
of ABI, terminate within a reasonable period of time its audit relationship with
Arthur Andersen, and obtain another outside auditing firm.

                                    ARTICLE V
                                      DATA

5.1 Ownership of Data.  Commencing  from the Effective  Date, both parties shall
jointly own all rights, title and interest in and to the Data. RTX and ABI shall
use their  respective  best efforts to cause data generated by such party in the
ETS to become Data. RTX and ABI shall have joint use of and must jointly consent
to the use of the Data and shall equally split proceeds  generated from any sale
of Data; provided,  however, that ABI acknowledges and accepts RTX's preexisting
relationship with Dow Jones. RTX shall pay ABI 50% of any proceeds received from
the sale of Data,  from the  relationship  with Dow Jones, on Data generated per
this Section 5.1 after the Effective Date. The joint ownership of the Data shall
survive this  Agreement;  provided,  however,  that any Data generated by either
party  after  this  Agreement  is  terminated  shall  be  solely  owned  by such
generating party. Any disagreements between RTX and ABI regarding the Data shall
be addressed by the Alliance Board.

                                   ARTICLE VI
                            MANAGEMENT AND OPERATIONS

6.1  ETS  Management.   Each  party  will  appoint  two  (2)  management   level
representatives,  each called a management contact ("Management Contact") to the
ETS  Management   Team.  The  Management  Team  shall  be


<PAGE>

responsible  for the  interaction  between the two (2)  parties for  management,
marketing,  finance,  accounting,  personnel,  and technological  decisions that
directly  affect  both RTX and ABI and the ETS during the  Agreement  Term,  for
bandwidth  and Internet  Protocol  markets that ABI is  facilitating  Trades in.
Furthermore, the Management Team shall meet in person a minimum of two (2) times
per month during the Initial  Term, to be reduced to one (1) time per month upon
mutual agreement of the Alliance Board members, and will be responsible for: (i)
overseeing  all  activities  assigned  to such  party in  connection  with  this
Agreement,  including, but not limited to, ensuring that all needs of Members of
the ETS are satisfactorily  met; (ii) acting as the primary point of contact for
all  inquiries  and  suggestions  from  the  other  party,  including,   without
limitation,  suggestions or other input regarding the bandwidth market, focus or
direction  of  the  ETS,  the  participation  of  ABI  Brokers  and  Members  in
facilitating  Trades  over the ETS and  similar  matters;  (iii)  acting  as the
initial point of contact to resolve disputes between the parties  regarding this
Agreement;  (iv) each party's  Management  Contact  shall advise and have direct
access  to the  principal  executive  officers  of  such  party.  As long as the
appointed  Management  Contact  is  of  management  level  at  each  party,  the
Management  Contact may be changed,  following notice to the other party. In the
event an issue  arises that ABI  believes  needs  further  consideration  by the
parties,  ABI's Management  Contact may raise such issue first with the Alliance
Board which will have ten (10)  calendar days to consider and attempt to resolve
such issue.  If  unsuccessful,  the issue will then be considered for resolution
over  another  ten (10) day period by the CEOs of ABI and RTX.  If such issue is
not resolved  within such ten (10) day timeframe,  ABI may raise such issue with
the RTX Board of Directors  through its seat on the RTX Board of Directors.  The
RTX Board of  Directors  shall have  twenty  (20) days in which to  resolve  the
matter.  Any  determination  by the RTX  Board of  Directors  shall be final and
binding and ABI shall have no further recourse in connection with such issue.

6.2 Technical  Contact.  Each party shall appoint a management  level  technical
contact  ("Technical  Contact") to represent it during the Agreement  Term. Each
party's  Technical  Contact  will report to the  Management  Team for  technical
matters assigned to such party in connection with this Agreement, including, but
not limited to, (i) ETS Upgrades;  (ii) ETS maintenance;  (iii) ETS service desk
technical  matters;  (iv) acting as primary  point of contact  for all  official
technical  inquiries  related  to  the  ETS;  (v)  representing  such  party  at
Management  Team  meetings;  and (vi) acting as the initial  point of contact to
resolve technical problems or disputes with the ETS.

6.3 Press  Releases.  Both parties  hereby agree that they shall each have equal
input  on  all  press  and  media  releases,  public  announcements  and  public
disclosures  that  deal  with  ABI or  its  role  in  promoting  online  trading
hereunder;  provided however, that each of RTX and ABI must receive consent from
the other party prior to issuing any press  release which  references  the other
party or the  arrangements  contemplated by this Agreement;  provided,  further,
that RTX  reserves  the right to issue any and all press  releases  and/or other
public  disclosure  statements which RTX reasonably  determines,  upon advice of
counsel,  to be  necessary  or  appropriate  for RTX to comply  with  applicable
securities or other laws. RTX hereby agrees that it shall use reasonable efforts
to obtain ABI's input before issuance of any such release or public disclosure.

                                   ARTICLE VII
                         REPRESENTATIONS AND WARRANTIES

7.1 RTX's Representations and Warranties.  RTX represents and warrants to ABI as
follows:

(a)  it is a corporation  duly organized,  validly existing and in good standing
     under the laws of the State of Delaware and it has the corporate  power and
     is authorized to carry on its business as now conducted;

(b)  it  has  performed  all  corporate   actions  and  received  all  corporate
     authorizations  necessary  to execute and  deliver  this  Agreement  and to
     perform its obligations  hereunder and this Agreement is valid, binding and
     enforceable  against it (subject  to  applicable  principles  of equity and
     bankruptcy and insolvency laws);

(c)  it has and  shall  maintain,  during  the  Agreement  Term,  the  power and
     authority, and all material governmental licenses, authorizations, consents
     approvals necessary to own its assets, carry on its business and to perform
     its obligations under this Agreement; and

(d)  the execution,  delivery and performance of this Agreement does not violate
     the terms of any  security  agreement,  license,  or any other  contract or
     written instrument to which it is bound.


<PAGE>

7.2 ABI's Representations and Warranties.  ABI represents and warrants to RTX as
follows:

         (a)      it is a limited  partnership duly organized,  validly existing
                  and in good standing  under the laws of the State of Texas and
                  it has the power and authority to carry on its business as now
                  conducted;

         (b)      it has performed  all actions and received all  authorizations
                  necessary to execute and deliver this Agreement and to perform
                  its obligations hereunder and this Agreement is valid, binding
                  and enforceable  against it (subject to applicable  principles
                  of equity and bankruptcy and insolvency laws);

         (c)      it has and shall  maintain,  during the  Agreement  Term,  the
                  power and authority,  and all material governmental  licenses,
                  authorizations,  consents and  approvals  necessary to own its
                  assets,  carry on its business and to perform its  obligations
                  under this Agreement; and

         (d)      the execution, delivery and performance of this Agreement does
                  not violate the terms of any security  agreement,  license, or
                  any  other  contract  or  written  instrument  to which ABI is
                  bound.

7.3  Disclaimer  of  Other  Warranties.   EXCEPT  FOR  THE  REPRESENTATIONS  AND
WARRANTIES EXPRESSLY CONTAINED IN THIS AGREEMENT,  EACH OF ABI AND RTX EXPRESSLY
DISCLAIMS  AND  WAIVES  ALL OTHER  REPRESENTATIONS  OR  WARRANTIES,  EXPRESS  OR
IMPLIED,  INCLUDING,  WITHOUT  LIMITATION,   REPRESENTATIONS  OR  WARRANTIES  OF
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR  PURPOSE, OR ARISING OUT OF COURSE
OF DEALING OR COURSE OF PERFORMANCE.

                                  ARTICLE VIII
                            PAYMENTS AND COLLECTIONS

8.1  Appointment  of Agent.  ABI hereby  authorizes  RTX: (i) to bill,  invoice,
collect and receive all sums of money due and payable to ABI,  arising  from any
and all  ABI  Broker  Trades  executed  on the  ETS,  with  full  power  (but no
obligation)  to  institute  any  suits,  actions  and  proceedings  that  may be
necessary for the collection and recovery of those sums, to represent ABI before
any court in connection with such collection and recovery,  and to prosecute the
same to final  judgment;  and (ii) on the payment or receipt of any such sums of
money due from any of such ABI  Broker  Trades,  to  satisfy  the same and issue
proper discharges,  together with any documents, whether of record or otherwise,
as may be  necessary  and  appropriate,  and in  connection  with the  same,  to
compromise,  settle or adjust any disputed claim or matter.  In connection  with
such  activities,  RTX shall not represent  itself as having any relationship to
ABI other than that of an independent  agent for the limited purposes  described
herein. For purposes of Commission Pool revenues, such revenues are deemed to be
RTX revenues  with respect to Section  8.1(i) above and RTX will in turn pay any
payments  owed from RTX to ABI  pursuant to and in  accordance  with Section 8.2
below. RTX shall not have, nor shall it hold itself out as having,  the power to
make  contracts in the name of or binding on ABI, nor shall it have the power to
pledge credit or extend credit in the name of ABI. ABI shall not have, nor shall
it hold  itself out as  having,  the power to make  contracts  in the name of or
binding on RTX, nor shall it have the power to pledge credit or extend credit in
the name of RTX.

8.2      ABI Commissions and RTX Commission.

         (a) ABI Original Commission: For the Initial Term RTX shall pay ABI, as
compensation  for  its  activities  hereunder,   thirty  (30%)  percent  of  the
Commission  Pool  collected or received by RTX during each calendar month of the
Initial  Term ("ABI  Original  Commission").  RTX shall pay ABI the ABI Original
Commission  within five (5)  business  days after the end of each such  calendar
month that the  Commission  Pool  revenue is  collected  or  received by RTX, or
within sixty (60) calendar  days after the end of each such calendar  month that
each such Trade was executed on the ETS, whichever is earlier.  All such amounts
will be adjusted by the portion of any amounts that RTX in unable to collect and
writes-off  as bad debt within one year after such trade.  If this  Agreement is
terminated during the Initial Term, RTX shall continue to pay ABI thirty percent
(30%) of the  Commission  Pool collected or received by RTX during each calendar
month after the termination  date for Trades  transacted on the ETS prior to the
termination date.


<PAGE>

         (b) ABI Subsequent Commission: After the Initial Term, RTX shall pay to
ABI the ABI Subsequent  Commission of the Commission  Pool collected or received
by RTX  during  each  calendar  month.  RTX  shall  pay ABI  the ABI  Subsequent
Commission  within five (5)  business  days after the end of each such  calendar
month that the  Commission  Pool  revenue is  collected  or  received by RTX, or
within sixty (60) calendar  days after the end of each such calendar  month that
each such Trade was executed on the ETS, whichever is earlier. If this Agreement
is  terminated  after the Initial  Term,  RTX shall  continue to pay ABI the ABI
Subsequent Commission of the Commission Pool collected or received by RTX during
each calendar month after the termination date for Trades  transacted on the ETS
prior to the termination date.

         (c) RTX Commission: All remaining amounts collected or received by RTX,
above the amounts  paid to ABI for the ABI  Subsequent  Commission,  during such
period shall belong to RTX as its compensation for its activities hereunder. The
portion  of the  Commission  Pool other than ABI  Original  Commissions  and ABI
Subsequent  Commissions,  as applicable,  collected or received by RTX hereunder
shall constitute the RTX Commission.

         (d) Both  parties  agree that a claim  arising  under this  Section 8.2
shall not be subject to the  limitation on liability in Article 11 or to Section
13.3.

8.3      Estimated ABI Monthly Cost and ABI Subsequent Commission.

         (a) Within  fifteen (15) days of from the Launch Date, ABI shall submit
to RTX its  Estimated  ABI  Monthly  Cost for each of the first three (3) months
following the Launch Date, which monthly estimates shall be attached at Schedule
G, as they are submitted  from ABI.  Within fifteen (15) days after the start of
the second,  third, and fourth three (3) month period following the Launch Date,
ABI shall submit to RTX its  Estimated  ABI Monthly Cost for each such three (3)
months.  RTX shall pay to ABI the Estimated ABI Monthly Cost for each such month
within five (5)  business  days after the end of the  previous  month during the
Initial Term.  The Estimated ABI Monthly Cost shall not exceed $70,000 per month
unless approved by the majority of the Alliance Board. The Estimated ABI Monthly
Cost shall  terminate at the end of the Initial Term,  unless the Alliance Board
unanimously votes to renew it for a specific period of time.

         (b) At any time that the  Estimated  ABI  Monthly  Cost  program  is in
effect,  should  the  Estimated  ABI  Monthly  Cost or the ABI  Actual  Cost (as
calculated  pursuant to Section 8.4) exceed  $70,000 and the Alliance Board does
not approve an increase to the Estimated ABI Monthly Cost or pay the increase to
the ABI  Actual  Cost,  ABI shall  have the right to be paid the  Estimated  ABI
Monthly  Cost or ABI Actual Cost owed for the month or period in  question,  and
then to have the ABI  Subsequent  Commission  begin  from the date the  Alliance
Board  denies  such  increase.  Should  ABI  elect  to have  the ABI  Subsequent
Commission  begin prior the end of the Initial Term, then RTX shall also pay ABI
the ABI Original  Commission earned and owed prior to the date that the Alliance
Board denies the ABI request for increase.

8.4      True-Up.

         (a) During the Initial Term, within thirty (30) calendar days after the
end of each  month,  the  Management  Team shall  determine  if certain  payment
adjustments  in  connection  with the Estimated ABI Monthly Cost are to be made.
This  period of time shall be the  calculation  period  ("Calculation  Period").
During any such  Calculation  Period,  the Management  Team shall  determine the
difference  between  the  Estimated  ABI Monthly  Cost and the ABI Actual  Cost,
herein called the ABI cost difference ("ABI Cost  Difference").  If the ABI Cost
Difference of any such calendar month is less than zero, then RTX shall,  within
five (5) business days after the end of such  Calculation  Period,  pay such ABI
Cost  Difference  to ABI. If the ABI Cost  Difference  of any calendar  month is
greater than zero,  then ABI shall,  within five (5) business days after the end
of such Calculation Period, pay such ABI Cost Difference to RTX.

         (b) If ABI exercises  its right to begin payment of the ABI  Subsequent
Commission  (as stated in Section 8.3) each calendar month before the end of the
Initial  Term,  then  subsection  c(i)  of  the  definition  of  ABI  Subsequent
Commission  shall equal  fifteen  percent (15%) until the end of the second year
following the Launch Date.


<PAGE>

         (c) Both  parties  agree that a claim  arising  under this  Section 8.4
shall not be subject to the  limitation on liability in Article 11 or to Section
13.3.

8.5 Taxes.  Taxes chargeable against the income or gross receipts of the parties
hereto or  assessed in  connection  with the  parties'  employees  (i.e.,  FICA,
withholding  taxes and other similar  payroll  taxes) shall be payable solely by
the party against which such amounts are assessed.

8.6  Expenses.   For  any  expenses  related  to  the  ETS  such  as  marketing,
advertising,  and  promotional  expenses  that either party would desire  shared
between the parties, prior to the incurrence thereof, both parties must mutually
agree in writing to share the cost of such expenses.  Otherwise the parties will
be responsible for their own expenses.

8.7 Share Price  Deficiency.  If the common  share price of RTX trades below the
initial strike price as set forth in the initial series of Warrants (as adjusted
for any stock split,  combination or similar  transaction) on the American Stock
Exchange  for more than twenty (20)  consecutive  trading  days (each such event
being referred to herein as a "Share Trading  Deficiency") at any time following
the date that is six (6) months after the Launch Date,  ABI shall have the right
by written  notice within ten (10) business  days  following  each Share Trading
Deficiency to, (i) require the parties to renegotiate this Agreement; or (ii) to
terminate  this  Agreement.  If ABI does not provide such notice within such ten
(10) business day period following a Share Trading  Deficiency,  ABI shall cease
having the right to  renegotiate or terminate this Agreement as a result of that
Share Trading  Deficiency.  Should ABI elect to renegotiate this Agreement,  the
parties  shall have an initial  period of thirty (30) days after ABI's notice in
which to renegotiate this Agreement ("Renegotiation Period"). Should the parties
fail to agree on a restructure of this Agreement by the end of the Renegotiation
Period and the  parties do not agree to extend the  Renegotiation  Period,  then
this Agreement shall be deemed to be terminated.

                                   ARTICLE IX
                          TERM, RENEWAL AND TERMINATION

9.1  Term.  This  Agreement  shall  commence  as of the  Effective  Date  for an
Agreement  Term  ending  on the  fifth  (5th)  anniversary  of the  Launch  Date
("Agreement  Term").  This Agreement shall automatically renew at the end of the
Agreement  Term for  additional  successive one (1) year terms (each, a "Renewal
Term"),  unless  previously  terminated as  contemplated  hereunder  (including,
without limitation, under Section 9.3).

9.2 Event Upon Effective  Date.  Upon the occurrence of the Effective  Date, the
parties shall cause the following evens to occur:

         (a)      the Side Letter shall come into full force and effect;

         (b)      RTX shall issue the Warrants to ABI; and


9.3      Termination.  This Agreement may be terminated as follows:

         (a)      Upon mutual written agreement of both parties;

         (b)      If  either  party  materially  fails  to  perform  any  of its
                  material obligations  hereunder and if any such failure is not
                  corrected within thirty (30) days after its receipt of written
                  notice  specifying  the  nature  of  its  failure,   then  the
                  non-failing   party  may,  at  its  option,   terminate   this
                  Agreement;  provided,  however,  that  if  the  failing  party
                  disputes  whether  there  has been a  material  breach of this
                  Agreement,  then this Agreement shall not terminate until such
                  dispute has been  resolved in accordance  with the  procedures
                  outlined in Section 12.1. If it is determined  pursuant to the
                  provisions  in  Section  12.1 that  there has been a  material
                  breach   of  this   Agreement,   then   the   Agreement   will
                  automatically terminate unless the parties agree otherwise.

         (c)      By  either  party,  at any  time,  upon ten (10)  days'  prior
                  written  notice to the other party upon the  occurrence of any
                  of the following: (i) the failure of the non-terminating party
                  generally  to pay its

<PAGE>

                  debts as such debts become due, the admission by such party in
                  writing of its inability to pay its debts as such debts become
                  due, or the making by such party of any general assignment for
                  the  benefit  of  creditors;  (ii)  the  commencement  by  the
                  non-terminating party of any case, proceeding, or other action
                  seeking reorganization,  arrangement, adjustment, liquidation,
                  dissolution  or  composition  of it or its debts under any law
                  relating to  bankruptcy,  insolvency,  or  reorganization,  or
                  relief of  debtors,  or  seeking  appointment  of a  receiver,
                  trustee,  custodian,  or other similar  official for it or for
                  all or any  substantial  part of its  property;  or (iii)  the
                  commencement  of any case,  proceeding or other action against
                  the non-terminating party seeking to have any order for relief
                  entered   against   such   party   as   debtor,   or   seeking
                  reorganization,    arrangement,    adjustment,    liquidation,
                  dissolution  or  composition  of such party or its debts under
                  any law relating to bankruptcy, insolvency, reorganization, or
                  relief of  debtors,  or  seeking  appointment  of a  receiver,
                  trustee,  custodian,  or other similar official for such party
                  or for all or any  substantial  part of the  property  of such
                  party,  and (a)  such  party  shall,  by any act or  omission,
                  indicate its consent to,  approval of, or acquiescence in such
                  case,  proceeding or action,  or (b) such case,  proceeding or
                  action  results in the entry of an order for  relief  which is
                  not fully stayed  within seven  business  days after the entry
                  thereof,  or (c) such  case,  proceeding,  or  action  remains
                  undismissed  for a period  of  thirty  (30) days or more or is
                  dismissed  or  suspended  only  pursuant to Section 305 of the
                  United States Bankruptcy Code or any  corresponding  provision
                  of any future United States Bankruptcy law;

         (d)      In accordance with Article 2 and Article 8;

                  (e) By the non-merging party, upon any merger,  consolidation,
                  business  combination,  reorganization or  recapitalization of
                  either party ("Merger Company") in which the Merger Company is
                  not the surviving  entity or in which the  stockholders of the
                  Merger  Company  immediately  prior  to such  transaction  own
                  capital  stock  representing  less than fifty percent (50%) of
                  the  Merger  Company's  voting  power  immediately  after such
                  transaction,   or  any   transaction   or  series  of  related
                  transactions in which capital stock  representing in excess of
                  fifty  percent (50%) of the Merger  Company's  voting power is
                  transferred; provided, however, that this Section 9.2(e) shall
                  only apply when the  acquiring  third party or the third party
                  otherwise gaining a controlling interest in either RTX and ABI
                  is a competitor in the bandwidth capacity or Internet Protocol
                  markets  of the  other  party or  where  the  event  adversely
                  affects one of the party's businesses; or

                  (f) At the end of any the Agreement  Term or a Renewal Term by
                  either party giving written notice of termination to the other
                  party at least  sixty  (60) days  prior to the end of the then
                  current Term.

                                    ARTICLE X

                                 CONFIDENTIALITY

10.1 General.  Each party  acknowledges  that it may gain access to confidential
information  belonging  to the other  party and its  affiliates  and  customers,
including, but not limited to business,  financial and technological information
("Proprietary  Information") which Proprietary Information constitutes and shall
constitute  valuable assets and trade secrets.  ABI acknowledges and agrees that
the ETS, the Documentation and the ETS Upgrades to each of the foregoing,  shall
constitute  Proprietary  Information  that is owned by RTX. Both parties  hereby
agree that all Data shall  constitute  Proprietary  Information that is owned by
the parties in accordance  with Article 5, except that the Data may be disclosed
publicly to third parties on an aggregated and anonymous  basis,  subject to the
parties' mutual  agreement.  Accordingly,  when a party (the "Receiving  Party")
receives Proprietary Information from another party (the "Disclosing Party") the
Receiving  Party  shall,  both  during  the  Agreement  Term and  following  the
termination thereof:

         (i)      keep secret and retain in strict  confidence  any  Proprietary
                  Information received from the Disclosing Party;


<PAGE>

         (ii)     not disclose to any third party any Proprietary Information of
                  the  Disclosing  Party  for any  reason  whatsoever  except as
                  authorized under this Agreement;

         (iii)    not disclose any  Proprietary  Information  received  from the
                  Disclosing Party to the Receiving  Party's and its affiliates'
                  employees, except on a need-to-know basis; and

         (iv)     not make use of any Proprietary  Information received from the
                  Disclosing  Party for its own  purposes  or for the benefit of
                  any third party except as authorized by this Agreement.

10.2  Requested or Required  Disclosure.  Notwithstanding  Section  10.1, if the
Receiving Party is or requested or required to disclose Proprietary  Information
of the Disclosing Party pursuant to a government regulatory entity or agency, by
court order or by law,  the  Receiving  Party  shall (A) provide the  Disclosing
Party with  reasonable  prior  written  notice of such  disclosure to permit the
Disclosing  Party the  opportunity  to seek  confidential  or other  appropriate
treatment of such  information,  (B) cooperate with the Disclosing Party, at the
Disclosing  Party's  expense,  in obtaining  confidential  or other  appropriate
treatment  of such  information,  and  (C)  furnish  only  such  portion  of the
Proprietary Information as the Receiving Party is legally required to disclose.

10.3  Exceptions.  The  obligations  of this  Article 10 shall not extend to any
information which:

         (a)      is in the public domain;

         (b)      comes into the public domain through no fault of the Receiving
                  Party,  its employees or persons to whom the  Receiving  Party
                  disclosed such information;

         (c)      is  already  lawfully  known,  free  of  restrictions,  to the
                  Receiving Party at the time of its receipt;

         (d)      is  known  or  developed   independently  of  any  Proprietary
                  Information  by the  Disclosing  Party as can be proved by the
                  Disclosing Party's contemporaneous business records; or

         (e)      subject to Section  10.2,  is  required to be  disclosed  by a
                  government  regulatory  entity or agency, by court order or by
                  law  and is not  under  seal or  otherwise  not  subject  to a
                  confidentiality order by such agency or court.

10.4  Events  upon  Termination.  Upon the  expiration  or  termination  of this
Agreement,  or upon  demand by  Disclosing  Party,  the  Receiving  Party  shall
promptly  return  all  Proprietary   Information  of  Disclosing  Party  in  its
possession (in whatever form it may be, including notes  containing  Proprietary
Information),  or at  Disclosing  Party's  option,  shall  certify in writing to
Disclosing Party that all such Proprietary Information has been destroyed.

10.5  Injunction.  Both parties  acknowledge  that remedies at law for breach of
either party's obligations under Article 10 of this Agreement may be inadequate,
that the non-breaching  party may be irreparably  harmed by any such breach, and
that in the event of any such breach, the non-breaching  party shall be entitled
to seek specific performance or any type of preliminary,  temporary or permanent
injunctive relief without a requirement to post bond.

10.6 Limitation of Liability. Both parties agree that a claim arising under this
Article 10 shall not be subject to the  limitation of liability in Article 11 or
to Section 13.3.

                                   ARTICLE XI
                             LIMITATION OF LIABILITY

11.1  Limitation  of  Liability - Pre Launch Date.  BEFORE THE LAUNCH DATE,  RTX
SHALL NOT BE LIABLE TO ABI (NOR TO ANY PERSON CLAIMING RIGHTS DERIVED FROM ABI'S
RIGHTS) FOR ANY DIRECT  DAMAGES OF ANY KIND IN ANY WAY RELATED TO THIS AGREEMENT
WHETHER IN CONTRACT OR IN TORT, REGARDLESS OF WHETHER RTX WAS ADVISED, HAD OTHER
REASON TO KNOW, OR IN FACT KNEW OF THE POSSIBILITY THEREOF.

BEFORE  THE  LAUNCH  DATE,  ABI SHALL  NOT BE  LIABLE TO RTX (NOR TO ANY  PERSON
CLAIMING RIGHTS DERIVED FROM RTX'S RIGHTS) FOR ANY DIRECT DAMAGES OF ANY KIND IN
ANY WAY RELATED TO THIS AGREEMENT WHETHER IN CONTRACT OR IN TORT,  REGARDLESS OF
WHETHER  RTX WAS  ADVISED,  HAD  OTHER  REASON  TO KNOW,  OR IN FACT KNEW OF THE
POSSIBILITY THEREOF.

<PAGE>

11.2  Limitation  of Liability - Post Launch Date. ON AND AFTER THE LAUNCH DATE,
THE MAXIMUM  LIABILITY OF RTX UNDER THIS AGREEMENT FOR ACTUAL  DAMAGES,  WHETHER
ARISING  OUT OF BREACH  OF  CONTRACT  (INCLUDING  BREACH  OF  WARRANTY)  OR TORT
(INCLUDING,  WITHOUT LIMITATION,  NEGLIGENCE AND STRICT LIABILITY),  SHALL IN NO
EVENT EXCEED THREE HUNDRED  THOUSAND US DOLLARS  ($300,000) IN AGGREGATE FOR ALL
CLAIMS DURING EACH YEAR OF THE AGREEMENT TERM.

ON AND AFTER THE LAUNCH DATE, THE MAXIMUM  LIABILITY OF ABI UNDER THIS AGREEMENT
FOR ACTUAL DAMAGES,  WHETHER ARISING OUT OF BREACH OF CONTRACT (INCLUDING BREACH
OF WARRANTY)  OR TORT  (INCLUDING,  WITHOUT  LIMITATION,  NEGLIGENCE  AND STRICT
LIABILITY),  SHALL  IN  NO  EVENT  EXCEED  THREE  HUNDRED  THOUSAND  US  DOLLARS
($300,000) IN AGGREGATE FOR ALL CLAIMS DURING EACH YEAR OF THE AGREEMENT TERM.

                                   ARTICLE XII
                           NEGOTIATION AND ARBITRATION

12.1  Arbitration  and Business  Arbitration.  The parties shall attempt in good
faith to resolve  any  dispute  arising  out of or  relating  to this  Agreement
promptly by negotiation between executives.  If the matter has not been resolved
within ten (10) days after a party's request for  negotiation,  either party may
initiate  arbitration  as provided  herein.  Except  where  otherwise  expressly
provided  in this  Agreement,  any  dispute  arising  out of or relating to this
contract or the breach,  termination  or  validity  thereof,  which has not been
resolved by negotiation,  shall be settled by binding  arbitration in accordance
with the then current  Center for Public  Resources  Rules for  Non-Administered
Arbitration of Business Disputes by three independent and impartial arbitrators.
Each party shall appoint one  arbitrator and the two  arbitrators  shall appoint
the third arbitrator,  who shall be the chairman of the arbitration  panel; each
arbitrator  selected  must have an  expertise in the  matter(s) in dispute.  The
arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. ss.
1-16, and judgment upon the award rendered by the  arbitrators may be entered by
any court having  jurisdiction  thereof.  The place of arbitration  shall be New
York, New York and the arbitration  shall be conducted in the English  language.
The laws of the  state of New York,  exclusive  of its  conflict-of-laws  rules,
shall govern as to the merits of the dispute.  The arbitrators are not empowered
to award damages in excess of those specified in this agreement,  and each party
hereby  irrevocably waives any right to recover such damages with respect to any
dispute resolved by arbitration.  The statute of limitations of the State of New
York applicable to the commencement of a lawsuit shall apply to the commencement
of an arbitration.

                                  ARTICLE XIII
                                     GENERAL

13.1 Amendment. No amendment,  modification or discharge of this Agreement,  and
no waiver  hereunder,  shall be valid or binding unless set forth in writing and
duly  executed  by  the  party  against  whom   enforcement  of  the  amendment,
modification, discharge or waiver is sought.

13.2  Assignment.  Either  party may assign  this  Agreement  and its rights and
obligations  hereunder  without the consent of the other party, to: (i) a parent
company or affiliate or  subsidiary  which is capable of  performing  all of its
obligations hereunder;  or (ii) any entity which purchases  substantially all of
its assets (provided, however, that such entity is not a competitor of the other
party and such event does not  adversely  affect  the other  party's  business).
Except as provided in this Section 13.2,  neither this  Agreement nor any rights
hereunder  shall be assignable by any party without the prior written consent of
the other party  hereto,  which consent  shall not be  unreasonably  withheld or
delayed.

13.3 No Consequential Damages. RTX SHALL NOT BE LIABLE TO ABI (NOR TO ANY PERSON
CLAIMING  RIGHTS  DERIVED  FROM OR THROUGH  ABI) FOR ANY  INCIDENTAL,  INDIRECT,
CONSEQUENTIAL,  SPECIAL,  PUNITIVE OR EXEMPLARY  DAMAGES OF ANY KIND (INCLUDING,
WITHOUT LIMITATION,  LOST REVENUES OR PROFITS, LOSS OF BUSINESS OR LOSS OF DATA)
IN ANY WAY RELATED TO THE ETS OR THIS AGREEMENT, WHETHER IN CONTRACT OR IN TORT,
AND REGARDLESS OF WHETHER RTX WAS ADVISED,  HAD OTHER REASON TO KNOW, OR IN FACT
KNEW OF THE POSSIBILITY THEREOF.


<PAGE>

ABI SHALL NOT BE LIABLE TO RTX (NOR TO ANY PERSON  CLAIMING  RIGHTS DERIVED FROM
OR THROUGH RTX) FOR ANY INCIDENTAL, INDIRECT,  CONSEQUENTIAL,  SPECIAL, PUNITIVE
OR EXEMPLARY DAMAGES OF ANY KIND (INCLUDING,  WITHOUT LIMITATION,  LOST REVENUES
OR  PROFITS,  LOSS OF BUSINESS OR LOSS OF DATA) IN ANY WAY RELATED TO THE ETS OR
THIS  AGREEMENT,  WHETHER IN CONTRACT OR IN TORT,  AND REGARDLESS OF WHETHER ABI
WAS  ADVISED,  HAD  OTHER  REASON TO KNOW,  OR IN FACT  KNEW OF THE  POSSIBILITY
THEREOF.

13.4     Audit of Books and Records.

Each party hereby agrees that each party shall prepare, or cause to be prepared,
and shall maintain for a period of at least three (3) years,  accurate corporate
books and  records  (excluding  bank  records)  with  respect  to  payments  and
transactions  effected  pursuant to or in connection  with this  Agreement,  any
Membership Agreement or any Agency Affidavit.

Each party,  upon reasonable  prior written notice during the Agreement Term and
for one (1) year  thereafter,  shall make such  records in which the other party
has a business or financial interest under this Agreement  reasonably  available
(on hard or soft copy, if maintained in such form) to the other party's auditors
and  other  representatives  at the  place or  places  where  such  records  are
customarily kept, for inspection during normal business hours.

13.5  Choice of Law.  This  Agreement  shall be  governed  by and  construed  in
accordance with the laws of the State of New York, U.S.A.  without giving effect
to the conflicts of law principles thereof (other than Section 5-1401 of the New
York General Obligations Law).

13.6 Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original,  but all of which together shall constitute one and
the same agreement.

13.7 Entire Agreement.  This Agreement,,  other documents  expressly referred to
herein or therein,  and all Schedules  hereto,  constitutes the entire agreement
between the parties  hereto with respect to the matters  specifically  addressed
herein,  supersede all written and oral communications and shall be binding upon
and inure to the benefit of the parties hereto and their successors and assigns.

13.8  Force  Majeure.  In the event  that  either  party's  performance  of this
Agreement or any  obligation  hereunder is  prevented,  restricted or interfered
with by causes beyond its reasonable control including, but not limited to, acts
of God, fire, explosion,  vandalism, storm or other similar occurrence, any law,
order, regulation, direction, action or request of the United States government,
or of any state or local government, or of any department,  agency,  commission,
court,  bureau,  corporation  or other  instrumentality  of any one or more such
governments,  or of any civil or military  authority,  or by national emergency,
insurrection,  riot or war,  or any  Internet,  computer  or  telecommunications
failures; then such party shall be excused from such performance on a day-to-day
basis to the extent of such prevention,  restriction or interference. Such party
shall use  reasonable  efforts under the  circumstances  to avoid or remove such
causes or nonperformance  and shall proceed to perform with reasonable  dispatch
whenever  such causes are removed or cease.  For purposes of this Section  13.8,
the actions of a party's  owners,  employees,  and agents  shall be deemed to be
causes within that party's reasonable control.

13.9  Headings.  Article,  section and  subsection  headings  contained  in this
Agreement are inserted for convenience of reference only, shall not be deemed to
be a part of this Agreement for any purpose,  and shall not in any way define or
affect the meaning, construction or scope of any of the provisions hereof.

13.10 Pronouns. All pronouns and any variations thereof shall be deemed to refer
to the masculine,  feminine,  neuter,  singular or plural as the identity of the
person or entity may require.

13.11 Currency. Unless otherwise indicated to the contrary, all monetary amounts
referred  to in  this  Agreement,  including  the  Schedules,  shall  be in U.S.
dollars.

13.12 No Joint  Venture or Agency.  The  relationship  of the parties under this
Agreement  is that of  independent  contractors,  and nothing in this  Agreement
shall be  construed  to create a joint  venture or  partnership.  Except for the
purposes expressly set forth in Section 8.1, neither party shall be deemed to be
an employee, agent, partner or legal


<PAGE>

representative  of the other for any  purpose  and  neither  party will have any
right,  power or authority to create any obligation or  responsibility on behalf
of the other.

13.13 No Third Party  Beneficiary.  Except as expressly  provided  herein,  this
Agreement  is made and entered into for the sole  protection  and benefit of the
parties  hereto,  and no other  person or entity  shall have any right of action
hereon,  right to claim any right or benefit from the terms contained  herein or
be deemed a third party beneficiary hereunder.

13.14 No Waiver.  Neither the waiver by any of the parties hereto of a breach of
or a default under any of the provisions of this  Agreement,  nor the failure of
any of the parties,  on one or more occasions,  to enforce any of the provisions
of this  Agreement  or to  exercise  any  right  or  privilege  hereunder  shall
thereafter  be  construed as a waiver of any  subsequent  breach or default of a
similar nature,  or as a waiver of any of such provisions,  rights or privileges
hereunder.

13.15 Notices. All notices, demands, requests, or other communications which may
be or are required to be given,  served, or sent by any party to any other party
pursuant  to  this  Agreement  shall  be in  writing  and  shall  be  mailed  by
first-class,  registered or certified mail,  return receipt  requested,  postage
prepaid,  or transmitted by hand delivery  (including  delivery by courier),  or
delivered by overnight  courier or by facsimile  transmission,  or by electronic
mail with a copy of such electronic  mail sent via telecopy  within  twenty-four
(24) hours thereafter, addressed as follows:

                  (i)      If to RTX:

                           RateXchange Corporation
                           185 Berry Street
                           Suite 3515
                           San Francisco, CA 94107

                           Attention:  Nick Cioll
                           Fax:     (415) 371-9801
                           E-mail:  ncioll@ratexchange.com

                           with a copy (which shall not constitute notice) to:

                           RateXchange Corporation
                           185 Berry Street
                           Suite 3515
                           San Francisco, CA 94107

                           Attention:  Christopher Aguilar, Corporate Counsel
                           Fax:     (415) 371-9801
                           E-mail:  ags@ratexchange.com


                  (ii)     If to ABI:

                           Steven W. Town
                            One Sugar Creek Center Blvd.
                           Suite 700
                           Sugar Land, TX. 77478
                           Fax No.:  281-634-8883    ?
                           E-mail: stevet@amerexenergy.com

                           with a copy (which shall not constitute notice) to:

                           Jimmy Welder
<PAGE>

                           The Kleberg Law Firm, P.C.
                           Suite 900 North Tower
                           800 N. Shoreline Blvd.
                           Corpus Christi, TX 78401?
                           Fax No.: (361) 693-8600
                           E-mail: jwelder@kleberg.com

Each party may designate by notice in writing a new address to which any notice,
demand,  request or  communication  may thereafter be so given,  served or sent.
Each notice, demand, request, or communication which shall be mailed,  delivered
or transmitted in the manner described above shall be deemed sufficiently given,
served,  sent and  received  for all purposes at such time as it is delivered to
the addressee (with the return receipt,  the delivery receipt,  the affidavit of
messenger  or  (with  respect  to a  telecopy)  the  confirmation  being  deemed
conclusive  (but not  exclusive)  evidence of such  delivery) or at such time as
delivery  is  refused  by the  addressee  upon  presentation,  or in the case of
electronic mail, the  confirmation of the telecopy being deemed  conclusive (but
not exclusive) evidence of such delivery.

13.16 Severability.  If any part of any provision of this Agreement or any other
agreement,  document or writing  given  pursuant to or in  connection  with this
Agreement  shall be invalid or  unenforceable  under  applicable  law, said part
shall be ineffective to the extent of such invalidity or unenforceability  only,
without  in any way  affecting  the  remaining  parts of said  provision  or the
remaining provisions of this Agreement.

13.17  Further  Assurances.  Each of the  parties  hereto  agrees to execute and
deliver or cause to be executed and delivered such further instruments,  to take
or cause to be taken such further actions,  and to use its reasonable efforts to
obtain such  requisite  consents  as the party may from time to time  reasonably
request in order to effectuate fully the purposes,  terms and conditions of this
Agreement.

13.18 Binding Effect.  Subject to any provisions hereof restricting  assignment,
this  Agreement  shall be  binding  upon and shall  inure to the  benefit of the
parties hereto and their respective successors and permitted assigns

13.19 Survival.  Sections 2.8, 5.1, 13.1, 13.3,  13.4, 13.5, 13.7, 13.9,  13.14,
13.15,  13.16  and  13.19  and  Articles  10,  11,  and 12,  shall  survive  the
termination of this Agreement.

                            (signature page follows)

<PAGE>




         IN  WITNESS  WHEREOF,  each  of the  parties  hereto  has  caused  this
Agreement to be duly executed and delivered on its behalf and its name as of the
date indicated above.

                                    AMEREX BANDWIDTH, LTD.

                                    By: /s/ Steven W. Town
                                       ------------------------
                                        Name:  Steven W. Town
                                        Title: Authorized Officer of the General
                                               Partner

                                    RATEXCHANGE CORPORATION

                                    By: /s/ Donald H. Sledge
                                       ----------------------------
                                        Name:  Donald H. Sledge
                                        Title: Chief Executive Officer


<PAGE>


                                                CONFIDENTIAL TREATMENT REQUESTED
                                             FOR BRACKETED PORTIONS OF THIS PAGE


                                   SCHEDULE A

In  addition  to other  functionally  ETS  Upgrades  and ETS  releases  that are
mutually  agreed to in  writing  by the  parties  from  time to time,  RTX shall
provide the following functionality upgrades to the ETS by the dates indicated.

The two ETS product versions are [***], and upgrades to those products. [***] is
the current ETS. [***] will be the result of the upgrades below, and which shall
include  such other  functionality  upgrades as stated in any  amendment to this
Schedule A.

Both parties hereby agree that the Time Frame requirement for each functionality
ETS Upgrade described below can be amended to be [***], if mutually agreed to by
both parties,  if [***] occurs later than the Time Frame  specified  below.  ABI
hereby  acknowledges  and  agrees  that the Time  Frame  specified  below may be
extended,  if mutually  agreed by both parties,  if ABI requires  changes to the
functionality upgrade described below.

Section 1:  [***]

[***]

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

                                       Version                      Time Frame

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

-------------------------------------- ---------------------------- ------------
           [***]                                  [***]             [***]

                                                  [***]
-------------------------------------- ---------------------------- ------------
           [***]                                  [***]             [***]

                                                  [***]
-------------------------------------- ---------------------------- ------------
           [***]                                  [***]             [***]
-------------------------------------- ---------------------------- ------------
           [***]                                  [***]             [***]
-------------------------------------- ---------------------------- ------------
           [***]                                  [***]             [***]
-------------------------------------- ---------------------------- ------------
           [***]
-------------------------------------- ---------------------------- ------------
           [***]                                  [***]             [***]
-------------------------------------- ---------------------------- ------------
           [***]                                  [***]             [***]
-------------------------------------- ---------------------------- ------------
           [***]                                  [***]             [***]
-------------------------------------- ---------------------------- ------------

Section 2:

a.  Product Pricing Options:

ABI shall  assist  RTX for  [***]pricing  specifications,  with  which RTX shall
program into the [***] the [***] product  pricing element for client viewing and
pricing.

Confidential
September 17, 2000
Attachment A

                                       1

<PAGE>


                                                CONFIDENTIAL TREATMENT REQUESTED
                                             FOR BRACKETED PORTIONS OF THIS PAGE

b. [***] Module:

The [***]  module to be released  with [***] must  support a [***]  process that
allows a  company  to  define  the  [***] to be  allocated  to each of the other
counterparties  participating  on the ETS.  Each client is allowed to create and
maintain this [***], which will contain all Members of the ETS.  Requirements of
the [***] Module are below:

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

         Requirement                   Version                      Time Frame

-------------------------------------- ---------------------------- ------------
-------------------------------------- ---------------------------- ------------
         [***]                                    [***]             [***]
-------------------------------------- ---------------------------- ------------
-------------------------------------- ---------------------------- ------------
         [***]                                    [***]             [***]
-------------------------------------- ---------------------------- ------------
-------------------------------------- ---------------------------- ------------
         [***]                                    [***]             [***]
-------------------------------------- ---------------------------- ------------
-------------------------------------- ---------------------------- ------------
         [***]                                    [***]             [***]
-------------------------------------- ---------------------------- ------------
-------------------------------------- ---------------------------- ------------
         [***]                                    [***]             [***]
-------------------------------------- ---------------------------- ------------
-------------------------------------- ---------------------------- ------------
         [***]                                    [***]             [***]
-------------------------------------- ---------------------------- ------------

Definition of [***] Total: [***]

c.  System Hours:

RTX will make the ETS available for trading for market as follows:

         a.   [***]
         b.   [***]

d.  Security:

a.       [***]
b.       [***]

e.  Service Help Desk:

[***]

f.  Speed Issues:

[***]

g.  [***]:
[***]

h.  Data Feeds:

[***]

Confidential
September 17, 2000
Attachment A

                                       2




<PAGE>


                                                CONFIDENTIAL TREATMENT REQUESTED
                                             FOR BRACKETED PORTIONS OF THIS PAGE


                                   SCHEDULE B

                            ETS Upgrade Test Process

ABI shall have the right,  [***] to conduct a test (the "ETS  Upgrade  Test") on
the ETS,  [***].  ABI shall have [***] to conduct the test of such ETS Upgrades.
Upon  ABI's   acceptance   of  the  ETS   Upgrades  it  will   execute  the  ABI
Acknowledgement of ETS Upgrades Acceptance contained in Schedule C.

If ABI or the  Management  Team do not approve the ETS Upgrade  being  tested or
those  requirements  stated in Schedule A, or any  amendment to Schedule A, then
ABI's  Management  Contacts shall promptly  provide,  [***] ("ETS Upgrade Notice
Period"),  RTX with written notice  specifying any  deficiencies in the upgraded
ETS  ("Deficiency  Notice").  RTX shall  have  [***]  after its  receipt  of the
Deficiency  Notice to correct such  deficiencies,  and [***]. Upon completion of
the items in the Deficiency Notice RTX Management Contacts shall give ABI notice
thereof ("Notice of Correction") and ABI shall then have [***] after its receipt
of the Notice of Correction  ("Additional Test Period") to conduct a test of the
upgraded ETS, as corrected. If ABI or the Management Team do not approve the ETS
Upgrades  being  tested  or those  requirements  stated  in  Schedule  A, or any
amendment to Schedule A by the expiration of this Additional Test Period, [***].

If RTX does not receive a Deficiency  Notice by the ETS Upgrade Notice Period or
within the Additional Test Period, from ABI or the Management Team, then the ETS
Upgrades shall be deemed to have been approved.


<PAGE>


                                   SCHEDULE C

                    ABI AND MANAGEMENT TEAM ACKNOWLEDGMENT OF
                             ETS UPGRADES ACCEPTANCE

ABI hereby  accepts and  approves the ETS  Upgrades,  contained in Schedule A to
this acceptance notice:

      /s/ Steven W. Town
-----------------------------------         -------------------------------
ABI Management Contact                      ABI Management Contact


The Management  Team hereby accepts and approves the ETS Upgrades,  contained in
Schedule A to this acceptance notice:


      /s/ Donald H. Sledge                          /s/ R.N. Cioll
----------------------------------          --------------------------------
RTX Management Contact                      RTX Management Contact

      /s/ Steven W. Town
----------------------------------          --------------------------------
ABI Management Contact                      ABI Management Contact


<PAGE>



                                   SCHEDULE D

                              "DBA" ACCOUNT REQUEST

AMEREX BANDWIDTH, LTD hereby requests that a "DBA" Account be opened as follows:

Principle's Name:  _____________________________________________________________

Principle's ABI Broker :  ___________________________________________________

                  Telephone:        _____________________________

                  Facsimile:        _____________________________

                  E-Mail:           _____________________________

Date of DBA Activation:  ___________________________________________________

================================================================================


AMEREX  BANDWIDTH,  LTD  hereby  affirms  that is has  been  granted  the  legal
authority to establish  this "DBA"  Account,  enabling it and its  employees the
right and  ability  to effect  brokered  transactions  on the ETS for  bandwidth
capacity and internet  protocol  markets on behalf of the principle,  identified
above.

AMEREX BANDWIDTH, LTD                         Authorized Representative:

Date:  _____________________                  __________________________________

                                              Print:____________________________

                                              Title: ___________________________



<PAGE>


                                   SCHEDULE E
                               FORM OF SIDE LETTER

                               September 18, 2000

Amerex Bandwidth, Ltd.
One Sugar Creek Center Blvd.
Suite 700
Sugar Land, TX 77478

Re:  RateXchange Corporation ("RTX")

Dear Amerex Bandwidth, Ltd:

                  This letter is being delivered in connection with that certain
Agreement  ("Agreement")  dated as of September  18, 2000 by and between  Amerex
Bandwidth,  Ltd. ("ABI") and RateXchange Corporation ("RTX") . Capitalized terms
used herein which are defined in the Agreement shall have the meanings set forth
in the Agreement, unless otherwise defined herein.

                  In  consideration  of the mutual promises  between the parties
set forth in the Agreement, upon the occurrence of the Effective Date, RTX shall
designate  Steven  W.  Town,  a  representative  of  ABI,  to the RTX  board  of
directors,   subject  to  each   director's   fiduciary  duty  to  RTX  and  its
stockholders.  The ABI  representative  shall be  appointed  to the RTX board of
directors as soon as practicable  after the Effective Date and shall serve until
the next annual meeting of the stockholders of RTX.

                  The rights set forth above are not transferable.

                  This  letter  will be  binding  upon  all  parties  until  the
effectiveness of any amendment, modification or termination agreed to in writing
by all parties.

                  This letter  shall be governed by and  construed  according to
the laws of the State of New York (excluding the choice of law rules thereof).

                                      Sincerely,

                                      RATEXCHANGE CORPORATION

                                      By:     /s/ Donald H. Sledge
                                          --------------------------------------
                                      Name:       Donald H. Sledge
                                             -----------------------------------
                                      Title:      CEO
                                              ----------------------------------



ACCEPTED AND AGREED:

AMEREX BANDWIDTH, LTD

By:       /s/ Steven W. Town
     ---------------------------------------
Name:         Steven W. Town
       -------------------------------------
Title:        CEO
        ------------------------------------


<PAGE>


                                               Warrant to Purchase up to 300,000
                                                          Shares of Common Stock

                        WARRANT TO PURCHASE COMMON STOCK

                                       of

                             RATEXCHANGE CORPORATION

                          Void after December 17, 2005
      (subject to earlier termination in accordance with the terms hereof)

         This certifies that, for value received, Amerex Bandwidth, Ltd., or its
registered assigns (the "Holder"),  is entitled,  subject to the terms set forth
below, to purchase from  RATEXCHANGE  CORPORATION,  a Delaware  corporation (the
"Company"),  up to 300,000  shares of the voting common stock,  $.0001 par value
per share ("Common  Stock"),  of the Company,  as constituted on the date hereof
(the "Warrant  Issue Date"),  upon  surrender of this Warrant,  at the principal
office of the Company  referred to below,  with the notice of exercise  attached
hereto duly executed,  and simultaneous  payment therefor in lawful money of the
United States or otherwise as hereinafter provided, at the Exercise Price as set
forth in Section 2 below.

1. Term of Warrant.  Subject to the terms and  conditions  set forth  herein and
except as provided  below,  this Warrant  shall be  exercisable,  in whole or in
part,  during the term  commencing  on the Warrant Issue Date and ending at 5:00
p.m., Eastern Standard Time, on December 17, 2005, and shall be void thereafter.

2.  Exercise  Price.  The exercise  price (the  "Exercise  Price") at which this
Warrant may be exercised shall be, per share, the average of the closing trading
price  quoted on The  American  Stock  Exchange  LLC as published in the Eastern
Edition of The Wall Street Journal for the twenty (20) trading days prior to and
including August 15, 2000.

3.                Exercise of Warrant.

         (a) The purchase rights  represented by this Warrant are exercisable by
the  Holder in whole or in part at any time,  or from time to time,  during  the
term hereof as  described in Section 1 above,  by the  surrender of this Warrant
and the  Notice  of  Exercise  attached  as Annex I hereto  duly  completed  and
executed on behalf of the  Holder,  at the  principal  office of the Company (or
such  other  office or agency of the  Company as it may  designate  by notice in
writing to the Holder at the address of the Holder appearing on the books of the
Company), upon payment (i) in cash payable to the Company, (ii) by wire transfer
of  immediately  available  funds,  (iii)  by  cancellation  by  the  Holder  of
indebtedness of the Company to the Holder,  or (iv) by some  combination of (i),
(ii)  and  (iii),  in each  case,  of the  purchase  price of the  shares  to be
purchased.

         (b) This Warrant shall be deemed to have been exercised  immediately as
of the close of and time of its  surrender for exercise as provided  above,  and
the person  entitled to receive the shares of Common  Stock  issuable  upon such
exercise  shall be  treated  for all  purposes  as the  holder of record of such
shares as of such date and time.  As  promptly as  practicable  on or after such
date and in any  event  within  ten (10) days  thereafter,  the  Company  at its
expense shall issue and deliver a certificate or certificates  for the number of
shares issuable upon such exercise to the person or persons  entitled to receive
the same.  In the event that this Warrant is  exercised in part,  the Company at
its expense  shall  execute and deliver a new Warrant of like tenor  exercisable
for the number of shares for which this Warrant may then be exercised.

4. No Fractional  Shares or Scrip.  No fractional  shares or scrip  representing
fractional shares shall be issued upon the exercise of this Warrant.  In lieu of
any  fractional  share to which the Holder  would  otherwise  be  entitled,  the
Company  shall make a cash payment equal to the fair market value of a share (as
determined according to Section 3(c) above) multiplied by such fraction.

5. Replacement of Warrant. On receipt of evidence reasonably satisfactory to the
Company of the loss,  theft,  destruction  or mutilation of this Warrant and, in
the case of loss,  theft or destruction,  on delivery of an

<PAGE>

indemnity agreement reasonably satisfactory in form and substance to the Company
or, in the case of mutilation,  on surrender and  cancellation  of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor and amount.

6. Rights of Stockholders.  Subject to Sections 9 and 11 of this Warrant,  until
this Warrant shall have been exercised as provided herein,  the Holder, as such,
shall not be  entitled to vote or receive  dividends  or be deemed the holder of
Common  Stock or any other  securities  of the  Company  that may at any time be
issuable on the exercise  hereof for any purpose,  nor shall anything  contained
herein be construed to confer upon the Holder,  as such,  any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof,  or to give or
withhold  consent to any corporate  action  (whether upon any  recapitalization,
issuance of stock,  reclassification  of stock,  change of par value,  change of
stock to no par value,  consolidation,  merger,  conveyance, or otherwise) or to
receive notice of meetings,  or to receive  dividends or subscription  rights or
otherwise.

7.                Transfer of Warrant.

         (a)  Warrant  Register.  The  Company  shall  maintain a register  (the
"Warrant Register") containing the names and addresses of the Holder or Holders.
Any Holder of this  Warrant or any  portion  thereof  may change its  address as
shown on the Warrant  Register by written notice to the Company  requesting such
change. Any notice or written communication required or permitted to be given to
the  Holder  may be  delivered  or given by mail to such  Holder as shown on the
Warrant  Register and at the address shown on the Warrant  Register.  Until this
Warrant is transferred on the Warrant  Register of the Company,  the Company may
treat the Holder as shown on the Warrant  Register as the absolute owner of this
Warrant for all purposes, notwithstanding any notice to the contrary.

         (b) Warrant  Agent.  The Company may, by written  notice to the Holder,
appoint an agent for the purpose of maintaining the Warrant Register referred to
in Section  7(a)  above,  issuing  the  Common  Stock or other  securities  then
issuable upon the exercise of this Warrant,  exchanging this Warrant,  replacing
this Warrant or any or all of the foregoing.  Thereafter, any such registration,
issuance,  exchange,  or  replacement,  as the case may be, shall be made at the
office of such agent.

         (c) Transferability and  Nonnegotiability of Warrant.  This Warrant may
not be transferred or assigned in whole or in part without  compliance  with all
applicable  federal  and  state  securities  laws  by  the  transferor  and  the
transferee  (including  the delivery of  investment  representation  letters and
legal opinions reasonably  satisfactory to the Company, if such are requested by
the Company) and any stockholders  agreement to which the transferor is a party.
Subject to the  provisions of this Warrant with respect to  compliance  with the
Securities  Act, title to this Warrant may be transferred by endorsement (by the
Holder  executing the Assignment  Form attached as Annex II hereto) and delivery
in the same manner as a negotiable  instrument  transferable  by endorsement and
delivery.

         (d) Exchange of Warrant  Upon a Transfer.  On surrender of this Warrant
for  exchange,  properly  endorsed  on the  Assignment  Form and  subject to the
provisions of this Warrant with respect to compliance  with the Act and with the
limitations  on  assignments  and transfers and contained in this Section 7, the
Company  at its  expense  shall  issue to or on the  order  of the  Holder a new
warrant or warrants  of like  tenor,  in the name of the Holder or as the Holder
(on payment by the Holder of any applicable  transfer taxes) may direct, for the
number of shares issuable upon exercise hereof.

         (e) Compliance  with  Securities  Laws. The Holder of this Warrant,  by
acceptance hereof, acknowledges that this Warrant and the shares of Common Stock
to be issued upon exercise hereof are being acquired solely for the Holder's own
account and not as a nominee for any other party,  and for investment,  and that
the Holder  shall not offer,  sell or  otherwise  dispose of this Warrant or any
shares  of  Common  Stock  to  be  issued  upon  exercise  hereof  except  under
circumstances  that  will not  result  in a  violation  of the Act or any  state
securities  laws.  Further,  the Holder of this Warrant,  by acceptance  hereof,
represents that it is an accredited  investor within the meaning of Regulation D
under the Securities  Act. Upon exercise of this Warrant,  the Holder shall,  if
requested  by the Company,  confirm in writing,  in a form  satisfactory  to the
Company,  that the shares of Common Stock so purchased are being acquired solely
for the  Holder's  own  account and not as a nominee  for any other  party,  for
investment, and not with a view toward distribution or resale.


<PAGE>

8. Reservation of Stock. The Company covenants that throughout the period during
which this Warrant is exercisable, the Company shall reserve from its authorized
and  unissued  Common  Stock a  sufficient  number of shares to provide  for the
issuance of Common Stock upon the  exercise of this  Warrant  and,  from time to
time,  shall take all steps necessary to amend its Certificate of  Incorporation
to provide sufficient  reserves of shares of Common Stock issuable upon exercise
of this  Warrant.  The  Company  further  covenants  that all shares that may be
issued upon the  exercise of rights  represented  by this Warrant and payment of
the  Exercise  Price,  all as set forth  herein,  will be free  from all  taxes,
encumbrances,  liens and  charges in respect of the issue  thereof  (other  than
taxes in  respect  of any  transfer  occurring  contemporaneously  or  otherwise
specified  herein).  The Company  agrees that its issuance of this Warrant shall
constitute  full  authority  to its  officers  who are charged  with the duty of
executing stock certificates to execute and issue the necessary certificates for
shares of Common Stock upon the exercise of this Warrant.

9.                Notices.

         (a)  Whenever  the  Exercise  Price or  number  of  shares  purchasable
hereunder  shall be adjusted  pursuant to Section 11 hereof,  the Company  shall
issue a certificate  signed by its Chief  Financial  Officer  setting forth,  in
reasonable  detail,  the  event  requiring  the  adjustment,  the  amount of the
adjustment, the method by which such adjustment was calculated, and the Exercise
Price and number of shares  purchasable  hereunder  after giving  effect to such
adjustment,  and  shall  cause  a copy  of  such  certificate  to be  mailed  by
first-class mail, postage prepaid,  return receipt  requested,  to the Holder of
this Warrant.

         (b)      In the event:

                  (i) that the Company shall take a record of the holders of its
Common  Stock (or other  stock or  securities  at the time  receivable  upon the
exercise  of this  Warrant)  for the  purpose of  entitling  them to receive any
dividend or other  distribution,  or any right to subscribe  for or purchase any
shares of stock of any class or any other  securities,  or to receive  any other
right; or

                  (ii)  of  any  capital  reorganization  of  the  Company,  any
reclassification  of the capital  stock of the  Company,  any  consolidation  or
merger of the Company with or into another corporation, or any conveyance of all
or substantially all of the assets of the Company to another corporation; or

                  (iii) of any voluntary dissolution,  liquidation or winding-up
of the Company;

                  then,  and in each such case,  the Company shall mail or cause
to be mailed to the Holder or Holders a notice  specifying,  as the case may be,
(a) the date on which a record is to be taken for the purpose of such  dividend,
distribution  or right,  and stating the amount and character of such  dividend,
distribution  or  right,   or  (b)  the  date  on  which  such   reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up is to take place,  and the time,  if any is to be fixed,  as of which
the holders of record of Common Stock (or such stock or  securities  at the time
receivable  upon the  exercise  of this  Warrant)  shall be entitled to exchange
their shares of Common Stock (or such other stock or securities)  for securities
or  other  property  deliverable  upon  such  reorganization,  reclassification,
consolidation,  merger, conveyance, dissolution, liquidation or winding-up. Such
notice shall be mailed at least 20 days prior to the date therein specified.

                           (c) All such notices, advice and communications shall
be deemed to have been  received  (i) in the case of personal  delivery,  on the
date of such delivery and (ii) in the case of mailing, on the third business day
following the date of such mailing.

<PAGE>

10.               Amendments.

         (a) Any term of this Warrant may be amended with the written consent of
the Company and the  Holder.  Any  amendment  effected in  accordance  with this
Section 10 shall be binding upon the Holder of this Warrant,  each future holder
of this Warrant, and the Company.

          (b) No waivers of, or exceptions to, any term,  condition or provision
of this  Warrant,  in any one or more  instances,  shall  be  deemed  to be,  or
construed as, a further or continuing waiver of, or exception to, any such term,
condition or provision.

11.  Adjustments.  The  Exercise  Price and the  number  of  shares  purchasable
hereunder are subject to adjustment from time to time as follows:

         (a) Merger,  Sale of Assets,  etc. If at any time while this Warrant or
any  portion  hereof  is  outstanding  and  unexpired,  there  shall  be  (i)  a
reorganization  (other  than  a  combination,   reclassification,   exchange  or
subdivision  of  shares  otherwise  provided  for  herein),  (ii)  a  merger  or
consolidation  of the  Company  with or into  another  corporation  in which the
Company is not the surviving entity or a merger (including a reverse  triangular
merger)  in which the  Company  is the  surviving  entity  but the shares of the
Company's  capital  stock  outstanding  immediately  prior  to  the  merger  are
converted  by virtue of the merger into other  property,  whether in the form of
securities,  cash,  or  otherwise,  or  (iii)  a  sale  or  transfer  of  all or
substantially  all of the Company's  properties  and assets,  then, as a part of
such reorganization,  merger, consolidation,  sale or transfer, lawful provision
shall be made so that the holder of this Warrant shall thereafter be entitled to
receive upon exercise of this Warrant,  during the period  specified  herein and
upon payment of the Exercise Price then in effect, the number of shares of stock
or other securities or property of the successor corporation resulting from such
reorganization,  merger,  consolidation,  sale or transfer  that a holder of the
shares  deliverable  upon  exercise of this Warrant  would have been entitled to
receive in such reorganization,  consolidation, merger, sale or transfer if this
Warrant   had   been   exercised   immediately   before   such   reorganization,
consolidation,  merger,  sale or transfer,  all subject to further adjustment as
provided in this Section 11. The  foregoing  provisions  of this  Section  11(a)
shall similarly apply to successive  reorganizations,  consolidations,  mergers,
sales and transfers and to the stock or securities of any other corporation that
are at the time receivable  upon the exercise of this Warrant.  If the per share
consideration  payable to the holder  hereof for shares in  connection  with any
such transaction is in a form other than cash or marketable securities, then the
value of such  consideration  shall be determined in good faith by the Company's
Board of Directors. In all events, appropriate adjustment (as determined in good
faith by the Company's  Board of Directors)  shall be made in the application of
the  provisions  of this  Warrant with respect to the rights and interest of the
Holder after the  transaction,  to the end that the  provisions  of this Warrant
shall be applicable  after that event, as near as reasonably may be, in relation
to any shares or other  property  deliverable  after that event upon exercise of
this Warrant.

         (b)  Reclassification,  etc.  If the  Company,  at any time  while this
Warrant  or  any  portion  hereof   remains   outstanding   and  unexpired,   by
reclassification of securities or otherwise,  shall change any of the securities
as to  which  purchase  rights  under  this  Warrant  exist  into  the same or a
different number of securities of any other class or classes, this Warrant shall
thereafter  represent the right to acquire such number and kind of securities as
would  have been  issuable  as the  result of such  change  with  respect to the
securities  that  were  subject  to  the  purchase  rights  under  this  Warrant
immediately  prior to such  reclassification  or other  change and the  Exercise
Price  therefor  shall  be  appropriately   adjusted,  all  subject  to  further
adjustment as provided in this Section 11.

         (c) Split,  Subdivision or Combination of Shares. If the Company at any
time while this Warrant or any portion hereof remains outstanding and unexpired,
shall split,  subdivide or combine the  securities as to which  purchase  rights
under this Warrant  exist,  into a different  number of  securities  of the same
class,  the  Exercise  Price  for  such  securities  shall  be   proportionately
decreased,  and the number of shares of such  securities  for which this Warrant
may be exercised shall be proportionately  increased,  in the case of a split or
subdivision,  or the Exercise Price for such securities shall be proportionately
increased and the number of shares of such securities for which this Warrant may
be exercised shall be proportionately decreased, in the case of a combination.

         (d) Adjustments for Dividends in Stock or Other Securities or Property.
If at any time while this Warrant or any portion hereof remains  outstanding and
unexpired the holders of the securities as to which  purchase  rights under this
Warrant exist at the time shall have  received,  or, on or after the record date
fixed for the


<PAGE>

determination of eligible  stockholders,  shall have become entitled to receive,
without  payment  therefor,  other or  additional  stock or other  securities or
property  (other than cash) of the Company by way of dividend,  then and in each
case,  this Warrant  shall  represent  the right to acquire,  in addition to the
number of shares of the security  receivable upon exercise of this Warrant,  and
without  payment of any additional  consideration  therefor,  the amount of such
other or additional  stock or other  securities or property (other than cash) of
the Company that such holder would hold on the date of such exercise had it been
the holder of record of the security receivable upon exercise of this Warrant on
the date  hereof and had  thereafter,  during the period from the date hereof to
and including the date of such  exercise,  retained such shares and/or all other
additional stock available by it as aforesaid during such period,  giving effect
to all  adjustments  called for during  such  period by the  provisions  of this
Section 11.

         (e)  Certificate  as  to  Adjustments.  Upon  the  occurrence  of  each
adjustment  or  readjustment  pursuant  to this  Section  11, the Company at its
expense shall promptly  compute such  adjustment or  readjustment  in accordance
with the terms hereof and furnish to each Holder of this  Warrant a  certificate
setting forth such  adjustment or  readjustment  and showing in detail the facts
upon which such adjustment or readjustment is based. The Company shall, upon the
written  request,  at any  time,  of any  such  Holder,  furnish  or cause to be
furnished to such Holder a like certificate  setting forth: (i) such adjustments
and readjustments;  (ii) the Exercise Price at the time in effect; and (iii) the
number of shares and the  amount,  if any,  of other  property  that at the time
would be received upon the exercise of the Warrant.

         (f)  No  Impairment.  The  Company  shall  not,  by  amendment  of  its
Certificate of Incorporation or through any reorganization,  transfer of assets,
consolidation,  merger,  dissolution,  issue or sale of  securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but shall at all
times in good faith  assist in the carrying  out of all the  provisions  of this
Section  11  and  in the  taking  of all  such  action  as may be  necessary  or
appropriate in order to protect the rights of the Holder of this Warrant against
impairment.

12.               Registration Rights.

         (a) Shelf Registration. At the request of the Holder, the Company shall
prepare and file, as soon as reasonably  practicable,  a registration  statement
under the  Securities  Act to effect the  "shelf"  registration  on a delayed or
continuous basis under the Securities Act of all Common Stock held by the Holder
pursuant to the exercise of this Warrant.  (the "Warrant  Shares").  The Company
shall use its reasonable  best efforts to cause such  registration  statement to
become effective under the Securities Act after the date of filing.

         (b) Other  Warrants  Definition.  The "Other  Warrants"  shall mean the
certain four warrants issued to the Holder on the date hereof,  each to purchase
up to  500,000  shares  of Common  Stock of the  Company,  in the form  attached
hereto.

         (c)  Expenses  of  Registration.  The  Company  shall  pay  any and all
registration  expenses incident to the filing of each registration  statement or
otherwise  incident to the performance by the Company of or its compliance with,
its  obligations  under this Section 12. The Holder  shall pay all  underwriting
discounts and commissions  and transfer  taxes, if any,  relating to the sale or
disposition of the Warrant Shares  included in such  registration  statement and
the fees of any counsel retained by the Holder in connection therewith.

         (d)  Registration  Procedures.  In connection with any registration and
the  registration  statement  effecting  such  registration,  the Company hereby
covenants and agrees that it shall:

                  (i) take such  action as may be  necessary  so that:  (A) such
registration statement and any amendment thereto and any prospectus forming part
thereof  and any  amendment  or  supplement  thereto  (and each  report or other
document  incorporated  therein  by  reference  in each  case)  complies  in all
material  respects with the Securities  Act and the  Securities  Exchange Act of
1934, as amended (the "Exchange  Act") and the respective  rules and regulations
thereunder;  (B) such registration statement and any amendment thereto does not,
when it becomes  effective,  contain an 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 not misleading;  and (C) any prospectus  forming part of
such registration statement, and any amendment or supplement to such prospectus,
does not  include  an untrue  statement  of a  material  fact or omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;


<PAGE>

                  (ii) notify the Holder as promptly  as  practicable  in any of
the following  circumstances:  (A) at any time when a prospectus relating to the
Warrant  Shares is required to be  delivered  under the  Securities  Act, of the
happening  of any  event as a result of which the  prospectus  included  in such
registration  statement contains an untrue statement of a material fact or omits
any fact necessary to make the statements  therein not  misleading,  and, at the
request of the Holder,  the Company will  prepare a  supplement  or amendment to
such  prospectus  so that,  as  thereafter  delivered to the  purchasers  of the
Warrant  Shares,  such  prospectus  will not  contain an untrue  statement  of a
material fact or omit to state any fact necessary to make the statements therein
not misleading;  (B) when such registration  statement and any amendment thereto
has been filed with the Securities and Exchange  Commission  (the  "Commission")
and when such registration statement or any post-effective amendment thereto has
become  effective;  (C) of  any  request  by the  Commission  for  amendment  or
supplements to such registration statement or the prospectus included therein or
for  additional  information;  (D) of the issuance by the Commission of any stop
order  suspending  the  effectiveness  of  such  registration  statement  or the
initiation  of any  proceedings  for that  purpose;  and (E) the  receipt by the
Company of any notification  with respect to the suspension of the qualification
of the securities  included  therein for sale  (including the Warrant Shares) in
any jurisdiction or the initiation of any proceeding for such purpose;

                  (iii) use its best  efforts to prevent  the  issuance,  and if
issued to obtain the withdrawal,  of any order  suspending the  effectiveness of
such registration statement at the earliest possible time;

                  (iv) use its best efforts to comply with the  requirements  of
any  applicable  blue sky laws of such  jurisdictions  as the Holder  reasonably
requests  and do any and all  other  acts and  things  which  may be  reasonably
necessary or advisable to enable the Holder to  consummate  the  disposition  in
such  jurisdictions of the Warrant Shares (provided,  however,  that the Company
will  not  be  required  to:  (A)  qualify  generally  to  do  business  in  any
jurisdiction  where it would not  otherwise  be required to qualify but for this
subparagraph,  (B) subject itself to taxation in any such jurisdictions,  or (C)
consent to general service of process in any such jurisdiction);

                  (v) cause the Warrant  Shares  included  in such  registration
statement to be listed on each  securities  exchange or quoted in each quotation
system on which  similar  securities  issued by the  Company  are then listed or
quoted; and

                  (vi)  cooperate  with the  Holder  to  facilitate  the  timely
preparation and delivery of certificates  representing  the Warrant Shares to be
sold pursuant to such registration  statement free of any restrictive legend and
registered in such names as the Holder may request in  connection  with the sale
of the Warrant Shares pursuant to such registration statement.

       The Holder  agrees  that,  upon receipt of any notice from the Company of
the happening of any event of the kind  described in Section  12(d)(ii)  hereof,
the Holder  will  immediately  discontinue  disposition  of the  Warrant  Shares
pursuant to a registration statement until the Holder's receipt of the copies of
the supplemented or amended prospectus contemplated by Section 12(d)(ii) hereof,
and, if so directed by the  Company,  the Holder will deliver to the Company (at
the expense of the Company) all copies in its  possession,  other than permanent
file copies then in the  Holder's  possession,  of the  prospectus  covering the
Warrant  Shares  current at the time of receipt of such  notice.  If the Company
shall give any such notice to suspend  the  disposition  of the  Warrant  Shares
pursuant to a registration statement, the Company shall extend the period during
which the registration  statement shall be maintained effective pursuant to this
Section 12 by the number of days during the period from and  including  the date
of the giving of such  notice to and  including  the date when the Holder  shall
have received  copies of the  supplemented  or amended  prospectus  necessary to
resume such dispositions.

         (e) Hold-Back  Agreements.  If the Company shall effect an underwritten
offering of its equity  securities,  the Holder shall not effect any public sale
or public distribution of securities of the Company of the same or similar class
or classes of the  securities  included in such  registration  statement  or any
securities  convertible into or exchangeable or exercisable for such securities,
including  a sale  pursuant to Rule 144 or Rule 144A under the  Securities  Act,
during the 15-day  period  prior to,  and during  such  period of time as may be
required  by the  managing  underwriter  of such  offering,  but not to exceed a
90-day period  beginning on, the effective  date of the  registration  statement
(except  pursuant to such offering),  except to the extent  otherwise  agreed in
writing by the managing underwriter of such offering.


<PAGE>

         (f)      Black-Out Periods for Registration Statements.

                  (i)  Notwithstanding  anything to the contrary in this Section
12,  the  Company  may,  from time to time and at any time,  subject  to Section
12(f)(ii) herein, delay filing or effectiveness of the registration statement or
direct the Holder to suspend sales of the Warrant Shares registered  thereunder,
as  provided  herein,  in the  event of the  consummation  of,  or  negotiations
relating to, a material corporate  transaction (A) that would require additional
disclosure of material information by the Company in such registration statement
(or such filings),  (B) as to which the Company has a bona fide business purpose
for  preserving  confidentiality  and (C) which  renders the  Company  unable to
comply with Commission requirements, in each case under circumstances that would
make it impractical or inadvisable to cause such registration statement (or such
filings)  to  become   effective  or  to  promptly  amend  or  supplement   such
registration  statement on a post-effective  basis, as applicable (a "Suspension
Event").

                  (ii) In the case of a Suspension  Event,  the Company may give
notice (a  "Suspension  Notice")  to the Holder to suspend  sales of the Warrant
Shares so that the Company may correct or update such registration statement (or
such  filings).  Each such  suspension  shall  continue  only for so long as the
Suspension  Event or its  effect is  continuing,  and in no event  will any such
suspension  exceed  ninety (90) days (or 120 days in any  calendar  year) or all
such   suspensions   pursuant  to  this  Warrant  exceed  an  aggregate  of  one
hundred-eighty  (180) days.  The Holder agrees that it will not effect any sales
of the Warrant Shares pursuant to such registration  statement (or such filings)
at any time after it has received a Suspension Notice from the Company and prior
to the termination of such Suspension Event. If so directed by the Company,  the
Holder will  deliver to the Company all copies of the  prospectus  covering  the
Warrant Shares held by it at the time of receipt of the Suspension  Notice.  The
Holder may recommence  effecting  sales of the Warrant  Shares  pursuant to such
registration statement (or such filings) following further notice to such effect
(an "End of Suspension Notice") from the Company, which End of Suspension Notice
shall, in the case of a Suspension Event, be given by the Company not later than
five  (5) days  after  the  conclusion  of any  Suspension  Event  and  shall be
accompanied by copies of the  supplemented  or amended  prospectus  necessary to
resume such sales.

         (g)      Indemnification and Contribution.

                  (i)   Indemnification  by  the  Company.   The  Company  shall
indemnify,  to the extent permitted by law, the Holder, each person who controls
the Holder (within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act) and its respective officers, directors,  partners, members,
employees,  agents and  representatives,  against all  actions,  suits,  claims,
damages, losses, costs, expenses or proceedings (collectively,  "Losses") caused
by any untrue or alleged  untrue  statement  of material  fact  contained in any
registration  statement,  prospectus or preliminary  prospectus or any amendment
thereof or supplement  thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements  therein,
in light of the circumstances  under which made, not misleading,  except insofar
as the same are caused by or contained in any  information  furnished in writing
to the  Company  by the Holder  expressly  for use  therein  or by the  Holder's
failure to deliver a copy of the  registration  statement or  prospectus  or any
amendments  or  supplements  thereto  after the Company has furnished the Holder
with a  sufficient  number of copies of the same and except  insofar as the same
are caused by or contained  in any  prospectus  if the Holder  failed to send or
deliver a copy of any subsequent prospectus or prospectus supplement which would
have corrected such untrue or alleged untrue  statement of material fact or such
omission or alleged omission of a material fact with or prior to the delivery of
written  confirmation  of the sale by the Holder after the Company has furnished
the Holder with a sufficient number of copies of the same. In connection with an
underwritten offering, the Company will indemnify such underwriters, each person
who  controls  such  underwriters  (within  the  meaning  of  Section  15 of the
Securities Act or Section 20 of the Exchange Act) and their respective officers,
directors, partners, employees, agents and representatives to the same extent as
provided above with respect to the indemnification of the Holder.

                  (ii)   Indemnification  by  Holder.  In  connection  with  any
registration  statement  in which the Holder is  participating,  the Holder will
furnish to the Company in writing  such  information  as the Company  reasonably
requests  for  use  in  connection  with  any  such  registration  statement  or
prospectus and, to the extent permitted by law, will indemnify the Company, each
person  who  controls  the  Company  (within  the  meaning  of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and their respective officers,
directors,  partners,  employees,  agents and representatives against any Losses
arising  out


<PAGE>

of or based upon any  untrue or  alleged  untrue  statement  of a material  fact
contained in any registration statement,  prospectus,  or form of prospectus, or
arising out of or based upon any omission or alleged omission of a material fact
required to be stated  therein or necessary to make the statements  therein,  in
light of the circumstances under which made, not misleading,  to the extent, but
only to the extent,  that such untrue or alleged  untrue  statement is contained
in, or such  omission or alleged  omission is required to be  contained  in, any
information  so furnished in writing by the Holder to the Company  expressly for
use in such  registration  statement or  prospectus  and that such  statement or
omission  was relied upon by the  Company in  preparation  of such  registration
statement, prospectus or form of prospectus;  provided, however, that the Holder
shall not be liable in any such case to the extent that the Holder has furnished
in writing to the Company prior to the filing of any such registration statement
or prospectus or amendment or supplement thereto  information  expressly for use
in such  registration  statement or  prospectus  or any  amendment or supplement
thereto which corrected or made not misleading, information previously furnished
to the Company,  and the Company failed to include such information  therein. In
no event shall the  liability of the Holder  hereunder be greater in amount than
the dollar amount of the proceeds  (net of payment of all expenses)  received by
the  Holder  upon  the  sale  of  the  Warrant   Shares   giving  rise  to  such
indemnification obligation. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such indemnified party.

                  (iii) Conduct of  Indemnification  Proceedings.  If any Person
shall be entitled to indemnity  pursuant to this Section 12(g), such indemnified
party shall give prompt  written  notice to the party or parties from which such
indemnity is sought of the  commencement of any proceeding with respect to which
such indemnified party seeks  indemnification  or contribution  pursuant hereto;
provided,  however, that the failure to so notify the indemnifying parties shall
not relieve the indemnifying  parties from any obligation or liability except to
the extent that the  indemnifying  parties have been prejudiced by such failure.
The  indemnifying  parties shall have the right,  exercisable  by giving written
notice to an indemnified party promptly after the receipt of written notice from
such  indemnified  party of such  proceeding,  to  assume,  at the  indemnifying
parties' expense,  the defense of any such proceeding,  with counsel  reasonably
satisfactory to such indemnified party;  provided,  however, that an indemnified
party or  parties  (if more  than  one  such  indemnified  party is named in any
proceeding)  shall  have  the  right  to  employ  separate  counsel  in any such
proceeding and to participate in the defense thereof,  but the fees and expenses
of such  counsel  shall be at the expense of such  indemnified  party or parties
unless the parties to such  proceeding  include  both the  indemnified  party or
parties and the indemnifying party or parties,  and there exists, in the opinion
of  the  indemnified  party(ies)'  counsel,  a  conflict  between  one  or  more
indemnifying  parties  and one or more  indemnified  parties,  in which case the
indemnifying  parties  shall,  in  connection  with any one such  proceeding  or
separate  but  substantially   similar  or  related   proceedings  in  the  same
jurisdiction,  arising out of the same general allegations or circumstances,  be
liable for the fees and expenses of not more than one separate firm of attorneys
(together with appropriate local counsel) at any time for such indemnified party
or parties. If an indemnifying party assumes the defense of such proceeding, the
indemnifying  parties will not be subject to any  liability  for any  settlement
made by the indemnified  party without its or their consent (such consent not to
be unreasonably withheld).

                  (iv) Contribution. If the indemnification provided for in this
Section 12(g) is unavailable to an indemnified  party or is insufficient to hold
such indemnified  party harmless for any Losses in respect of which this Section
12(g) would  otherwise  apply by its terms,  then each  applicable  indemnifying
party, in lieu of indemnifying such indemnified  party, shall have an obligation
to  contribute  to the amount  paid or payable  by such  indemnified  party as a
result of such  Losses,  in such  proportion  as is  appropriate  to reflect the
relative fault of the indemnifying  party, on the one hand, and such indemnified
party,  on the  other  hand,  in  connection  with the  actions,  statements  or
omissions that resulted in such Losses as well as any other  relevant  equitable
considerations.  The relative fault of such indemnifying party, on the one hand,
and indemnified  party, on the other hand,  shall be determined by reference to,
among other  things,  whether any action in  question,  including  any untrue or
alleged untrue  statement of a material fact or omission or alleged  omission to
state a material fact, has been taken by, or relates to information supplied by,
such indemnifying  party or indemnified party, and the parties' relative intent,
knowledge,  access to information and opportunity to correct or prevent any such
action, statement or omission. The amount paid or payable by a party as a result
of any  Losses  shall be deemed to include  any legal or other fees or  expenses
incurred by such party in  connection  with any  proceeding,  to the extent such
party would have been indemnified for such expenses under Section 12(j)(iii), if
the  indemnification  provided for in Section 12(g)(i) or Section  12(g)(ii) was
available  to such party.  The Company and the Holder agree that it would not be
just and  equitable  if  contribution  pursuant to this Section  12(g)(iv)  were
determined by pro rata allocation or by any other method of allocation that does
not take  account  of the  equitable  considerations  referred  to in the second
sentence of this  paragraph.  Notwithstanding  the  provisions  of this  Section
12(g)(iv),  the  Holder,  as an  indemnifying  party,  shall not be  required to
contribute any amount in excess of the amount by which the net proceeds received
by the Holder


<PAGE>

exceeds the amount of any damages that the Holder has otherwise been required to
pay by reason of such untrue or alleged untrue  statement or omission or alleged
omission. No person adjudged guilty of fraudulent  misrepresentation (within the
meaning  of  Section  11(f)  of  the  Securities   Act)  shall  be  entitled  to
contribution   from  any  person   who  was  not   guilty  of  such   fraudulent
misrepresentation.

         (h)      Transfers.

                  (i) If the Holder transfers Warrant Shares  constituting 1% or
more of the Common Stock then  outstanding,  the Holder may also transfer to its
transferee  the right to have its  Warrant  Shares  included  in a  registration
pursuant to Section  12(a)  hereof;  provided,  that the transfer of such rights
shall  include all rights and  obligations  set forth under this Section 12, and
provided, further, that no such transfer shall be deemed to obligate the Company
to issue notices  hereunder to any additional  person,  except to the extent the
Company shall have received actual notice of such transfer to such person. At no
time shall there be more than one "Holder" for purposes of Section 12 hereof.

                  (ii) Any assignment or transfer of the registration rights set
forth herein shall be subject to the  assumption by the  transferee of the terms
and conditions set forth in Section 12 hereof applicable to the transferor,  and
any proposed  transferee  shall execute such documents and instruments  that the
Company may reasonably  require to evidence that such transferee is bound by the
terms and conditions set forth in Section 12 hereof.

13.               General.

         (a)  Governing  Law.  This Warrant  shall be governed by and  construed
according  to the laws of the State of  Delaware  (excluding  the  choice of law
rules thereof).

         (b) Delays or  Omissions.  No delay or omission to exercise  any right,
power,  or remedy accruing to either party upon any breach or default under this
Warrant,  shall be deemed a waiver of any other breach or default theretofore or
thereafter occurring.  Any waiver,  permit,  consent, or approval of any kind or
character  on the part of either  party of any  breach  or  default  under  this
Warrant,  or any  waiver  on the  part of  either  party  of any  provisions  or
conditions  of this Warrant,  must be in writing and shall be effective  only to
the extent  specifically set forth in such writing.  All remedies,  either under
this Warrant or by law or otherwise afforded to either of the parties,  shall be
cumulative and not alternative.

         (c) References. Unless the context otherwise requires, any reference to
a "Section" refers to a section of this Warrant.

         (d) Captions. Captions of sections have been added only for convenience
and shall not be deemed to be a part of this Warrant.

                  IN WITNESS  WHEREOF,  RateXchange  Corporation has caused this
Warrant to be executed by its officer thereunto duly authorized.

Dated: September 17, 2000

                             RATEXCHANGE CORPORATION

                             By:      /s/ Donald H. Sledge
                                 -----------------------------------
                                  Name:   Donald H. Sledge
                                  Title:  Chief Executive Officer


<PAGE>


ANNEX I

                               NOTICE OF EXERCISE

To: RATEXCHANGE CORPORATION

         (1) The undersigned  hereby irrevocably elects to purchase _____ shares
of  Common  Stock  of  RATEXCHANGE  CORPORATION,  pursuant  to the  terms of the
attached  Warrant,  and tenders  herewith payment of the purchase price for such
shares in full.

         (2) In exercising  this Warrant,  the  undersigned  hereby confirms and
acknowledges  that the shares of Common Stock are being acquired  solely for the
account of the  undersigned  and not as a nominee for any other  party,  and for
investment,  and that the undersigned shall not offer, sell or otherwise dispose
of any such shares of Common  Stock  except  under  circumstances  that will not
result in a violation of the  Securities  Act of 1933, as amended,  or any state
securities laws.

         (3) Please issue a certificate or certificates representing said shares
of Common Stock, and pay any cash for any fractional share to:

         Name                        Address                    No. Shares
         ----                        -------                    ----------







         (4)  Please  issue a new  Warrant  for the  unexercised  portion of the
attached Warrant in the name of the undersigned  and/or,  if the undersigned has
completed an Assignment  Form in the form of Annex II to this  Warrant,  in such
other names and amounts as is specified in such Assignment Form.

Dated: _____________________                Holder: ____________________________


                                            By: ________________________________
                                            Name:
                                            Title:





<PAGE>


                                                                        ANNEX II

                                 ASSIGNMENT FORM

         FOR VALUE RECEIVED,  the undersigned  registered  owner of this Warrant
hereby  sells,  assigns and transfers  unto the Assignee  named below all of the
rights of the  undersigned  under this  Warrant,  with  respect to the number of
shares of Common Stock set forth below:

Name of Assignee           Address                            No. of Shares







and does hereby irrevocably constitute and appoint  ____________________________
Attorney  to  make  such  transfer  on  the  books  of  RATEXCHANGE  CORPORATION
maintained for such purpose, with full power of substitution in the premises.

         The  undersigned  also  represents  that,  by  assignment  hereof,  the
Assignee  acknowledges  that this  Warrant and the shares of Common  Stock to be
issued upon  exercise  hereof are being  acquired  for  investment  and that the
Assignee  shall not offer,  sell or  otherwise  dispose  of this  Warrant or any
shares of stock to be issued upon  exercise  hereof  except under  circumstances
which will not result in a violation of the  Securities Act of 1933, as amended,
or any state securities laws.  Further,  the Assignee has acknowledged that upon
exercise of this  Warrant,  the  Assignee  shall,  if  requested by the Company,
confirm in writing,  in a form  satisfactory to the Company,  that the shares of
stock so purchased are being  acquired for investment and not with a view toward
distribution or resale.

Dated: _____________________                Holder: ____________________________


                                            By: ________________________________
                                            Name:
                                            Title:



<PAGE>


                                     WARRANT

THIS WARRANT AND THE SHARES OF COMMON STOCK REPRESENTED BY THIS WARRANT HAVE NOT
BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE  "SECURITIES
ACT"),  OR UNDER THE  SECURITIES  LAW OF ANY STATE OR OTHER  JURISDICTION.  SUCH
WARRANTS AND SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR
IN CONNECTION WITH, THE DISTRIBUTION  THEREOF.  SUCH WARRANTS AND SHARES MAY NOT
BE OFFERED,  SOLD, PLEDGED,  OR TRANSFERRED UNLESS (I) A REGISTRATION  STATEMENT
UNDER THE ACT IS IN EFFECT AS TO THESE SECURITIES AND SUCH OFFER,  SALE, PLEDGE,
OR TRANSFER IS IN  COMPLIANCE  WITH  APPLICABLE  SECURITIES  LAW OF ANY STATE OR
OTHER  JURISDICTION  OR (II) THERE IS AN  OPINION OF COUNSEL OR OTHER  EVIDENCE,
SATISFACTORY TO THE COMPANY,  THAT AN EXEMPTION  THEREFROM IS AVAILABLE AND THAT
SUCH  OFFER,  SALE,  PLEDGE,  OR  TRANSFER  IS  IN  COMPLIANCE  WITH  APPLICABLE
SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION.


<PAGE>




                                               Warrant to Purchase up to 500,000
                                                          Shares of Common Stock

                        WARRANT TO PURCHASE COMMON STOCK

                                       of

                             RATEXCHANGE CORPORATION

                          Void after December 17, 2005
      (subject to earlier termination in accordance with the terms hereof)

         This certifies that, for value received, Amerex Bandwidth, Ltd., or its
registered assigns (the "Holder"),  is entitled,  subject to the terms set forth
below, to purchase from  RATEXCHANGE  CORPORATION,  a Delaware  corporation (the
"Company"),  up to 500,000  shares of the voting common stock,  $.0001 par value
per share ("Common  Stock"),  of the Company,  as constituted on the date hereof
(the "Warrant  Issue Date"),  upon  surrender of this Warrant,  at the principal
office of the Company  referred to below,  with the notice of exercise  attached
hereto duly executed,  and simultaneous  payment therefor in lawful money of the
United States or otherwise as hereinafter provided, at the Exercise Price as set
forth in Section 2 below. The shares of Common Stock  exercisable  hereunder are
subject to vesting as provided below.

1. Term of Warrant.  Subject to the terms and  conditions  set forth  herein and
except as provided  below,  this Warrant  shall be  exercisable,  in whole or in
part,  for shares of Common Stock which have vested (as provided  below)  during
the term  commencing on the Warrant Issue Date and ending at 5:00 p.m.,  Eastern
Standard Time, on December 17, 2005, and shall be void thereafter.

2.  Exercise  Price.  The exercise  price (the  "Exercise  Price") at which this
Warrant may be exercised shall be, per share, 105% of the average of the closing
trading  price  quoted on The  American  Stock  Exchange LLC as published in the
Eastern  Edition of The Wall Street  Journal for the twenty  (20)  trading  days
prior to and including August 15, 2000.

3. Vesting. All shares of Common Stock exercisable hereunder shall vest upon the
earlier of (i)September 17, 2005, or (ii) a minimum of $1,000,000 of total gross
commodity  value  of  transactions  is  executed  by ABI on the  ETS;  provided,
however,  that no single Trade shall represent more than $1,000,000 of the gross
commodity value.

4.                Exercise of Warrant.

         (a) The purchase rights  represented by this Warrant are exercisable by
the Holder in whole or in part at any time  following  vesting of such shares as
described  in Section 3 above,  during the term hereof as described in Section 1
above,  by the surrender of this Warrant and the Notice of Exercise  attached as
Annex I hereto duly  completed  and  executed  on behalf of the  Holder,  at the
principal  office of the Company (or such other  office or agency of the Company
as it may  designate  by notice in writing  to the Holder at the  address of the
Holder appearing on the books of the Company),  upon payment (i) in cash payable
to the Company,  (ii) by wire transfer of immediately  available funds, (iii) by
cancellation by the Holder of indebtedness of the Company to the Holder, or (iv)
by some  combination of (i), (ii) and (iii), in each case, of the purchase price
of the shares to be purchased.

         (b) This Warrant shall be deemed to have been exercised  immediately as
of the close of and time of its  surrender for exercise as provided  above,  and
the person  entitled to receive the shares of Common  Stock  issuable  upon such
exercise  shall be  treated  for all  purposes  as the  holder of record of such
shares as of such date and time.  As  promptly as  practicable  on or after such
date and in any  event  within  ten (10) days  thereafter,  the  Company  at its
expense shall issue and deliver a certificate or certificates  for the number of
shares issuable upon such exercise to the person or persons  entitled to receive
the same.  In the event that this Warrant is  exercised in part,  the Company at
its expense  shall  execute and deliver a new Warrant of like tenor  exercisable
for the number of shares for which this Warrant may then be exercised.

<PAGE>

5. No Fractional  Shares or Scrip.  No fractional  shares or scrip  representing
fractional shares shall be issued upon the exercise of this Warrant.  In lieu of
any  fractional  share to which the Holder  would  otherwise  be  entitled,  the
Company  shall make a cash payment equal to the fair market value of a share (as
determined according to Section 4(c) above) multiplied by such fraction.

6. Replacement of Warrant. On receipt of evidence reasonably satisfactory to the
Company of the loss,  theft,  destruction  or mutilation of this Warrant and, in
the case of loss,  theft or destruction,  on delivery of an indemnity  agreement
reasonably  satisfactory in form and substance to the Company or, in the case of
mutilation,  on surrender and  cancellation of this Warrant,  the Company at its
expense  shall execute and deliver,  in lieu of this  Warrant,  a new warrant of
like tenor and amount.

7. Rights of Stockholders.  Subject to Sections 10 and 12 of this Warrant, until
this Warrant shall have been exercised as provided herein,  the Holder, as such,
shall not be  entitled to vote or receive  dividends  or be deemed the holder of
Common  Stock or any other  securities  of the  Company  that may at any time be
issuable on the exercise  hereof for any purpose,  nor shall anything  contained
herein be construed to confer upon the Holder,  as such,  any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof,  or to give or
withhold  consent to any corporate  action  (whether upon any  recapitalization,
issuance of stock,  reclassification  of stock,  change of par value,  change of
stock to no par value,  consolidation,  merger,  conveyance, or otherwise) or to
receive notice of meetings,  or to receive  dividends or subscription  rights or
otherwise.

8.                Transfer of Warrant.

         (a)  Warrant  Register.  The  Company  shall  maintain a register  (the
"Warrant Register") containing the names and addresses of the Holder or Holders.
Any Holder of this  Warrant or any  portion  thereof  may change its  address as
shown on the Warrant  Register by written notice to the Company  requesting such
change. Any notice or written communication required or permitted to be given to
the  Holder  may be  delivered  or given by mail to such  Holder as shown on the
Warrant  Register and at the address shown on the Warrant  Register.  Until this
Warrant is transferred on the Warrant  Register of the Company,  the Company may
treat the Holder as shown on the Warrant  Register as the absolute owner of this
Warrant for all purposes, notwithstanding any notice to the contrary.

         (b) Warrant  Agent.  The Company may, by written  notice to the Holder,
appoint an agent for the purpose of maintaining the Warrant Register referred to
in Section  8(a)  above,  issuing  the  Common  Stock or other  securities  then
issuable upon the exercise of this Warrant,  exchanging this Warrant,  replacing
this Warrant or any or all of the foregoing.  Thereafter, any such registration,
issuance,  exchange,  or  replacement,  as the case may be, shall be made at the
office of such agent.

         (c) Transferability and  Nonnegotiability of Warrant.  This Warrant may
not be transferred or assigned in whole or in part without  compliance  with all
applicable  federal  and  state  securities  laws  by  the  transferor  and  the
transferee  (including  the delivery of  investment  representation  letters and
legal opinions reasonably  satisfactory to the Company, if such are requested by
the Company) and any stockholders  agreement to which the transferor is a party.
Subject to the  provisions of this Warrant with respect to  compliance  with the
Securities  Act, title to this Warrant may be transferred by endorsement (by the
Holder  executing the Assignment  Form attached as Annex II hereto) and delivery
in the same manner as a negotiable  instrument  transferable  by endorsement and
delivery.

         (d) Exchange of Warrant  Upon a Transfer.  On surrender of this Warrant
for  exchange,  properly  endorsed  on the  Assignment  Form and  subject to the
provisions of this Warrant with respect to compliance  with the Act and with the
limitations  on  assignments  and transfers and contained in this Section 8, the
Company  at its  expense  shall  issue to or on the  order  of the  Holder a new
warrant or warrants  of like  tenor,  in the name of the Holder or as the Holder
(on payment by the Holder of any applicable  transfer taxes) may direct, for the
number of shares issuable upon exercise hereof.

         (e) Compliance  with  Securities  Laws. The Holder of this Warrant,  by
acceptance hereof, acknowledges that this Warrant and the shares of Common Stock
to be issued upon exercise hereof are being


<PAGE>

acquired  solely for the Holder's own account and not as a nominee for any other
party,  and for  investment,  and that  the  Holder  shall  not  offer,  sell or
otherwise  dispose of this  Warrant  or any shares of Common  Stock to be issued
upon  exercise  hereof  except  under  circumstances  that will not  result in a
violation of the Act or any state securities laws.  Further,  the Holder of this
Warrant,  by acceptance  hereof,  represents  that it is an accredited  investor
within the meaning of  Regulation D under the  Securities  Act. Upon exercise of
this Warrant, the Holder shall, if requested by the Company, confirm in writing,
in a form  satisfactory  to the  Company,  that the  shares of  Common  Stock so
purchased  are being  acquired  solely for the Holder's own account and not as a
nominee  for  any  other  party,  for  investment,  and not  with a view  toward
distribution or resale.

9. Reservation of Stock. The Company covenants that throughout the period during
which this Warrant is exercisable, the Company shall reserve from its authorized
and  unissued  Common  Stock a  sufficient  number of shares to provide  for the
issuance of Common Stock upon the  exercise of this  Warrant  and,  from time to
time,  shall take all steps necessary to amend its Certificate of  Incorporation
to provide sufficient  reserves of shares of Common Stock issuable upon exercise
of this  Warrant.  The  Company  further  covenants  that all shares that may be
issued upon the  exercise of rights  represented  by this Warrant and payment of
the  Exercise  Price,  all as set forth  herein,  will be free  from all  taxes,
encumbrances,  liens and  charges in respect of the issue  thereof  (other  than
taxes in  respect  of any  transfer  occurring  contemporaneously  or  otherwise
specified  herein).  The Company  agrees that its issuance of this Warrant shall
constitute  full  authority  to its  officers  who are charged  with the duty of
executing stock certificates to execute and issue the necessary certificates for
shares of Common Stock upon the exercise of this Warrant.

10.               Notices.

         (a)  Whenever  the  Exercise  Price or  number  of  shares  purchasable
hereunder  shall be adjusted  pursuant to Section 12 hereof,  the Company  shall
issue a certificate  signed by its Chief  Financial  Officer  setting forth,  in
reasonable  detail,  the  event  requiring  the  adjustment,  the  amount of the
adjustment, the method by which such adjustment was calculated, and the Exercise
Price and number of shares  purchasable  hereunder  after giving  effect to such
adjustment,  and  shall  cause  a copy  of  such  certificate  to be  mailed  by
first-class mail, postage prepaid,  return receipt  requested,  to the Holder of
this Warrant.

         (b)      In the event:

                  (i) that the Company shall take a record of the holders of its
Common  Stock (or other  stock or  securities  at the time  receivable  upon the
exercise  of this  Warrant)  for the  purpose of  entitling  them to receive any
dividend or other  distribution,  or any right to subscribe  for or purchase any
shares of stock of any class or any other  securities,  or to receive  any other
right; or

                  (ii)  of  any  capital  reorganization  of  the  Company,  any
reclassification  of the capital  stock of the  Company,  any  consolidation  or
merger of the Company with or into another corporation, or any conveyance of all
or substantially all of the assets of the Company to another corporation; or

                  (iii) of any voluntary dissolution,  liquidation or winding-up
of the Company;

                  then,  and in each such case,  the Company shall mail or cause
to be mailed to the Holder or Holders a notice  specifying,  as the case may be,
(a) the date on which a record is to be taken for the purpose of such  dividend,
distribution  or right,  and stating the amount and character of such  dividend,
distribution  or  right,   or  (b)  the  date  on  which  such   reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up is to take place,  and the time,  if any is to be fixed,  as of which
the holders of record of Common Stock (or such stock or  securities  at the time
receivable  upon the  exercise  of this  Warrant)  shall be entitled to exchange
their shares of Common Stock (or such other stock or securities)  for securities
or  other  property  deliverable  upon  such  reorganization,  reclassification,
consolidation,  merger, conveyance, dissolution, liquidation or winding-up. Such
notice shall be mailed at least 20 days prior to the date therein specified.

<PAGE>

                  (c) All  such  notices,  advice  and  communications  shall be
deemed to have been received (i) in the case of personal  delivery,  on the date
of such  delivery  and (ii) in the case of mailing,  on the third  business  day
following the date of such mailing.

11.               Amendments.

         (a) Any term of this Warrant may be amended with the written consent of
the Company and the  Holder.  Any  amendment  effected in  accordance  with this
Section 11 shall be binding upon the Holder of this Warrant,  each future holder
of this Warrant, and the Company.

          (b) No waivers of, or exceptions to, any term,  condition or provision
of this  Warrant,  in any one or more  instances,  shall  be  deemed  to be,  or
construed as, a further or continuing waiver of, or exception to, any such term,
condition or provision.

12.  Adjustments.  The  Exercise  Price and the  number  of  shares  purchasable
hereunder are subject to adjustment from time to time as follows:

         (a) Merger,  Sale of Assets,  etc. If at any time while this Warrant or
any  portion  hereof  is  outstanding  and  unexpired,  there  shall  be  (i)  a
reorganization  (other  than  a  combination,   reclassification,   exchange  or
subdivision  of  shares  otherwise  provided  for  herein),  (ii)  a  merger  or
consolidation  of the  Company  with or into  another  corporation  in which the
Company is not the surviving entity or a merger (including a reverse  triangular
merger)  in which the  Company  is the  surviving  entity  but the shares of the
Company's  capital  stock  outstanding  immediately  prior  to  the  merger  are
converted  by virtue of the merger into other  property,  whether in the form of
securities,  cash,  or  otherwise,  or  (iii)  a  sale  or  transfer  of  all or
substantially  all of the Company's  properties  and assets,  then, as a part of
such reorganization,  merger, consolidation,  sale or transfer, lawful provision
shall be made so that the holder of this Warrant shall thereafter be entitled to
receive upon exercise of this Warrant,  during the period  specified  herein and
upon payment of the Exercise Price then in effect, the number of shares of stock
or other securities or property of the successor corporation resulting from such
reorganization,  merger,  consolidation,  sale or transfer  that a holder of the
shares  deliverable  upon  exercise of this Warrant  would have been entitled to
receive in such reorganization,  consolidation, merger, sale or transfer if this
Warrant   had   been   exercised   immediately   before   such   reorganization,
consolidation,  merger,  sale or transfer,  all subject to further adjustment as
provided in this Section 12. The  foregoing  provisions  of this  Section  12(a)
shall similarly apply to successive  reorganizations,  consolidations,  mergers,
sales and transfers and to the stock or securities of any other corporation that
are at the time receivable  upon the exercise of this Warrant.  If the per share
consideration  payable to the holder  hereof for shares in  connection  with any
such transaction is in a form other than cash or marketable securities, then the
value of such  consideration  shall be determined in good faith by the Company's
Board of Directors. In all events, appropriate adjustment (as determined in good
faith by the Company's  Board of Directors)  shall be made in the application of
the  provisions  of this  Warrant with respect to the rights and interest of the
Holder after the  transaction,  to the end that the  provisions  of this Warrant
shall be applicable  after that event, as near as reasonably may be, in relation
to any shares or other  property  deliverable  after that event upon exercise of
this Warrant.

         (b)  Reclassification,  etc.  If the  Company,  at any time  while this
Warrant  or  any  portion  hereof   remains   outstanding   and  unexpired,   by
reclassification of securities or otherwise,  shall change any of the securities
as to  which  purchase  rights  under  this  Warrant  exist  into  the same or a
different number of securities of any other class or classes, this Warrant shall
thereafter  represent the right to acquire such number and kind of securities as
would  have been  issuable  as the  result of such  change  with  respect to the
securities  that  were  subject  to  the  purchase  rights  under  this  Warrant
immediately  prior to such  reclassification  or other  change and the  Exercise
Price  therefor  shall  be  appropriately   adjusted,  all  subject  to  further
adjustment as provided in this Section 12.

         (c) Split,  Subdivision or Combination of Shares. If the Company at any
time while this Warrant or any portion hereof remains outstanding and unexpired,
shall split,  subdivide or combine the  securities as to which  purchase  rights
under this Warrant  exist,  into a different  number of  securities  of the same
class,  the  Exercise


<PAGE>

Price for such securities shall be proportionately  decreased, and the number of
shares of such  securities  for which this  Warrant  may be  exercised  shall be
proportionately  increased,  in the  case  of a  split  or  subdivision,  or the
Exercise Price for such securities  shall be  proportionately  increased and the
number of shares of such  securities  for which this  Warrant  may be  exercised
shall be proportionately decreased, in the case of a combination.

         (d) Adjustments for Dividends in Stock or Other Securities or Property.
If at any time while this Warrant or any portion hereof remains  outstanding and
unexpired the holders of the securities as to which  purchase  rights under this
Warrant exist at the time shall have  received,  or, on or after the record date
fixed for the determination of eligible stockholders, shall have become entitled
to  receive,  without  payment  therefor,  other  or  additional  stock or other
securities or property (other than cash) of the Company by way of dividend, then
and in each case, this Warrant shall represent the right to acquire, in addition
to the  number  of shares  of the  security  receivable  upon  exercise  of this
Warrant,  and without  payment of any  additional  consideration  therefor,  the
amount of such other or additional  stock or other securities or property (other
than  cash) of the  Company  that  such  holder  would  hold on the date of such
exercise  had it been the  holder  of  record of the  security  receivable  upon
exercise  of this  Warrant  on the date  hereof and had  thereafter,  during the
period from the date hereof to and including the date of such exercise, retained
such shares  and/or all other  additional  stock  available  by it as  aforesaid
during such  period,  giving  effect to all  adjustments  called for during such
period by the provisions of this Section 12.

         (e)  Certificate  as  to  Adjustments.  Upon  the  occurrence  of  each
adjustment  or  readjustment  pursuant  to this  Section  12, the Company at its
expense shall promptly  compute such  adjustment or  readjustment  in accordance
with the terms hereof and furnish to each Holder of this  Warrant a  certificate
setting forth such  adjustment or  readjustment  and showing in detail the facts
upon which such adjustment or readjustment is based. The Company shall, upon the
written  request,  at any  time,  of any  such  Holder,  furnish  or cause to be
furnished to such Holder a like certificate  setting forth: (i) such adjustments
and readjustments;  (ii) the Exercise Price at the time in effect; and (iii) the
number of shares and the  amount,  if any,  of other  property  that at the time
would be received upon the exercise of the Warrant.

         (f)  No  Impairment.  The  Company  shall  not,  by  amendment  of  its
Certificate of Incorporation or through any reorganization,  transfer of assets,
consolidation,  merger,  dissolution,  issue or sale of  securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but shall at all
times in good faith  assist in the carrying  out of all the  provisions  of this
Section  12  and  in the  taking  of all  such  action  as may be  necessary  or
appropriate in order to protect the rights of the Holder of this Warrant against
impairment.

13.               Registration Rights.

         (a) Shelf  Registration.  After the Holder has  exercised in whole this
Warrant and the Other  Warrants  (as defined  below) for an  aggregate  exercise
price  that  equals or  exceeds  $1,000,000  and upon the  vesting of the shares
represented  by this Warrant (as described in Section 3, above)  ("Warrant No. 5
Vesting  Date") , the Company  shall  prepare and file within five (5)  business
days after the Warrant No. 5 Vesting  Date a  registration  statement  under the
Securities  Act to effect the "shelf"  registration  on a delayed or  continuous
basis under the Securities  Act of all Common Stock held by the Holder  pursuant
to the exercise of this Warrant.  (the "Warrant Shares").  The Company shall use
its  reasonable  best  efforts to cause such  registration  statement  to become
effective under the Securities Act after the date of filing.

         (b) Other  Warrants  Definition.  The "Other  Warrants"  shall mean the
certain four warrants  issued to the Holder on the date hereof,  one to purchase
up to 300,000  shares of Common  Stock and three each to  purchase up to 500,000
shares of Common Stock of the Company, in the form attached hereto.

         (c)  Expenses  of  Registration.  The  Company  shall  pay  any and all
registration  expenses incident to the filing of each registration  statement or
otherwise  incident to the performance by the Company of or its compliance with,
its  obligations  under this Section 13. The Holder  shall pay all  underwriting
discounts and commissions  and transfer  taxes, if any,  relating to the sale or
disposition of the Warrant Shares  included in such  registration  statement and
the fees of any counsel retained by the Holder in connection therewith.

         (d)  Registration  Procedures.  In connection with any registration and
the  registration  statement  effecting  such  registration,  the Company hereby
covenants and agrees that it shall:
<PAGE>

                  (i) take such  action as may be  necessary  so that:  (A) such
registration statement and any amendment thereto and any prospectus forming part
thereof  and any  amendment  or  supplement  thereto  (and each  report or other
document  incorporated  therein  by  reference  in each  case)  complies  in all
material  respects with the Securities  Act and the  Securities  Exchange Act of
1934, as amended (the "Exchange  Act") and the respective  rules and regulations
thereunder;  (B) such registration statement and any amendment thereto does not,
when it becomes  effective,  contain an 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 not misleading;  and (C) any prospectus  forming part of
such registration statement, and any amendment or supplement to such prospectus,
does not  include  an untrue  statement  of a  material  fact or omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;

                  (ii) notify the Holder as promptly  as  practicable  in any of
the following  circumstances:  (A) at any time when a prospectus relating to the
Warrant  Shares is required to be  delivered  under the  Securities  Act, of the
happening  of any  event as a result of which the  prospectus  included  in such
registration  statement contains an untrue statement of a material fact or omits
any fact necessary to make the statements  therein not  misleading,  and, at the
request of the Holder,  the Company will  prepare a  supplement  or amendment to
such  prospectus  so that,  as  thereafter  delivered to the  purchasers  of the
Warrant  Shares,  such  prospectus  will not  contain an untrue  statement  of a
material fact or omit to state any fact necessary to make the statements therein
not misleading;  (B) when such registration  statement and any amendment thereto
has been filed with the Securities and Exchange  Commission  (the  "Commission")
and when such registration statement or any post-effective amendment thereto has
become  effective;  (C) of  any  request  by the  Commission  for  amendment  or
supplements to such registration statement or the prospectus included therein or
for  additional  information;  (D) of the issuance by the Commission of any stop
order  suspending  the  effectiveness  of  such  registration  statement  or the
initiation  of any  proceedings  for that  purpose;  and (E) the  receipt by the
Company of any notification  with respect to the suspension of the qualification
of the securities  included  therein for sale  (including the Warrant Shares) in
any jurisdiction or the initiation of any proceeding for such purpose;

                  (iii) use its best  efforts to prevent  the  issuance,  and if
issued to obtain the withdrawal,  of any order  suspending the  effectiveness of
such registration statement at the earliest possible time;

                  (iv) use its best efforts to comply with the  requirements  of
any  applicable  blue sky laws of such  jurisdictions  as the Holder  reasonably
requests  and do any and all  other  acts and  things  which  may be  reasonably
necessary or advisable to enable the Holder to  consummate  the  disposition  in
such  jurisdictions of the Warrant Shares (provided,  however,  that the Company
will  not  be  required  to:  (A)  qualify  generally  to  do  business  in  any
jurisdiction  where it would not  otherwise  be required to qualify but for this
subparagraph,  (B) subject itself to taxation in any such jurisdictions,  or (C)
consent to general service of process in any such jurisdiction);

                  (v) cause the Warrant  Shares  included  in such  registration
statement to be listed on each  securities  exchange or quoted in each quotation
system on which  similar  securities  issued by the  Company  are then listed or
quoted; and

                  (vi)  cooperate  with the  Holder  to  facilitate  the  timely
preparation and delivery of certificates  representing  the Warrant Shares to be
sold pursuant to such registration  statement free of any restrictive legend and
registered in such names as the Holder may request in  connection  with the sale
of the Warrant Shares pursuant to such registration statement.

       The Holder  agrees  that,  upon receipt of any notice from the Company of
the happening of any event of the kind  described in Section  13(d)(ii)  hereof,
the Holder  will  immediately  discontinue  disposition  of the  Warrant  Shares
pursuant to a registration statement until the Holder's receipt of the copies of
the supplemented or amended prospectus contemplated by Section 13(d)(ii) hereof,
and, if so directed by the  Company,  the Holder will deliver to the Company (at
the expense of the Company) all copies in its  possession,  other than permanent
file copies then in the  Holder's  possession,  of the  prospectus  covering the
Warrant  Shares  current at the time of receipt of such  notice.  If the Company
shall give any such notice to suspend  the  disposition  of the  Warrant  Shares
pursuant to a registration statement, the Company shall extend the period during
which the registration  statement shall be maintained effective pursuant to this
Section 13 by the number of days during the period from and  including  the date
of the giving of

<PAGE>

such notice to and including the date when the Holder shall have received copies
of the supplemented or amended prospectus necessary to resume such dispositions.

         (e) Hold-Back  Agreements.  If the Company shall effect an underwritten
offering of its equity  securities,  the Holder shall not effect any public sale
or public distribution of securities of the Company of the same or similar class
or classes of the  securities  included in such  registration  statement  or any
securities  convertible into or exchangeable or exercisable for such securities,
including  a sale  pursuant to Rule 144 or Rule 144A under the  Securities  Act,
during the 15-day  period  prior to,  and during  such  period of time as may be
required  by the  managing  underwriter  of such  offering,  but not to exceed a
90-day period  beginning on, the effective  date of the  registration  statement
(except  pursuant to such offering),  except to the extent  otherwise  agreed in
writing by the managing underwriter of such offering.

         (f)      Black-Out Periods for Registration Statements.

                  (i)  Notwithstanding  anything to the contrary in this Section
13,  the  Company  may,  from time to time and at any time,  subject  to Section
13(f)(ii) herein, delay filing or effectiveness of the registration statement or
direct the Holder to suspend sales of the Warrant Shares registered  thereunder,
as  provided  herein,  in the  event of the  consummation  of,  or  negotiations
relating to, a material corporate  transaction (A) that would require additional
disclosure of material information by the Company in such registration statement
(or such filings),  (B) as to which the Company has a bona fide business purpose
for  preserving  confidentiality  and (C) which  renders the  Company  unable to
comply with Commission requirements, in each case under circumstances that would
make it impractical or inadvisable to cause such registration statement (or such
filings)  to  become   effective  or  to  promptly  amend  or  supplement   such
registration  statement on a post-effective  basis, as applicable (a "Suspension
Event").

                  (ii) In the case of a Suspension  Event,  the Company may give
notice (a  "Suspension  Notice")  to the Holder to suspend  sales of the Warrant
Shares so that the Company may correct or update such registration statement (or
such  filings).  Each such  suspension  shall  continue  only for so long as the
Suspension  Event or its  effect is  continuing,  and in no event  will any such
suspension  exceed  ninety (90) days (or 120 days in any  calendar  year) or all
such   suspensions   pursuant  to  this  Warrant  exceed  an  aggregate  of  one
hundred-eighty  (180) days.  The Holder agrees that it will not effect any sales
of the Warrant Shares pursuant to such registration  statement (or such filings)
at any time after it has received a Suspension Notice from the Company and prior
to the termination of such Suspension Event. If so directed by the Company,  the
Holder will  deliver to the Company all copies of the  prospectus  covering  the
Warrant Shares held by it at the time of receipt of the Suspension  Notice.  The
Holder may recommence  effecting  sales of the Warrant  Shares  pursuant to such
registration statement (or such filings) following further notice to such effect
(an "End of Suspension Notice") from the Company, which End of Suspension Notice
shall, in the case of a Suspension Event, be given by the Company not later than
five  (5) days  after  the  conclusion  of any  Suspension  Event  and  shall be
accompanied by copies of the  supplemented  or amended  prospectus  necessary to
resume such sales.

         (g)      Indemnification and Contribution.

                  (i)   Indemnification  by  the  Company.   The  Company  shall
indemnify,  to the extent permitted by law, the Holder, each person who controls
the Holder (within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act) and its respective officers, directors,  partners, members,
employees,  agents and  representatives,  against all  actions,  suits,  claims,
damages, losses, costs, expenses or proceedings (collectively,  "Losses") caused
by any untrue or alleged  untrue  statement  of material  fact  contained in any
registration  statement,  prospectus or preliminary  prospectus or any amendment
thereof or supplement  thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements  therein,
in light of the circumstances  under which made, not misleading,  except insofar
as the same are caused by or contained in any  information  furnished in writing
to the  Company  by the Holder  expressly  for use  therein  or by the  Holder's
failure to deliver a copy of the  registration  statement or  prospectus  or any
amendments  or  supplements  thereto  after the Company has furnished the Holder
with a  sufficient  number of copies of the same and except  insofar as the same
are caused by or contained  in any  prospectus  if the Holder  failed to send or
deliver a copy of any subsequent prospectus or prospectus supplement which would
have corrected such untrue or alleged untrue  statement of material fact or such
omission or alleged omission of a material fact with or prior to the delivery of
written  confirmation  of the sale by the Holder after the Company has furnished
the Holder with a sufficient number

<PAGE>

of copies of the same. In connection with an underwritten  offering, the Company
will indemnify  such  underwriters,  each person who controls such  underwriters
(within  the  meaning of Section 15 of the  Securities  Act or Section 20 of the
Exchange Act) and their respective  officers,  directors,  partners,  employees,
agents and  representatives to the same extent as provided above with respect to
the indemnification of the Holder.

                  (ii)   Indemnification  by  Holder.  In  connection  with  any
registration  statement  in which the Holder is  participating,  the Holder will
furnish to the Company in writing  such  information  as the Company  reasonably
requests  for  use  in  connection  with  any  such  registration  statement  or
prospectus and, to the extent permitted by law, will indemnify the Company, each
person  who  controls  the  Company  (within  the  meaning  of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and their respective officers,
directors,  partners,  employees,  agents and representatives against any Losses
arising  out of or based  upon any  untrue  or  alleged  untrue  statement  of a
material fact contained in any registration  statement,  prospectus,  or form of
prospectus,  or arising out of or based upon any omission or alleged omission of
a  material  fact  required  to be  stated  therein  or  necessary  to make  the
statements  therein,  in  light  of the  circumstances  under  which  made,  not
misleading,  to the extent, but only to the extent,  that such untrue or alleged
untrue  statement  is  contained  in, or such  omission  or alleged  omission is
required to be  contained  in, any  information  so  furnished in writing by the
Holder  to the  Company  expressly  for use in such  registration  statement  or
prospectus and that such statement or omission was relied upon by the Company in
preparation of such  registration  statement,  prospectus or form of prospectus;
provided,  however,  that the Holder shall not be liable in any such case to the
extent  that the Holder has  furnished  in writing to the  Company  prior to the
filing  of any  such  registration  statement  or  prospectus  or  amendment  or
supplement thereto information expressly for use in such registration  statement
or prospectus or any amendment or supplement thereto which corrected or made not
misleading,  information  previously  furnished to the Company,  and the Company
failed to include such information  therein.  In no event shall the liability of
the Holder hereunder be greater in amount than the dollar amount of the proceeds
(net of payment of all  expenses)  received  by the Holder  upon the sale of the
Warrant Shares giving rise to such  indemnification  obligation.  Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such indemnified party.

                  (iii) Conduct of  Indemnification  Proceedings.  If any Person
shall be entitled to indemnity  pursuant to this Section 13(g), such indemnified
party shall give prompt  written  notice to the party or parties from which such
indemnity is sought of the  commencement of any proceeding with respect to which
such indemnified party seeks  indemnification  or contribution  pursuant hereto;
provided,  however, that the failure to so notify the indemnifying parties shall
not relieve the indemnifying  parties from any obligation or liability except to
the extent that the  indemnifying  parties have been prejudiced by such failure.
The  indemnifying  parties shall have the right,  exercisable  by giving written
notice to an indemnified party promptly after the receipt of written notice from
such  indemnified  party of such  proceeding,  to  assume,  at the  indemnifying
parties' expense,  the defense of any such proceeding,  with counsel  reasonably
satisfactory to such indemnified party;  provided,  however, that an indemnified
party or  parties  (if more  than  one  such  indemnified  party is named in any
proceeding)  shall  have  the  right  to  employ  separate  counsel  in any such
proceeding and to participate in the defense thereof,  but the fees and expenses
of such  counsel  shall be at the expense of such  indemnified  party or parties
unless the parties to such  proceeding  include  both the  indemnified  party or
parties and the indemnifying party or parties,  and there exists, in the opinion
of  the  indemnified  party(ies)'  counsel,  a  conflict  between  one  or  more
indemnifying  parties  and one or more  indemnified  parties,  in which case the
indemnifying  parties  shall,  in  connection  with any one such  proceeding  or
separate  but  substantially   similar  or  related   proceedings  in  the  same
jurisdiction,  arising out of the same general allegations or circumstances,  be
liable for the fees and expenses of not more than one separate firm of attorneys
(together with appropriate local counsel) at any time for such indemnified party
or parties. If an indemnifying party assumes the defense of such proceeding, the
indemnifying  parties will not be subject to any  liability  for any  settlement
made by the indemnified  party without its or their consent (such consent not to
be unreasonably withheld).

                  (iv) Contribution. If the indemnification provided for in this
Section 13(g) is unavailable to an indemnified  party or is insufficient to hold
such indemnified  party harmless for any Losses in respect of which this Section
13(g) would  otherwise  apply by its terms,  then each  applicable  indemnifying
party, in lieu of indemnifying such indemnified  party, shall have an obligation
to  contribute  to the amount  paid or payable  by such  indemnified  party as a
result of such  Losses,  in such  proportion  as is  appropriate  to reflect the
relative fault of the indemnifying  party, on the one hand, and such indemnified
party,  on the  other  hand,  in  connection  with the  actions,  statements  or
omissions that resulted in such Losses as well as any other  relevant  equitable
considerations.  The relative fault of such indemnifying party, on the one hand,
and indemnified  party, on the other hand,  shall be

<PAGE>

determined by reference to, among other things,  whether any action in question,
including any untrue or alleged untrue  statement of a material fact or omission
or alleged  omission to state a material  fact, has been taken by, or relates to
information  supplied by, such indemnifying  party or indemnified party, and the
parties'  relative intent,  knowledge,  access to information and opportunity to
correct or prevent any such action,  statement  or omission.  The amount paid or
payable  by a party as a result of any  Losses  shall be deemed to  include  any
legal or other fees or expenses  incurred by such party in  connection  with any
proceeding,  to the extent  such  party  would  have been  indemnified  for such
expenses  under  Section  13(g)(iii),  if the  indemnification  provided  for in
Section  13(g)(i) or Section  13(g)(ii) was available to such party. The Company
and the Holder  agree that it would not be just and  equitable  if  contribution
pursuant to this Section  13(g)(iv) were determined by pro rata allocation or by
any other  method of  allocation  that does not take  account  of the  equitable
considerations   referred  to  in  the  second   sentence  of  this   paragraph.
Notwithstanding  the  provisions of this Section  13(g)(iv),  the Holder,  as an
indemnifying  party, shall not be required to contribute any amount in excess of
the amount by which the net proceeds  received by the Holder  exceeds the amount
of any damages that the Holder has  otherwise  been required to pay by reason of
such untrue or alleged  untrue  statement  or omission or alleged  omission.  No
person  adjudged guilty of fraudulent  misrepresentation  (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution  from any
person who was not guilty of such fraudulent misrepresentation.

         (h)      Transfers.

                  (i) If the Holder transfers Warrant Shares  constituting 1% or
more of the Common Stock then  outstanding,  the Holder may also transfer to its
transferee  the right to have its  Warrant  Shares  included  in a  registration
pursuant to Section  12(a)  hereof;  provided,  that the transfer of such rights
shall  include all rights and  obligations  set forth under this Section 12, and
provided, further, that no such transfer shall be deemed to obligate the Company
to issue notices  hereunder to any additional  person,  except to the extent the
Company shall have received actual notice of such transfer to such person. At no
time shall there be more than one "Holder" for purposes of Section 12 hereof.

                  (ii) Any assignment or transfer of the registration rights set
forth herein shall be subject to the  assumption by the  transferee of the terms
and conditions set forth in Section 13 hereof applicable to the transferor,  and
any proposed  transferee  shall execute such documents and instruments  that the
Company may reasonably  require to evidence that such transferee is bound by the
terms and conditions set forth in Section 13 hereof.

14.               General.

         (a)  Governing  Law.  This Warrant  shall be governed by and  construed
according  to the laws of the State of  Delaware  (excluding  the  choice of law
rules thereof).

         (b) Delays or  Omissions.  No delay or omission to exercise  any right,
power,  or remedy accruing to either party upon any breach or default under this
Warrant,  shall be deemed a waiver of any other breach or default theretofore or
thereafter occurring.  Any waiver,  permit,  consent, or approval of any kind or
character  on the part of either  party of any  breach  or  default  under  this
Warrant,  or any  waiver  on the  part of  either  party  of any  provisions  or
conditions  of this Warrant,  must be in writing and shall be effective  only to
the extent  specifically set forth in such writing.  All remedies,  either under
this Warrant or by law or otherwise afforded to either of the parties,  shall be
cumulative and not alternative.

         (c) References. Unless the context otherwise requires, any reference to
a "Section" refers to a section of this Warrant.

         (d) Captions. Captions of sections have been added only for convenience
and shall not be deemed to be a part of this Warrant.



<PAGE>


                  IN WITNESS  WHEREOF,  RateXchange  Corporation has caused this
Warrant to be executed by its officer thereunto duly authorized.

Dated: September 17, 2000


                             RATEXCHANGE CORPORATION

                             By:       /s/ Donald H. Sledge
                                   ----------------------------------
                                   Name:  Donald H. Sledge
                                   Title: Chief Executive Officer


<PAGE>


ANNEX I

                               NOTICE OF EXERCISE

To: RATEXCHANGE CORPORATION

         (1) The undersigned  hereby irrevocably elects to purchase _____ shares
of  Common  Stock  of  RATEXCHANGE  CORPORATION,  pursuant  to the  terms of the
attached  Warrant,  and tenders  herewith payment of the purchase price for such
shares in full.

         (2) In exercising  this Warrant,  the  undersigned  hereby confirms and
acknowledges  that the shares of Common Stock are being acquired  solely for the
account of the  undersigned  and not as a nominee for any other  party,  and for
investment,  and that the undersigned shall not offer, sell or otherwise dispose
of any such shares of Common  Stock  except  under  circumstances  that will not
result in a violation of the  Securities  Act of 1933, as amended,  or any state
securities laws.

         (3) Please issue a certificate or certificates representing said shares
of Common Stock, and pay any cash for any fractional share to:

         Name                     Address                    No. Shares
         ----                     -------                    ----------







         (4)  Please  issue a new  Warrant  for the  unexercised  portion of the
attached Warrant in the name of the undersigned  and/or,  if the undersigned has
completed an Assignment  Form in the form of Annex II to this  Warrant,  in such
other names and amounts as is specified in such Assignment Form.

Dated: _____________________                Holder: ____________________________


                                            By: ________________________________
                                            Name:
                                            Title:





<PAGE>


                                                                        ANNEX II

                                 ASSIGNMENT FORM

         FOR VALUE RECEIVED,  the undersigned  registered  owner of this Warrant
hereby  sells,  assigns and transfers  unto the Assignee  named below all of the
rights of the  undersigned  under this  Warrant,  with  respect to the number of
shares of Common Stock set forth below:

Name of Assignee                Address                            No. of Shares
----------------                -------                            -------------







and does hereby irrevocably constitute and appoint  ____________________________
Attorney  to  make  such  transfer  on  the  books  of  RATEXCHANGE  CORPORATION
maintained for such purpose, with full power of substitution in the premises.

         The  undersigned  also  represents  that,  by  assignment  hereof,  the
Assignee  acknowledges  that this  Warrant and the shares of Common  Stock to be
issued upon  exercise  hereof are being  acquired  for  investment  and that the
Assignee  shall not offer,  sell or  otherwise  dispose  of this  Warrant or any
shares of stock to be issued upon  exercise  hereof  except under  circumstances
which will not result in a violation of the  Securities Act of 1933, as amended,
or any state securities laws.  Further,  the Assignee has acknowledged that upon
exercise of this  Warrant,  the  Assignee  shall,  if  requested by the Company,
confirm in writing,  in a form  satisfactory to the Company,  that the shares of
stock so purchased are being  acquired for investment and not with a view toward
distribution or resale.

Dated: _____________________                Holder: ____________________________


                                            By: ________________________________
                                            Name:
                                            Title:

<PAGE>






                                     WARRANT

THIS WARRANT AND THE SHARES OF COMMON STOCK REPRESENTED BY THIS WARRANT HAVE NOT
BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE  "SECURITIES
ACT"),  OR UNDER THE  SECURITIES  LAW OF ANY STATE OR OTHER  JURISDICTION.  SUCH
WARRANTS AND SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR
IN CONNECTION WITH, THE DISTRIBUTION  THEREOF.  SUCH WARRANTS AND SHARES MAY NOT
BE OFFERED,  SOLD, PLEDGED,  OR TRANSFERRED UNLESS (I) A REGISTRATION  STATEMENT
UNDER THE ACT IS IN EFFECT AS TO THESE SECURITIES AND SUCH OFFER,  SALE, PLEDGE,
OR TRANSFER IS IN  COMPLIANCE  WITH  APPLICABLE  SECURITIES  LAW OF ANY STATE OR
OTHER  JURISDICTION  OR (II) THERE IS AN  OPINION OF COUNSEL OR OTHER  EVIDENCE,
SATISFACTORY TO THE COMPANY,  THAT AN EXEMPTION  THEREFROM IS AVAILABLE AND THAT
SUCH  OFFER,  SALE,  PLEDGE,  OR  TRANSFER  IS  IN  COMPLIANCE  WITH  APPLICABLE
SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION.


<PAGE>




                                               Warrant to Purchase up to 500,000
                                                          Shares of Common Stock

                        WARRANT TO PURCHASE COMMON STOCK

                                       of

                             RATEXCHANGE CORPORATION

                          Void after December 17, 2005
      (subject to earlier termination in accordance with the terms hereof)

         This certifies that, for value received, Amerex Bandwidth, Ltd., or its
registered assigns (the "Holder"),  is entitled,  subject to the terms set forth
below, to purchase from  RATEXCHANGE  CORPORATION,  a Delaware  corporation (the
"Company"),  up to 500,000  shares of the voting common stock,  $.0001 par value
per share ("Common  Stock"),  of the Company,  as constituted on the date hereof
(the "Warrant  Issue Date"),  upon  surrender of this Warrant,  at the principal
office of the Company  referred to below,  with the notice of exercise  attached
hereto duly executed,  and simultaneous  payment therefor in lawful money of the
United States or otherwise as hereinafter provided, at the Exercise Price as set
forth in Section 2 below. The shares of Common Stock  exercisable  hereunder are
subject to vesting as provided below.

1. Term of Warrant.  Subject to the terms and  conditions  set forth  herein and
except as provided  below,  this Warrant  shall be  exercisable,  in whole or in
part,  for shares of Common Stock which have vested (as provided  below)  during
the term  commencing on the Warrant Issue Date and ending at 5:00 p.m.,  Eastern
Standard Time, on December 17, 2005, and shall be void thereafter.

2.  Exercise  Price.  The exercise  price (the  "Exercise  Price") at which this
Warrant may be exercised shall be, per share, 110% of the average of the closing
trading  price  quoted on The  American  Stock  Exchange LLC as published in the
Eastern  Edition of The Wall Street  Journal for the twenty  (20)  trading  days
prior to and including August 15, 2000.

3. Vesting. All shares of Common Stock exercisable hereunder shall vest upon the
earlier of (i)September 17, 2005, or (ii) a minimum of $1,000,000 of total gross
commodity  value  of  transactions  is  executed  by ABI on the ETS ;  provided,
however,  that no single Trade shall represent more than $1,000,000 of the gross
commodity value.

4.                Exercise of Warrant.

         (a) The purchase rights  represented by this Warrant are exercisable by
the Holder in whole or in part at any time  following  vesting of such shares as
described  in Section 3 above,  during the term hereof as described in Section 1
above,  by the surrender of this Warrant and the Notice of Exercise  attached as
Annex I hereto duly  completed  and  executed  on behalf of the  Holder,  at the
principal  office of the Company (or such other  office or agency of the Company
as it may  designate  by notice in writing  to the Holder at the  address of the
Holder appearing on the books of the Company),  upon payment (i) in cash payable
to the Company,  (ii) by wire transfer of immediately  available funds, (iii) by
cancellation by the Holder of indebtedness of the Company to the Holder, or (iv)
by some  combination of (i), (ii) and (iii), in each case, of the purchase price
of the shares to be purchased.

         (b) This Warrant shall be deemed to have been exercised  immediately as
of the close of and time of its  surrender for exercise as provided  above,  and
the person  entitled to receive the shares of Common  Stock  issuable  upon such
exercise  shall be  treated  for all  purposes  as the  holder of record of such
shares as of such date and time.  As  promptly as  practicable  on or after such
date and in any  event  within  ten (10) days  thereafter,  the  Company  at its
expense shall issue and deliver a certificate or certificates  for the number of
shares issuable upon such exercise to the person or persons  entitled to receive
the same.  In the event that this Warrant is  exercised in part,  the Company at
its expense  shall  execute and deliver a new Warrant of like tenor  exercisable
for the number of shares for which this Warrant may then be exercised.

<PAGE>

5. No Fractional  Shares or Scrip.  No fractional  shares or scrip  representing
fractional shares shall be issued upon the exercise of this Warrant.  In lieu of
any  fractional  share to which the Holder  would  otherwise  be  entitled,  the
Company  shall make a cash payment equal to the fair market value of a share (as
determined according to Section 4(c) above) multiplied by such fraction.

6. Replacement of Warrant. On receipt of evidence reasonably satisfactory to the
Company of the loss,  theft,  destruction  or mutilation of this Warrant and, in
the case of loss,  theft or destruction,  on delivery of an indemnity  agreement
reasonably  satisfactory in form and substance to the Company or, in the case of
mutilation,  on surrender and  cancellation of this Warrant,  the Company at its
expense  shall execute and deliver,  in lieu of this  Warrant,  a new warrant of
like tenor and amount.

7. Rights of Stockholders.  Subject to Sections 10 and 12 of this Warrant, until
this Warrant shall have been exercised as provided herein,  the Holder, as such,
shall not be  entitled to vote or receive  dividends  or be deemed the holder of
Common  Stock or any other  securities  of the  Company  that may at any time be
issuable on the exercise  hereof for any purpose,  nor shall anything  contained
herein be construed to confer upon the Holder,  as such,  any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof,  or to give or
withhold  consent to any corporate  action  (whether upon any  recapitalization,
issuance of stock,  reclassification  of stock,  change of par value,  change of
stock to no par value,  consolidation,  merger,  conveyance, or otherwise) or to
receive notice of meetings,  or to receive  dividends or subscription  rights or
otherwise.

8.                Transfer of Warrant.

         (a)  Warrant  Register.  The  Company  shall  maintain a register  (the
"Warrant Register") containing the names and addresses of the Holder or Holders.
Any Holder of this  Warrant or any  portion  thereof  may change its  address as
shown on the Warrant  Register by written notice to the Company  requesting such
change. Any notice or written communication required or permitted to be given to
the  Holder  may be  delivered  or given by mail to such  Holder as shown on the
Warrant  Register and at the address shown on the Warrant  Register.  Until this
Warrant is transferred on the Warrant  Register of the Company,  the Company may
treat the Holder as shown on the Warrant  Register as the absolute owner of this
Warrant for all purposes, notwithstanding any notice to the contrary.

         (b) Warrant  Agent.  The Company may, by written  notice to the Holder,
appoint an agent for the purpose of maintaining the Warrant Register referred to
in Section  8(a)  above,  issuing  the  Common  Stock or other  securities  then
issuable upon the exercise of this Warrant,  exchanging this Warrant,  replacing
this Warrant or any or all of the foregoing.  Thereafter, any such registration,
issuance,  exchange,  or  replacement,  as the case may be, shall be made at the
office of such agent.

         (c) Transferability and  Nonnegotiability of Warrant.  This Warrant may
not be transferred or assigned in whole or in part without  compliance  with all
applicable  federal  and  state  securities  laws  by  the  transferor  and  the
transferee  (including  the delivery of  investment  representation  letters and
legal opinions reasonably  satisfactory to the Company, if such are requested by
the Company) and any stockholders  agreement to which the transferor is a party.
Subject to the  provisions of this Warrant with respect to  compliance  with the
Securities  Act, title to this Warrant may be transferred by endorsement (by the
Holder  executing the Assignment  Form attached as Annex II hereto) and delivery
in the same manner as a negotiable  instrument  transferable  by endorsement and
delivery.

         (d) Exchange of Warrant  Upon a Transfer.  On surrender of this Warrant
for  exchange,  properly  endorsed  on the  Assignment  Form and  subject to the
provisions of this Warrant with respect to compliance  with the Act and with the
limitations  on  assignments  and transfers and contained in this Section 8, the
Company  at its  expense  shall  issue to or on the  order  of the  Holder a new
warrant or warrants  of like  tenor,  in the name of the Holder or as the Holder
(on payment by the Holder of any applicable  transfer taxes) may direct, for the
number of shares issuable upon exercise hereof.

         (e) Compliance  with  Securities  Laws. The Holder of this Warrant,  by
acceptance hereof, acknowledges that this Warrant and the shares of Common Stock
to be issued upon exercise hereof are being


<PAGE>

acquired  solely for the Holder's own account and not as a nominee for any other
party,  and for  investment,  and that  the  Holder  shall  not  offer,  sell or
otherwise  dispose of this  Warrant  or any shares of Common  Stock to be issued
upon  exercise  hereof  except  under  circumstances  that will not  result in a
violation of the Act or any state securities laws.  Further,  the Holder of this
Warrant,  by acceptance  hereof,  represents  that it is an accredited  investor
within the meaning of  Regulation D under the  Securities  Act. Upon exercise of
this Warrant, the Holder shall, if requested by the Company, confirm in writing,
in a form  satisfactory  to the  Company,  that the  shares of  Common  Stock so
purchased  are being  acquired  solely for the Holder's own account and not as a
nominee  for  any  other  party,  for  investment,  and not  with a view  toward
distribution or resale.

9. Reservation of Stock. The Company covenants that throughout the period during
which this Warrant is exercisable, the Company shall reserve from its authorized
and  unissued  Common  Stock a  sufficient  number of shares to provide  for the
issuance of Common Stock upon the  exercise of this  Warrant  and,  from time to
time,  shall take all steps necessary to amend its Certificate of  Incorporation
to provide sufficient  reserves of shares of Common Stock issuable upon exercise
of this  Warrant.  The  Company  further  covenants  that all shares that may be
issued upon the  exercise of rights  represented  by this Warrant and payment of
the  Exercise  Price,  all as set forth  herein,  will be free  from all  taxes,
encumbrances,  liens and  charges in respect of the issue  thereof  (other  than
taxes in  respect  of any  transfer  occurring  contemporaneously  or  otherwise
specified  herein).  The Company  agrees that its issuance of this Warrant shall
constitute  full  authority  to its  officers  who are charged  with the duty of
executing stock certificates to execute and issue the necessary certificates for
shares of Common Stock upon the exercise of this Warrant.

10.               Notices.

         (a)  Whenever  the  Exercise  Price or  number  of  shares  purchasable
hereunder  shall be adjusted  pursuant to Section 12 hereof,  the Company  shall
issue a certificate  signed by its Chief  Financial  Officer  setting forth,  in
reasonable  detail,  the  event  requiring  the  adjustment,  the  amount of the
adjustment, the method by which such adjustment was calculated, and the Exercise
Price and number of shares  purchasable  hereunder  after giving  effect to such
adjustment,  and  shall  cause  a copy  of  such  certificate  to be  mailed  by
first-class mail, postage prepaid,  return receipt  requested,  to the Holder of
this Warrant.

         (b)      In the event:

                  (i) that the Company shall take a record of the holders of its
Common  Stock (or other  stock or  securities  at the time  receivable  upon the
exercise  of this  Warrant)  for the  purpose of  entitling  them to receive any
dividend or other  distribution,  or any right to subscribe  for or purchase any
shares of stock of any class or any other  securities,  or to receive  any other
right; or

                  (ii)  of  any  capital  reorganization  of  the  Company,  any
reclassification  of the capital  stock of the  Company,  any  consolidation  or
merger of the Company with or into another corporation, or any conveyance of all
or substantially all of the assets of the Company to another corporation; or

                  (iii) of any voluntary dissolution,  liquidation or winding-up
of the Company;

                  then,  and in each such case,  the Company shall mail or cause
to be mailed to the Holder or Holders a notice  specifying,  as the case may be,
(a) the date on which a record is to be taken for the purpose of such  dividend,
distribution  or right,  and stating the amount and character of such  dividend,
distribution  or  right,   or  (b)  the  date  on  which  such   reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up is to take place,  and the time,  if any is to be fixed,  as of which
the holders of record of Common Stock (or such stock or  securities  at the time
receivable  upon the  exercise  of this  Warrant)  shall be entitled to exchange
their shares of Common Stock (or such other stock or securities)  for securities
or  other  property  deliverable  upon  such  reorganization,  reclassification,
consolidation,  merger, conveyance, dissolution, liquidation or winding-up. Such
notice shall be mailed at least 20 days prior to the date therein specified.
<PAGE>

                           (c) All such notices, advice and communications shall
be deemed to have been  received  (i) in the case of personal  delivery,  on the
date of such delivery and (ii) in the case of mailing, on the third business day
following the date of such mailing.

11. Amendments.

         (a) Any term of this Warrant may be amended with the written consent of
the Company and the  Holder.  Any  amendment  effected in  accordance  with this
Section 11 shall be binding upon the Holder of this Warrant,  each future holder
of this Warrant, and the Company.

          (b) No waivers of, or exceptions to, any term,  condition or provision
of this  Warrant,  in any one or more  instances,  shall  be  deemed  to be,  or
construed as, a further or continuing waiver of, or exception to, any such term,
condition or provision.

12.  Adjustments.  The  Exercise  Price and the  number  of  shares  purchasable
hereunder are subject to adjustment from time to time as follows:

         (a) Merger,  Sale of Assets,  etc. If at any time while this Warrant or
any  portion  hereof  is  outstanding  and  unexpired,  there  shall  be  (i)  a
reorganization  (other  than  a  combination,   reclassification,   exchange  or
subdivision  of  shares  otherwise  provided  for  herein),  (ii)  a  merger  or
consolidation  of the  Company  with or into  another  corporation  in which the
Company is not the surviving entity or a merger (including a reverse  triangular
merger)  in which the  Company  is the  surviving  entity  but the shares of the
Company's  capital  stock  outstanding  immediately  prior  to  the  merger  are
converted  by virtue of the merger into other  property,  whether in the form of
securities,  cash,  or  otherwise,  or  (iii)  a  sale  or  transfer  of  all or
substantially  all of the Company's  properties  and assets,  then, as a part of
such reorganization,  merger, consolidation,  sale or transfer, lawful provision
shall be made so that the holder of this Warrant shall thereafter be entitled to
receive upon exercise of this Warrant,  during the period  specified  herein and
upon payment of the Exercise Price then in effect, the number of shares of stock
or other securities or property of the successor corporation resulting from such
reorganization,  merger,  consolidation,  sale or transfer  that a holder of the
shares  deliverable  upon  exercise of this Warrant  would have been entitled to
receive in such reorganization,  consolidation, merger, sale or transfer if this
Warrant   had   been   exercised   immediately   before   such   reorganization,
consolidation,  merger,  sale or transfer,  all subject to further adjustment as
provided in this Section 12. The  foregoing  provisions  of this  Section  12(a)
shall similarly apply to successive  reorganizations,  consolidations,  mergers,
sales and transfers and to the stock or securities of any other corporation that
are at the time receivable  upon the exercise of this Warrant.  If the per share
consideration  payable to the holder  hereof for shares in  connection  with any
such transaction is in a form other than cash or marketable securities, then the
value of such  consideration  shall be determined in good faith by the Company's
Board of Directors. In all events, appropriate adjustment (as determined in good
faith by the Company's  Board of Directors)  shall be made in the application of
the  provisions  of this  Warrant with respect to the rights and interest of the
Holder after the  transaction,  to the end that the  provisions  of this Warrant
shall be applicable  after that event, as near as reasonably may be, in relation
to any shares or other  property  deliverable  after that event upon exercise of
this Warrant.

         (b)  Reclassification,  etc.  If the  Company,  at any time  while this
Warrant  or  any  portion  hereof   remains   outstanding   and  unexpired,   by
reclassification of securities or otherwise,  shall change any of the securities
as to  which  purchase  rights  under  this  Warrant  exist  into  the same or a
different number of securities of any other class or classes, this Warrant shall
thereafter  represent the right to acquire such number and kind of securities as
would  have been  issuable  as the  result of such  change  with  respect to the
securities  that  were  subject  to  the  purchase  rights  under  this  Warrant
immediately  prior to such  reclassification  or other  change and the  Exercise
Price  therefor  shall  be  appropriately   adjusted,  all  subject  to  further
adjustment as provided in this Section 12.

         (c) Split,  Subdivision or Combination of Shares. If the Company at any
time while this Warrant or any portion hereof remains outstanding and unexpired,
shall split,  subdivide or combine the  securities as to which  purchase  rights
under this Warrant  exist,  into a different  number of  securities  of the same
class,  the  Exercise  Price  for  such  securities  shall  be   proportionately
decreased,  and the number of shares of such  securities  for which this Warrant
may be exercised shall be proportionately  increased,  in the case of a split or
subdivision,  or the Exercise


<PAGE>

Price for such securities shall be  proportionately  increased and the number of
shares of such  securities  for which this  Warrant  may be  exercised  shall be
proportionately decreased, in the case of a combination.

         (d) Adjustments for Dividends in Stock or Other Securities or Property.
If at any time while this Warrant or any portion hereof remains  outstanding and
unexpired the holders of the securities as to which  purchase  rights under this
Warrant exist at the time shall have  received,  or, on or after the record date
fixed for the determination of eligible stockholders, shall have become entitled
to  receive,  without  payment  therefor,  other  or  additional  stock or other
securities or property (other than cash) of the Company by way of dividend, then
and in each case, this Warrant shall represent the right to acquire, in addition
to the  number  of shares  of the  security  receivable  upon  exercise  of this
Warrant,  and without  payment of any  additional  consideration  therefor,  the
amount of such other or additional  stock or other securities or property (other
than  cash) of the  Company  that  such  holder  would  hold on the date of such
exercise  had it been the  holder  of  record of the  security  receivable  upon
exercise  of this  Warrant  on the date  hereof and had  thereafter,  during the
period from the date hereof to and including the date of such exercise, retained
such shares  and/or all other  additional  stock  available  by it as  aforesaid
during such  period,  giving  effect to all  adjustments  called for during such
period by the provisions of this Section 12.

         (e)  Certificate  as  to  Adjustments.  Upon  the  occurrence  of  each
adjustment  or  readjustment  pursuant  to this  Section  12, the Company at its
expense shall promptly  compute such  adjustment or  readjustment  in accordance
with the terms hereof and furnish to each Holder of this  Warrant a  certificate
setting forth such  adjustment or  readjustment  and showing in detail the facts
upon which such adjustment or readjustment is based. The Company shall, upon the
written  request,  at any  time,  of any  such  Holder,  furnish  or cause to be
furnished to such Holder a like certificate  setting forth: (i) such adjustments
and readjustments;  (ii) the Exercise Price at the time in effect; and (iii) the
number of shares and the  amount,  if any,  of other  property  that at the time
would be received upon the exercise of the Warrant.

         (f)  No  Impairment.  The  Company  shall  not,  by  amendment  of  its
Certificate of Incorporation or through any reorganization,  transfer of assets,
consolidation,  merger,  dissolution,  issue or sale of  securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but shall at all
times in good faith  assist in the carrying  out of all the  provisions  of this
Section  12  and  in the  taking  of all  such  action  as may be  necessary  or
appropriate in order to protect the rights of the Holder of this Warrant against
impairment.

13.               Registration Rights.

         (a) Shelf  Registration.  After the Holder has  exercised in whole this
Warrant and the Other  Warrants  (as defined  below) for an  aggregate  exercise
price  that  equals or  exceeds  $1,000,000  and upon the  vesting of the shares
represented  by this Warrant (as described in Section 3, above)  ("Warrant No. 4
Vesting  Date") , the Company  shall  prepare and file within five (5)  business
days after the Warrant No. 4 Vesting  Date a  registration  statement  under the
Securities  Act to effect the "shelf"  registration  on a delayed or  continuous
basis under the Securities  Act of all Common Stock held by the Holder  pursuant
to the exercise of this Warrant.  (the "Warrant Shares").  The Company shall use
its  reasonable  best  efforts to cause such  registration  statement  to become
effective under the Securities Act after the date of filing.

         (b) Other  Warrants  Definition.  The "Other  Warrants"  shall mean the
certain four warrants  issued to the Holder on the date hereof,  one to purchase
up to 300,000  shares of Common  Stock and three each to  purchase up to 500,000
shares of Common Stock of the Company, in the form attached hereto.

         (c)  Expenses  of  Registration.  The  Company  shall  pay  any and all
registration  expenses incident to the filing of each registration  statement or
otherwise  incident to the performance by the Company of or its compliance with,
its  obligations  under this Section 13. The Holder  shall pay all  underwriting
discounts and commissions  and transfer  taxes, if any,  relating to the sale or
disposition of the Warrant Shares  included in such  registration  statement and
the fees of any counsel retained by the Holder in connection therewith.

         (d)  Registration  Procedures.  In connection with any registration and
the  registration  statement  effecting  such  registration,  the Company hereby
covenants and agrees that it shall:
<PAGE>

                  (i) take such  action as may be  necessary  so that:  (A) such
registration statement and any amendment thereto and any prospectus forming part
thereof  and any  amendment  or  supplement  thereto  (and each  report or other
document  incorporated  therein  by  reference  in each  case)  complies  in all
material  respects with the Securities  Act and the  Securities  Exchange Act of
1934, as amended (the "Exchange  Act") and the respective  rules and regulations
thereunder;  (B) such registration statement and any amendment thereto does not,
when it becomes  effective,  contain an 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 not misleading;  and (C) any prospectus  forming part of
such registration statement, and any amendment or supplement to such prospectus,
does not  include  an untrue  statement  of a  material  fact or omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;

                  (ii) notify the Holder as promptly  as  practicable  in any of
the following  circumstances:  (A) at any time when a prospectus relating to the
Warrant  Shares is required to be  delivered  under the  Securities  Act, of the
happening  of any  event as a result of which the  prospectus  included  in such
registration  statement contains an untrue statement of a material fact or omits
any fact necessary to make the statements  therein not  misleading,  and, at the
request of the Holder,  the Company will  prepare a  supplement  or amendment to
such  prospectus  so that,  as  thereafter  delivered to the  purchasers  of the
Warrant  Shares,  such  prospectus  will not  contain an untrue  statement  of a
material fact or omit to state any fact necessary to make the statements therein
not misleading;  (B) when such registration  statement and any amendment thereto
has been filed with the Securities and Exchange  Commission  (the  "Commission")
and when such registration statement or any post-effective amendment thereto has
become  effective;  (C) of  any  request  by the  Commission  for  amendment  or
supplements to such registration statement or the prospectus included therein or
for  additional  information;  (D) of the issuance by the Commission of any stop
order  suspending  the  effectiveness  of  such  registration  statement  or the
initiation  of any  proceedings  for that  purpose;  and (E) the  receipt by the
Company of any notification  with respect to the suspension of the qualification
of the securities  included  therein for sale  (including the Warrant Shares) in
any jurisdiction or the initiation of any proceeding for such purpose;

                  (iii) use its best  efforts to prevent  the  issuance,  and if
issued to obtain the withdrawal,  of any order  suspending the  effectiveness of
such registration statement at the earliest possible time;

                  (iv) use its best efforts to comply with the  requirements  of
any  applicable  blue sky laws of such  jurisdictions  as the Holder  reasonably
requests  and do any and all  other  acts and  things  which  may be  reasonably
necessary or advisable to enable the Holder to  consummate  the  disposition  in
such  jurisdictions of the Warrant Shares (provided,  however,  that the Company
will  not  be  required  to:  (A)  qualify  generally  to  do  business  in  any
jurisdiction  where it would not  otherwise  be required to qualify but for this
subparagraph,  (B) subject itself to taxation in any such jurisdictions,  or (C)
consent to general service of process in any such jurisdiction);

                  (v) cause the Warrant  Shares  included  in such  registration
statement to be listed on each  securities  exchange or quoted in each quotation
system on which  similar  securities  issued by the  Company  are then listed or
quoted; and

                  (vi)  cooperate  with the  Holder  to  facilitate  the  timely
preparation and delivery of certificates  representing  the Warrant Shares to be
sold pursuant to such registration  statement free of any restrictive legend and
registered in such names as the Holder may request in  connection  with the sale
of the Warrant Shares pursuant to such registration statement.

       The Holder  agrees  that,  upon receipt of any notice from the Company of
the happening of any event of the kind  described in Section  13(d)(ii)  hereof,
the Holder  will  immediately  discontinue  disposition  of the  Warrant  Shares
pursuant to a registration statement until the Holder's receipt of the copies of
the supplemented or amended prospectus contemplated by Section 13(d)(ii) hereof,
and, if so directed by the  Company,  the Holder will deliver to the Company (at
the expense of the Company) all copies in its  possession,  other than permanent
file copies then in the  Holder's  possession,  of the  prospectus  covering the
Warrant  Shares  current at the time of receipt of such  notice.  If the Company
shall give any such notice to suspend  the  disposition  of the  Warrant  Shares
pursuant to a registration statement, the Company shall extend the period during
which the registration  statement shall be maintained effective pursuant to this
Section 13 by the number of days during the period from and  including  the date
of the giving of


<PAGE>

such notice to and including the date when the Holder shall have received copies
of the supplemented or amended prospectus necessary to resume such dispositions.

         (e) Hold-Back  Agreements.  If the Company shall effect an underwritten
offering of its equity  securities,  the Holder shall not effect any public sale
or public distribution of securities of the Company of the same or similar class
or classes of the  securities  included in such  registration  statement  or any
securities  convertible into or exchangeable or exercisable for such securities,
including  a sale  pursuant to Rule 144 or Rule 144A under the  Securities  Act,
during the 15-day  period  prior to,  and during  such  period of time as may be
required  by the  managing  underwriter  of such  offering,  but not to exceed a
90-day period  beginning on, the effective  date of the  registration  statement
(except  pursuant to such offering),  except to the extent  otherwise  agreed in
writing by the managing underwriter of such offering.

         (f)      Black-Out Periods for Registration Statements.

                  (i)  Notwithstanding  anything to the contrary in this Section
13,  the  Company  may,  from time to time and at any time,  subject  to Section
13(f)(ii) herein, delay filing or effectiveness of the registration statement or
direct the Holder to suspend sales of the Warrant Shares registered  thereunder,
as  provided  herein,  in the  event of the  consummation  of,  or  negotiations
relating to, a material corporate  transaction (A) that would require additional
disclosure of material information by the Company in such registration statement
(or such filings),  (B) as to which the Company has a bona fide business purpose
for  preserving  confidentiality  and (C) which  renders the  Company  unable to
comply with Commission requirements, in each case under circumstances that would
make it impractical or inadvisable to cause such registration statement (or such
filings)  to  become   effective  or  to  promptly  amend  or  supplement   such
registration  statement on a post-effective  basis, as applicable (a "Suspension
Event").

                  (ii) In the case of a Suspension  Event,  the Company may give
notice (a  "Suspension  Notice")  to the Holder to suspend  sales of the Warrant
Shares so that the Company may correct or update such registration statement (or
such  filings).  Each such  suspension  shall  continue  only for so long as the
Suspension  Event or its  effect is  continuing,  and in no event  will any such
suspension  exceed  ninety (90) days (or 120 days in any  calendar  year) or all
such   suspensions   pursuant  to  this  Warrant  exceed  an  aggregate  of  one
hundred-eighty  (180) days.  The Holder agrees that it will not effect any sales
of the Warrant Shares pursuant to such registration  statement (or such filings)
at any time after it has received a Suspension Notice from the Company and prior
to the termination of such Suspension Event. If so directed by the Company,  the
Holder will  deliver to the Company all copies of the  prospectus  covering  the
Warrant Shares held by it at the time of receipt of the Suspension  Notice.  The
Holder may recommence  effecting  sales of the Warrant  Shares  pursuant to such
registration statement (or such filings) following further notice to such effect
(an "End of Suspension Notice") from the Company, which End of Suspension Notice
shall, in the case of a Suspension Event, be given by the Company not later than
five  (5) days  after  the  conclusion  of any  Suspension  Event  and  shall be
accompanied by copies of the  supplemented  or amended  prospectus  necessary to
resume such sales.

         (g)      Indemnification and Contribution.

                  (i)   Indemnification  by  the  Company.   The  Company  shall
indemnify,  to the extent permitted by law, the Holder, each person who controls
the Holder (within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act) and its respective officers, directors,  partners, members,
employees,  agents and  representatives,  against all  actions,  suits,  claims,
damages, losses, costs, expenses or proceedings (collectively,  "Losses") caused
by any untrue or alleged  untrue  statement  of material  fact  contained in any
registration  statement,  prospectus or preliminary  prospectus or any amendment
thereof or supplement  thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements  therein,
in light of the circumstances  under which made, not misleading,  except insofar
as the same are caused by or contained in any  information  furnished in writing
to the  Company  by the Holder  expressly  for use  therein  or by the  Holder's
failure to deliver a copy of the  registration  statement or  prospectus  or any
amendments  or  supplements  thereto  after the Company has furnished the Holder
with a  sufficient  number of copies of the same and except  insofar as the same
are caused by or contained  in any  prospectus  if the Holder  failed to send or
deliver a copy of any subsequent prospectus or prospectus supplement which would
have corrected such untrue or alleged untrue  statement of material fact or such
omission or alleged omission of a material fact with or prior to the delivery of
written  confirmation  of the sale by the Holder after the Company has furnished
the Holder with a sufficient number

<PAGE>

of copies of the same. In connection with an underwritten  offering, the Company
will indemnify  such  underwriters,  each person who controls such  underwriters
(within  the  meaning of Section 15 of the  Securities  Act or Section 20 of the
Exchange Act) and their respective  officers,  directors,  partners,  employees,
agents and  representatives to the same extent as provided above with respect to
the indemnification of the Holder.

                  (ii)   Indemnification  by  Holder.  In  connection  with  any
registration  statement  in which the Holder is  participating,  the Holder will
furnish to the Company in writing  such  information  as the Company  reasonably
requests  for  use  in  connection  with  any  such  registration  statement  or
prospectus and, to the extent permitted by law, will indemnify the Company, each
person  who  controls  the  Company  (within  the  meaning  of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and their respective officers,
directors,  partners,  employees,  agents and representatives against any Losses
arising  out of or based  upon any  untrue  or  alleged  untrue  statement  of a
material fact contained in any registration  statement,  prospectus,  or form of
prospectus,  or arising out of or based upon any omission or alleged omission of
a  material  fact  required  to be  stated  therein  or  necessary  to make  the
statements  therein,  in  light  of the  circumstances  under  which  made,  not
misleading,  to the extent, but only to the extent,  that such untrue or alleged
untrue  statement  is  contained  in, or such  omission  or alleged  omission is
required to be  contained  in, any  information  so  furnished in writing by the
Holder  to the  Company  expressly  for use in such  registration  statement  or
prospectus and that such statement or omission was relied upon by the Company in
preparation of such  registration  statement,  prospectus or form of prospectus;
provided,  however,  that the Holder shall not be liable in any such case to the
extent  that the Holder has  furnished  in writing to the  Company  prior to the
filing  of any  such  registration  statement  or  prospectus  or  amendment  or
supplement thereto information expressly for use in such registration  statement
or prospectus or any amendment or supplement thereto which corrected or made not
misleading,  information  previously  furnished to the Company,  and the Company
failed to include such information  therein.  In no event shall the liability of
the Holder hereunder be greater in amount than the dollar amount of the proceeds
(net of payment of all  expenses)  received  by the Holder  upon the sale of the
Warrant Shares giving rise to such  indemnification  obligation.  Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such indemnified party.

                  (iii) Conduct of  Indemnification  Proceedings.  If any Person
shall be entitled to indemnity  pursuant to this Section 13(g), such indemnified
party shall give prompt  written  notice to the party or parties from which such
indemnity is sought of the  commencement of any proceeding with respect to which
such indemnified party seeks  indemnification  or contribution  pursuant hereto;
provided,  however, that the failure to so notify the indemnifying parties shall
not relieve the indemnifying  parties from any obligation or liability except to
the extent that the  indemnifying  parties have been prejudiced by such failure.
The  indemnifying  parties shall have the right,  exercisable  by giving written
notice to an indemnified party promptly after the receipt of written notice from
such  indemnified  party of such  proceeding,  to  assume,  at the  indemnifying
parties' expense,  the defense of any such proceeding,  with counsel  reasonably
satisfactory to such indemnified party;  provided,  however, that an indemnified
party or  parties  (if more  than  one  such  indemnified  party is named in any
proceeding)  shall  have  the  right  to  employ  separate  counsel  in any such
proceeding and to participate in the defense thereof,  but the fees and expenses
of such  counsel  shall be at the expense of such  indemnified  party or parties
unless the parties to such  proceeding  include  both the  indemnified  party or
parties and the indemnifying party or parties,  and there exists, in the opinion
of  the  indemnified  party(ies)'  counsel,  a  conflict  between  one  or  more
indemnifying  parties  and one or more  indemnified  parties,  in which case the
indemnifying  parties  shall,  in  connection  with any one such  proceeding  or
separate  but  substantially   similar  or  related   proceedings  in  the  same
jurisdiction,  arising out of the same general allegations or circumstances,  be
liable for the fees and expenses of not more than one separate firm of attorneys
(together with appropriate local counsel) at any time for such indemnified party
or parties. If an indemnifying party assumes the defense of such proceeding, the
indemnifying  parties will not be subject to any  liability  for any  settlement
made by the indemnified  party without its or their consent (such consent not to
be unreasonably withheld).

                  (iv) Contribution. If the indemnification provided for in this
Section 13(g) is unavailable to an indemnified  party or is insufficient to hold
such indemnified  party harmless for any Losses in respect of which this Section
13(g) would  otherwise  apply by its terms,  then each  applicable  indemnifying
party, in lieu of indemnifying such indemnified  party, shall have an obligation
to  contribute  to the amount  paid or payable  by such  indemnified  party as a
result of such  Losses,  in such  proportion  as is  appropriate  to reflect the
relative fault of the indemnifying  party, on the one hand, and such indemnified
party,  on the  other  hand,  in  connection  with the  actions,  statements  or
omissions that resulted in such Losses as well as any other  relevant  equitable
considerations.  The relative fault of such indemnifying party, on the one hand,
and indemnified  party, on the other hand,  shall be


<PAGE>

determined by reference to, among other things,  whether any action in question,
including any untrue or alleged untrue  statement of a material fact or omission
or alleged  omission to state a material  fact, has been taken by, or relates to
information  supplied by, such indemnifying  party or indemnified party, and the
parties'  relative intent,  knowledge,  access to information and opportunity to
correct or prevent any such action,  statement  or omission.  The amount paid or
payable  by a party as a result of any  Losses  shall be deemed to  include  any
legal or other fees or expenses  incurred by such party in  connection  with any
proceeding,  to the extent  such  party  would  have been  indemnified  for such
expenses  under  Section  13(g)(iii),  if the  indemnification  provided  for in
Section  13(g)(i) or Section  13(g)(ii) was available to such party. The Company
and the Holder  agree that it would not be just and  equitable  if  contribution
pursuant to this Section  13(g)(iv) were determined by pro rata allocation or by
any other  method of  allocation  that does not take  account  of the  equitable
considerations   referred  to  in  the  second   sentence  of  this   paragraph.
Notwithstanding  the  provisions of this Section  13(g)(iv),  the Holder,  as an
indemnifying  party, shall not be required to contribute any amount in excess of
the amount by which the net proceeds  received by the Holder  exceeds the amount
of any damages that the Holder has  otherwise  been required to pay by reason of
such untrue or alleged  untrue  statement  or omission or alleged  omission.  No
person  adjudged guilty of fraudulent  misrepresentation  (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution  from any
person who was not guilty of such fraudulent misrepresentation.

         (h)      Transfers.

                  (i) If the Holder transfers Warrant Shares  constituting 1% or
more of the Common Stock then  outstanding,  the Holder may also transfer to its
transferee  the right to have its  Warrant  Shares  included  in a  registration
pursuant to Section  12(a)  hereof;  provided,  that the transfer of such rights
shall  include all rights and  obligations  set forth under this Section 12, and
provided, further, that no such transfer shall be deemed to obligate the Company
to issue notices  hereunder to any additional  person,  except to the extent the
Company shall have received actual notice of such transfer to such person. At no
time shall there be more than one "Holder" for purposes of Section 12 hereof.

                  (ii) Any assignment or transfer of the registration rights set
forth herein shall be subject to the  assumption by the  transferee of the terms
and conditions set forth in Section 13 hereof applicable to the transferor,  and
any proposed  transferee  shall execute such documents and instruments  that the
Company may reasonably  require to evidence that such transferee is bound by the
terms and conditions set forth in Section 13 hereof.

14.               General.

         (a)  Governing  Law.  This Warrant  shall be governed by and  construed
according  to the laws of the State of  Delaware  (excluding  the  choice of law
rules thereof).

         (b) Delays or  Omissions.  No delay or omission to exercise  any right,
power,  or remedy accruing to either party upon any breach or default under this
Warrant,  shall be deemed a waiver of any other breach or default theretofore or
thereafter occurring.  Any waiver,  permit,  consent, or approval of any kind or
character  on the part of either  party of any  breach  or  default  under  this
Warrant,  or any  waiver  on the  part of  either  party  of any  provisions  or
conditions  of this Warrant,  must be in writing and shall be effective  only to
the extent  specifically set forth in such writing.  All remedies,  either under
this Warrant or by law or otherwise afforded to either of the parties,  shall be
cumulative and not alternative.

         (c) References. Unless the context otherwise requires, any reference to
a "Section" refers to a section of this Warrant.

         (d) Captions. Captions of sections have been added only for convenience
and shall not be deemed to be a part of this Warrant.


<PAGE>

                  IN WITNESS  WHEREOF,  RateXchange  Corporation has caused this
Warrant to be executed by its officer thereunto duly authorized.

Dated: September 17, 2000


                                   RATEXCHANGE CORPORATION

                                   By:        /s/ Donald H. Sledge
                                         ----------------------------------
                                         Name:  Donald H. Sledge
                                         Title: Chief Executive Officer


<PAGE>


ANNEX I

                               NOTICE OF EXERCISE

To: RATEXCHANGE CORPORATION

         (1) The undersigned  hereby irrevocably elects to purchase _____ shares
of  Common  Stock  of  RATEXCHANGE  CORPORATION,  pursuant  to the  terms of the
attached  Warrant,  and tenders  herewith payment of the purchase price for such
shares in full.

         (2) In exercising  this Warrant,  the  undersigned  hereby confirms and
acknowledges  that the shares of Common Stock are being acquired  solely for the
account of the  undersigned  and not as a nominee for any other  party,  and for
investment,  and that the undersigned shall not offer, sell or otherwise dispose
of any such shares of Common  Stock  except  under  circumstances  that will not
result in a violation of the  Securities  Act of 1933, as amended,  or any state
securities laws.

         (3) Please issue a certificate or certificates representing said shares
of Common Stock, and pay any cash for any fractional share to:

         Name                        Address                    No. Shares
         ----                        -------                    ----------







         (4)  Please  issue a new  Warrant  for the  unexercised  portion of the
attached Warrant in the name of the undersigned  and/or,  if the undersigned has
completed an Assignment  Form in the form of Annex II to this  Warrant,  in such
other names and amounts as is specified in such Assignment Form.

Dated: _____________________                Holder: ____________________________


                                            By: ________________________________
                                            Name:
                                            Title:





<PAGE>


                                                                        ANNEX II

                                 ASSIGNMENT FORM

         FOR VALUE RECEIVED,  the undersigned  registered  owner of this Warrant
hereby  sells,  assigns and transfers  unto the Assignee  named below all of the
rights of the  undersigned  under this  Warrant,  with  respect to the number of
shares of Common Stock set forth below:

Name of Assignee                Address                            No. of Shares
----------------                -------                            -------------







and does hereby irrevocably constitute and appoint  ____________________________
Attorney  to  make  such  transfer  on  the  books  of  RATEXCHANGE  CORPORATION
maintained for such purpose, with full power of substitution in the premises.

         The  undersigned  also  represents  that,  by  assignment  hereof,  the
Assignee  acknowledges  that this  Warrant and the shares of Common  Stock to be
issued upon  exercise  hereof are being  acquired  for  investment  and that the
Assignee  shall not offer,  sell or  otherwise  dispose  of this  Warrant or any
shares of stock to be issued upon  exercise  hereof  except under  circumstances
which will not result in a violation of the  Securities Act of 1933, as amended,
or any state securities laws.  Further,  the Assignee has acknowledged that upon
exercise of this  Warrant,  the  Assignee  shall,  if  requested by the Company,
confirm in writing,  in a form  satisfactory to the Company,  that the shares of
stock so purchased are being  acquired for investment and not with a view toward
distribution or resale.

Dated: _____________________                Holder: ____________________________


                                            By: ________________________________
                                            Name:
                                            Title:

<PAGE>



                                     WARRANT

THIS WARRANT AND THE SHARES OF COMMON STOCK REPRESENTED BY THIS WARRANT HAVE NOT
BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE  "SECURITIES
ACT"),  OR UNDER THE  SECURITIES  LAW OF ANY STATE OR OTHER  JURISDICTION.  SUCH
WARRANTS AND SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR
IN CONNECTION WITH, THE DISTRIBUTION  THEREOF.  SUCH WARRANTS AND SHARES MAY NOT
BE OFFERED,  SOLD, PLEDGED,  OR TRANSFERRED UNLESS (I) A REGISTRATION  STATEMENT
UNDER THE ACT IS IN EFFECT AS TO THESE SECURITIES AND SUCH OFFER,  SALE, PLEDGE,
OR TRANSFER IS IN  COMPLIANCE  WITH  APPLICABLE  SECURITIES  LAW OF ANY STATE OR
OTHER  JURISDICTION  OR (II) THERE IS AN  OPINION OF COUNSEL OR OTHER  EVIDENCE,
SATISFACTORY TO THE COMPANY,  THAT AN EXEMPTION  THEREFROM IS AVAILABLE AND THAT
SUCH  OFFER,  SALE,  PLEDGE,  OR  TRANSFER  IS  IN  COMPLIANCE  WITH  APPLICABLE
SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION.


<PAGE>




                                               Warrant to Purchase up to 500,000
                                                          Shares of Common Stock

                        WARRANT TO PURCHASE COMMON STOCK

                                       of

                             RATEXCHANGE CORPORATION

                          Void after December 17, 2005
      (subject to earlier termination in accordance with the terms hereof)

         This certifies that, for value received, Amerex Bandwidth, Ltd., or its
registered assigns (the "Holder"),  is entitled,  subject to the terms set forth
below, to purchase from  RATEXCHANGE  CORPORATION,  a Delaware  corporation (the
"Company"),  up to 500,000  shares of the voting common stock,  $.0001 par value
per share ("Common  Stock"),  of the Company,  as constituted on the date hereof
(the "Warrant  Issue Date"),  upon  surrender of this Warrant,  at the principal
office of the Company  referred to below,  with the notice of exercise  attached
hereto duly executed,  and simultaneous  payment therefor in lawful money of the
United States or otherwise as hereinafter provided, at the Exercise Price as set
forth in Section 2 below. The shares of Common Stock  exercisable  hereunder are
subject to vesting as provided below.

1. Term of Warrant.  Subject to the terms and  conditions  set forth  herein and
except as provided  below,  this Warrant  shall be  exercisable,  in whole or in
part,  for shares of Common Stock which have vested (as provided  below)  during
the term  commencing on the Warrant Issue Date and ending at 5:00 p.m.,  Eastern
Standard Time, on December 17, 2005, and shall be void thereafter.

2.  Exercise  Price.  The exercise  price (the  "Exercise  Price") at which this
Warrant may be exercised shall be, per share, 115% of the average of the closing
trading  price  quoted on The  American  Stock  Exchange LLC as published in the
Eastern  Edition of The Wall Street  Journal for the twenty  (20)  trading  days
prior to and including August 15, 2000.

3. Vesting. All shares of Common Stock exercisable hereunder shall vest upon the
earlier of (i)  September  17, 2005,  or (ii) a minimum of  $3,000,000  of total
gross  commodity value of transactions is executed by ABI on the ETS ; provided,
however,  that no single Trade shall represent more than $1,000,000 of the gross
commodity value.

4.                Exercise of Warrant.

         (a) The purchase rights  represented by this Warrant are exercisable by
the Holder in whole or in part at any time  following  vesting of such shares as
described  in Section 3 above,  during the term hereof as described in Section 1
above,  by the surrender of this Warrant and the Notice of Exercise  attached as
Annex I hereto duly  completed  and  executed  on behalf of the  Holder,  at the
principal  office of the Company (or such other  office or agency of the Company
as it may  designate  by notice in writing  to the Holder at the  address of the
Holder appearing on the books of the Company),  upon payment (i) in cash payable
to the Company,  (ii) by wire transfer of immediately  available funds, (iii) by
cancellation by the Holder of indebtedness of the Company to the Holder, or (iv)
by some  combination of (i), (ii) and (iii), in each case, of the purchase price
of the shares to be purchased.

         (b) This Warrant shall be deemed to have been exercised  immediately as
of the close of and time of its  surrender for exercise as provided  above,  and
the person  entitled to receive the shares of Common  Stock  issuable  upon such
exercise  shall be  treated  for all  purposes  as the  holder of record of such
shares as of such date and time.  As  promptly as  practicable  on or after such
date and in any  event  within  ten (10) days  thereafter,  the  Company  at its
expense shall issue and deliver a certificate or certificates  for the number of
shares issuable upon such exercise to the person or persons  entitled to receive
the same.  In the event that this Warrant is  exercised in part,  the Company at
its expense  shall  execute and deliver a new Warrant of like tenor  exercisable
for the number of shares for which this Warrant may then be exercised.
<PAGE>

5. No Fractional  Shares or Scrip.  No fractional  shares or scrip  representing
fractional shares shall be issued upon the exercise of this Warrant.  In lieu of
any  fractional  share to which the Holder  would  otherwise  be  entitled,  the
Company  shall make a cash payment equal to the fair market value of a share (as
determined according to Section 4(c) above) multiplied by such fraction.

6. Replacement of Warrant. On receipt of evidence reasonably satisfactory to the
Company of the loss,  theft,  destruction  or mutilation of this Warrant and, in
the case of loss,  theft or destruction,  on delivery of an indemnity  agreement
reasonably  satisfactory in form and substance to the Company or, in the case of
mutilation,  on surrender and  cancellation of this Warrant,  the Company at its
expense  shall execute and deliver,  in lieu of this  Warrant,  a new warrant of
like tenor and amount.

7. Rights of Stockholders.  Subject to Sections 10 and 12 of this Warrant, until
this Warrant shall have been exercised as provided herein,  the Holder, as such,
shall not be  entitled to vote or receive  dividends  or be deemed the holder of
Common  Stock or any other  securities  of the  Company  that may at any time be
issuable on the exercise  hereof for any purpose,  nor shall anything  contained
herein be construed to confer upon the Holder,  as such,  any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof,  or to give or
withhold  consent to any corporate  action  (whether upon any  recapitalization,
issuance of stock,  reclassification  of stock,  change of par value,  change of
stock to no par value,  consolidation,  merger,  conveyance, or otherwise) or to
receive notice of meetings,  or to receive  dividends or subscription  rights or
otherwise.

8.                Transfer of Warrant.

         (a)  Warrant  Register.  The  Company  shall  maintain a register  (the
"Warrant Register") containing the names and addresses of the Holder or Holders.
Any Holder of this  Warrant or any  portion  thereof  may change its  address as
shown on the Warrant  Register by written notice to the Company  requesting such
change. Any notice or written communication required or permitted to be given to
the  Holder  may be  delivered  or given by mail to such  Holder as shown on the
Warrant  Register and at the address shown on the Warrant  Register.  Until this
Warrant is transferred on the Warrant  Register of the Company,  the Company may
treat the Holder as shown on the Warrant  Register as the absolute owner of this
Warrant for all purposes, notwithstanding any notice to the contrary.

         (b) Warrant  Agent.  The Company may, by written  notice to the Holder,
appoint an agent for the purpose of maintaining the Warrant Register referred to
in Section  8(a)  above,  issuing  the  Common  Stock or other  securities  then
issuable upon the exercise of this Warrant,  exchanging this Warrant,  replacing
this Warrant or any or all of the foregoing.  Thereafter, any such registration,
issuance,  exchange,  or  replacement,  as the case may be, shall be made at the
office of such agent.

         (c) Transferability and  Nonnegotiability of Warrant.  This Warrant may
not be transferred or assigned in whole or in part without  compliance  with all
applicable  federal  and  state  securities  laws  by  the  transferor  and  the
transferee  (including  the delivery of  investment  representation  letters and
legal opinions reasonably  satisfactory to the Company, if such are requested by
the Company) and any stockholders  agreement to which the transferor is a party.
Subject to the  provisions of this Warrant with respect to  compliance  with the
Securities  Act, title to this Warrant may be transferred by endorsement (by the
Holder  executing the Assignment  Form attached as Annex II hereto) and delivery
in the same manner as a negotiable  instrument  transferable  by endorsement and
delivery.

         (d) Exchange of Warrant  Upon a Transfer.  On surrender of this Warrant
for  exchange,  properly  endorsed  on the  Assignment  Form and  subject to the
provisions of this Warrant with respect to compliance  with the Act and with the
limitations  on  assignments  and transfers and contained in this Section 8, the
Company  at its  expense  shall  issue to or on the  order  of the  Holder a new
warrant or warrants  of like  tenor,  in the name of the Holder or as the Holder
(on payment by the Holder of any applicable  transfer taxes) may direct, for the
number of shares issuable upon exercise hereof.

         (e) Compliance  with  Securities  Laws. The Holder of this Warrant,  by
acceptance hereof, acknowledges that this Warrant and the shares of Common Stock
to be issued upon exercise hereof are being


<PAGE>

acquired  solely for the Holder's own account and not as a nominee for any other
party,  and for  investment,  and that  the  Holder  shall  not  offer,  sell or
otherwise  dispose of this  Warrant  or any shares of Common  Stock to be issued
upon  exercise  hereof  except  under  circumstances  that will not  result in a
violation of the Act or any state securities laws.  Further,  the Holder of this
Warrant,  by acceptance  hereof,  represents  that it is an accredited  investor
within the meaning of  Regulation D under the  Securities  Act. Upon exercise of
this Warrant, the Holder shall, if requested by the Company, confirm in writing,
in a form  satisfactory  to the  Company,  that the  shares of  Common  Stock so
purchased  are being  acquired  solely for the Holder's own account and not as a
nominee  for  any  other  party,  for  investment,  and not  with a view  toward
distribution or resale.

9. Reservation of Stock. The Company covenants that throughout the period during
which this Warrant is exercisable, the Company shall reserve from its authorized
and  unissued  Common  Stock a  sufficient  number of shares to provide  for the
issuance of Common Stock upon the  exercise of this  Warrant  and,  from time to
time,  shall take all steps necessary to amend its Certificate of  Incorporation
to provide sufficient  reserves of shares of Common Stock issuable upon exercise
of this  Warrant.  The  Company  further  covenants  that all shares that may be
issued upon the  exercise of rights  represented  by this Warrant and payment of
the  Exercise  Price,  all as set forth  herein,  will be free  from all  taxes,
encumbrances,  liens and  charges in respect of the issue  thereof  (other  than
taxes in  respect  of any  transfer  occurring  contemporaneously  or  otherwise
specified  herein).  The Company  agrees that its issuance of this Warrant shall
constitute  full  authority  to its  officers  who are charged  with the duty of
executing stock certificates to execute and issue the necessary certificates for
shares of Common Stock upon the exercise of this Warrant.

10.               Notices.

         (a)  Whenever  the  Exercise  Price or  number  of  shares  purchasable
hereunder  shall be adjusted  pursuant to Section 12 hereof,  the Company  shall
issue a certificate  signed by its Chief  Financial  Officer  setting forth,  in
reasonable  detail,  the  event  requiring  the  adjustment,  the  amount of the
adjustment, the method by which such adjustment was calculated, and the Exercise
Price and number of shares  purchasable  hereunder  after giving  effect to such
adjustment,  and  shall  cause  a copy  of  such  certificate  to be  mailed  by
first-class mail, postage prepaid,  return receipt  requested,  to the Holder of
this Warrant.

         (b)      In the event:

                  (i) that the Company shall take a record of the holders of its
Common  Stock (or other  stock or  securities  at the time  receivable  upon the
exercise  of this  Warrant)  for the  purpose of  entitling  them to receive any
dividend or other  distribution,  or any right to subscribe  for or purchase any
shares of stock of any class or any other  securities,  or to receive  any other
right; or

                  (ii)  of  any  capital  reorganization  of  the  Company,  any
reclassification  of the capital  stock of the  Company,  any  consolidation  or
merger of the Company with or into another corporation, or any conveyance of all
or substantially all of the assets of the Company to another corporation; or

                  (iii) of any voluntary dissolution,  liquidation or winding-up
of the Company;

                  then,  and in each such case,  the Company shall mail or cause
to be mailed to the Holder or Holders a notice  specifying,  as the case may be,
(a) the date on which a record is to be taken for the purpose of such  dividend,
distribution  or right,  and stating the amount and character of such  dividend,
distribution  or  right,   or  (b)  the  date  on  which  such   reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up is to take place,  and the time,  if any is to be fixed,  as of which
the holders of record of Common Stock (or such stock or  securities  at the time
receivable  upon the  exercise  of this  Warrant)  shall be entitled to exchange
their shares of Common Stock (or such other stock or securities)  for securities
or  other  property  deliverable  upon  such  reorganization,  reclassification,
consolidation,  merger, conveyance, dissolution, liquidation or winding-up. Such
notice shall be mailed at least 20 days prior to the date therein specified.

<PAGE>

                           (c) All such notices, advice and communications shall
be deemed to have been  received  (i) in the case of personal  delivery,  on the
date of such delivery and (ii) in the case of mailing, on the third business day
following the date of such mailing.

11.               Amendments.

         (a) Any term of this Warrant may be amended with the written consent of
the Company and the  Holder.  Any  amendment  effected in  accordance  with this
Section 11 shall be binding upon the Holder of this Warrant,  each future holder
of this Warrant, and the Company.

          (b) No waivers of, or exceptions to, any term,  condition or provision
of this  Warrant,  in any one or more  instances,  shall  be  deemed  to be,  or
construed as, a further or continuing waiver of, or exception to, any such term,
condition or provision.

12.  Adjustments.  The  Exercise  Price and the  number  of  shares  purchasable
hereunder are subject to adjustment from time to time as follows:

         (a) Merger,  Sale of Assets,  etc. If at any time while this Warrant or
any  portion  hereof  is  outstanding  and  unexpired,  there  shall  be  (i)  a
reorganization  (other  than  a  combination,   reclassification,   exchange  or
subdivision  of  shares  otherwise  provided  for  herein),  (ii)  a  merger  or
consolidation  of the  Company  with or into  another  corporation  in which the
Company is not the surviving entity or a merger (including a reverse  triangular
merger)  in which the  Company  is the  surviving  entity  but the shares of the
Company's  capital  stock  outstanding  immediately  prior  to  the  merger  are
converted  by virtue of the merger into other  property,  whether in the form of
securities,  cash,  or  otherwise,  or  (iii)  a  sale  or  transfer  of  all or
substantially  all of the Company's  properties  and assets,  then, as a part of
such reorganization,  merger, consolidation,  sale or transfer, lawful provision
shall be made so that the holder of this Warrant shall thereafter be entitled to
receive upon exercise of this Warrant,  during the period  specified  herein and
upon payment of the Exercise Price then in effect, the number of shares of stock
or other securities or property of the successor corporation resulting from such
reorganization,  merger,  consolidation,  sale or transfer  that a holder of the
shares  deliverable  upon  exercise of this Warrant  would have been entitled to
receive in such reorganization,  consolidation, merger, sale or transfer if this
Warrant   had   been   exercised   immediately   before   such   reorganization,
consolidation,  merger,  sale or transfer,  all subject to further adjustment as
provided in this Section 12. The  foregoing  provisions  of this  Section  12(a)
shall similarly apply to successive  reorganizations,  consolidations,  mergers,
sales and transfers and to the stock or securities of any other corporation that
are at the time receivable  upon the exercise of this Warrant.  If the per share
consideration  payable to the holder  hereof for shares in  connection  with any
such transaction is in a form other than cash or marketable securities, then the
value of such  consideration  shall be determined in good faith by the Company's
Board of Directors. In all events, appropriate adjustment (as determined in good
faith by the Company's  Board of Directors)  shall be made in the application of
the  provisions  of this  Warrant with respect to the rights and interest of the
Holder after the  transaction,  to the end that the  provisions  of this Warrant
shall be applicable  after that event, as near as reasonably may be, in relation
to any shares or other  property  deliverable  after that event upon exercise of
this Warrant.

         (b)  Reclassification,  etc.  If the  Company,  at any time  while this
Warrant  or  any  portion  hereof   remains   outstanding   and  unexpired,   by
reclassification of securities or otherwise,  shall change any of the securities
as to  which  purchase  rights  under  this  Warrant  exist  into  the same or a
different number of securities of any other class or classes, this Warrant shall
thereafter  represent the right to acquire such number and kind of securities as
would  have been  issuable  as the  result of such  change  with  respect to the
securities  that  were  subject  to  the  purchase  rights  under  this  Warrant
immediately  prior to such  reclassification  or other  change and the  Exercise
Price  therefor  shall  be  appropriately   adjusted,  all  subject  to  further
adjustment as provided in this Section 12.

         (c) Split,  Subdivision or Combination of Shares. If the Company at any
time while this Warrant or any portion hereof remains outstanding and unexpired,
shall split,  subdivide or combine the  securities as to which  purchase  rights
under this Warrant  exist,  into a different  number of  securities  of the same
class,  the  Exercise  Price  for  such  securities  shall  be   proportionately
decreased,  and the number of shares of such  securities  for which this Warrant
may be exercised shall be proportionately  increased,  in the case of a split or
subdivision,  or the Exercise


<PAGE>

Price for such securities shall be  proportionately  increased and the number of
shares of such  securities  for which this  Warrant  may be  exercised  shall be
proportionately decreased, in the case of a combination.

         (d) Adjustments for Dividends in Stock or Other Securities or Property.
If at any time while this Warrant or any portion hereof remains  outstanding and
unexpired the holders of the securities as to which  purchase  rights under this
Warrant exist at the time shall have  received,  or, on or after the record date
fixed for the determination of eligible stockholders, shall have become entitled
to  receive,  without  payment  therefor,  other  or  additional  stock or other
securities or property (other than cash) of the Company by way of dividend, then
and in each case, this Warrant shall represent the right to acquire, in addition
to the  number  of shares  of the  security  receivable  upon  exercise  of this
Warrant,  and without  payment of any  additional  consideration  therefor,  the
amount of such other or additional  stock or other securities or property (other
than  cash) of the  Company  that  such  holder  would  hold on the date of such
exercise  had it been the  holder  of  record of the  security  receivable  upon
exercise  of this  Warrant  on the date  hereof and had  thereafter,  during the
period from the date hereof to and including the date of such exercise, retained
such shares  and/or all other  additional  stock  available  by it as  aforesaid
during such  period,  giving  effect to all  adjustments  called for during such
period by the provisions of this Section 12.

         (e)  Certificate  as  to  Adjustments.  Upon  the  occurrence  of  each
adjustment  or  readjustment  pursuant  to this  Section  12, the Company at its
expense shall promptly  compute such  adjustment or  readjustment  in accordance
with the terms hereof and furnish to each Holder of this  Warrant a  certificate
setting forth such  adjustment or  readjustment  and showing in detail the facts
upon which such adjustment or readjustment is based. The Company shall, upon the
written  request,  at any  time,  of any  such  Holder,  furnish  or cause to be
furnished to such Holder a like certificate  setting forth: (i) such adjustments
and readjustments;  (ii) the Exercise Price at the time in effect; and (iii) the
number of shares and the  amount,  if any,  of other  property  that at the time
would be received upon the exercise of the Warrant.

         (f)  No  Impairment.  The  Company  shall  not,  by  amendment  of  its
Certificate of Incorporation or through any reorganization,  transfer of assets,
consolidation,  merger,  dissolution,  issue or sale of  securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but shall at all
times in good faith  assist in the carrying  out of all the  provisions  of this
Section  12  and  in the  taking  of all  such  action  as may be  necessary  or
appropriate in order to protect the rights of the Holder of this Warrant against
impairment.

13.               Registration Rights.

         (a) Shelf  Registration.  After the Holder has  exercised in whole this
Warrant and the Other  Warrants  (as defined  below) for an  aggregate  exercise
price  that  equals or  exceeds  $1,000,000  and upon the  vesting of the shares
represented  by this Warrant (as described in Section 3, above)  ("Warrant No. 3
Vesting  Date") , the Company  shall  prepare and file within five (5)  business
days after the Warrant No. 3 Vesting  Date a  registration  statement  under the
Securities  Act to effect the "shelf"  registration  on a delayed or  continuous
basis under the Securities  Act of all Common Stock held by the Holder  pursuant
to the exercise of this Warrant.  (the "Warrant Shares").  The Company shall use
its  reasonable  best  efforts to cause such  registration  statement  to become
effective under the Securities Act after the date of filing.

         (b) Other  Warrants  Definition.  The "Other  Warrants"  shall mean the
certain four warrants  issued to the Holder on the date hereof,  one to purchase
up to 300,000  shares of Common  Stock and three each to  purchase up to 500,000
shares of Common Stock of the Company, in the form attached hereto.

         (c)  Expenses  of  Registration.  The  Company  shall  pay  any and all
registration  expenses incident to the filing of each registration  statement or
otherwise  incident to the performance by the Company of or its compliance with,
its  obligations  under this Section 13. The Holder  shall pay all  underwriting
discounts and commissions  and transfer  taxes, if any,  relating to the sale or
disposition of the Warrant Shares  included in such  registration  statement and
the fees of any counsel retained by the Holder in connection therewith.

         (d)  Registration  Procedures.  In connection with any registration and
the  registration  statement  effecting  such  registration,  the Company hereby
covenants and agrees that it shall:

<PAGE>

                  (i) take such  action as may be  necessary  so that:  (A) such
registration statement and any amendment thereto and any prospectus forming part
thereof  and any  amendment  or  supplement  thereto  (and each  report or other
document  incorporated  therein  by  reference  in each  case)  complies  in all
material  respects with the Securities  Act and the  Securities  Exchange Act of
1934, as amended (the "Exchange  Act") and the respective  rules and regulations
thereunder;  (B) such registration statement and any amendment thereto does not,
when it becomes  effective,  contain an 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 not misleading;  and (C) any prospectus  forming part of
such registration statement, and any amendment or supplement to such prospectus,
does not  include  an untrue  statement  of a  material  fact or omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;

                  (ii) notify the Holder as promptly  as  practicable  in any of
the following  circumstances:  (A) at any time when a prospectus relating to the
Warrant  Shares is required to be  delivered  under the  Securities  Act, of the
happening  of any  event as a result of which the  prospectus  included  in such
registration  statement contains an untrue statement of a material fact or omits
any fact necessary to make the statements  therein not  misleading,  and, at the
request of the Holder,  the Company will  prepare a  supplement  or amendment to
such  prospectus  so that,  as  thereafter  delivered to the  purchasers  of the
Warrant  Shares,  such  prospectus  will not  contain an untrue  statement  of a
material fact or omit to state any fact necessary to make the statements therein
not misleading;  (B) when such registration  statement and any amendment thereto
has been filed with the Securities and Exchange  Commission  (the  "Commission")
and when such registration statement or any post-effective amendment thereto has
become  effective;  (C) of  any  request  by the  Commission  for  amendment  or
supplements to such registration statement or the prospectus included therein or
for  additional  information;  (D) of the issuance by the Commission of any stop
order  suspending  the  effectiveness  of  such  registration  statement  or the
initiation  of any  proceedings  for that  purpose;  and (E) the  receipt by the
Company of any notification  with respect to the suspension of the qualification
of the securities  included  therein for sale  (including the Warrant Shares) in
any jurisdiction or the initiation of any proceeding for such purpose;

                  (iii) use its best  efforts to prevent  the  issuance,  and if
issued to obtain the withdrawal,  of any order  suspending the  effectiveness of
such registration statement at the earliest possible time;

                  (iv) use its best efforts to comply with the  requirements  of
any  applicable  blue sky laws of such  jurisdictions  as the Holder  reasonably
requests  and do any and all  other  acts and  things  which  may be  reasonably
necessary or advisable to enable the Holder to  consummate  the  disposition  in
such  jurisdictions of the Warrant Shares (provided,  however,  that the Company
will  not  be  required  to:  (A)  qualify  generally  to  do  business  in  any
jurisdiction  where it would not  otherwise  be required to qualify but for this
subparagraph,  (B) subject itself to taxation in any such jurisdictions,  or (C)
consent to general service of process in any such jurisdiction);

                  (v) cause the Warrant  Shares  included  in such  registration
statement to be listed on each  securities  exchange or quoted in each quotation
system on which  similar  securities  issued by the  Company  are then listed or
quoted; and

                  (vi)  cooperate  with the  Holder  to  facilitate  the  timely
preparation and delivery of certificates  representing  the Warrant Shares to be
sold pursuant to such registration  statement free of any restrictive legend and
registered in such names as the Holder may request in  connection  with the sale
of the Warrant Shares pursuant to such registration statement.

       The Holder  agrees  that,  upon receipt of any notice from the Company of
the happening of any event of the kind  described in Section  13(d)(ii)  hereof,
the Holder  will  immediately  discontinue  disposition  of the  Warrant  Shares
pursuant to a registration statement until the Holder's receipt of the copies of
the supplemented or amended prospectus contemplated by Section 13(d)(ii) hereof,
and, if so directed by the  Company,  the Holder will deliver to the Company (at
the expense of the Company) all copies in its  possession,  other than permanent
file copies then in the  Holder's  possession,  of the  prospectus  covering the
Warrant  Shares  current at the time of receipt of such  notice.  If the Company
shall give any such notice to suspend  the  disposition  of the  Warrant  Shares
pursuant to a registration statement, the Company shall extend the period during
which the registration  statement shall be maintained effective pursuant to this
Section 13 by the number of days during the period from and  including  the date
of the giving of


<PAGE>

such notice to and including the date when the Holder shall have received copies
of the supplemented or amended prospectus necessary to resume such dispositions.

         (e) Hold-Back  Agreements.  If the Company shall effect an underwritten
offering of its equity  securities,  the Holder shall not effect any public sale
or public distribution of securities of the Company of the same or similar class
or classes of the  securities  included in such  registration  statement  or any
securities  convertible into or exchangeable or exercisable for such securities,
including  a sale  pursuant to Rule 144 or Rule 144A under the  Securities  Act,
during the 15-day  period  prior to,  and during  such  period of time as may be
required  by the  managing  underwriter  of such  offering,  but not to exceed a
90-day period  beginning on, the effective  date of the  registration  statement
(except  pursuant to such offering),  except to the extent  otherwise  agreed in
writing by the managing underwriter of such offering.

         (f)      Black-Out Periods for Registration Statements.

                  (i)  Notwithstanding  anything to the contrary in this Section
13,  the  Company  may,  from time to time and at any time,  subject  to Section
13(f)(ii) herein, delay filing or effectiveness of the registration statement or
direct the Holder to suspend sales of the Warrant Shares registered  thereunder,
as  provided  herein,  in the  event of the  consummation  of,  or  negotiations
relating to, a material corporate  transaction (A) that would require additional
disclosure of material information by the Company in such registration statement
(or such filings),  (B) as to which the Company has a bona fide business purpose
for  preserving  confidentiality  and (C) which  renders the  Company  unable to
comply with Commission requirements, in each case under circumstances that would
make it impractical or inadvisable to cause such registration statement (or such
filings)  to  become   effective  or  to  promptly  amend  or  supplement   such
registration  statement on a post-effective  basis, as applicable (a "Suspension
Event").

                  (ii) In the case of a Suspension  Event,  the Company may give
notice (a  "Suspension  Notice")  to the Holder to suspend  sales of the Warrant
Shares so that the Company may correct or update such registration statement (or
such  filings).  Each such  suspension  shall  continue  only for so long as the
Suspension  Event or its  effect is  continuing,  and in no event  will any such
suspension  exceed  ninety (90) days (or 120 days in any  calendar  year) or all
such   suspensions   pursuant  to  this  Warrant  exceed  an  aggregate  of  one
hundred-eighty  (180) days.  The Holder agrees that it will not effect any sales
of the Warrant Shares pursuant to such registration  statement (or such filings)
at any time after it has received a Suspension Notice from the Company and prior
to the termination of such Suspension Event. If so directed by the Company,  the
Holder will  deliver to the Company all copies of the  prospectus  covering  the
Warrant Shares held by it at the time of receipt of the Suspension  Notice.  The
Holder may recommence  effecting  sales of the Warrant  Shares  pursuant to such
registration statement (or such filings) following further notice to such effect
(an "End of Suspension Notice") from the Company, which End of Suspension Notice
shall, in the case of a Suspension Event, be given by the Company not later than
five  (5) days  after  the  conclusion  of any  Suspension  Event  and  shall be
accompanied by copies of the  supplemented  or amended  prospectus  necessary to
resume such sales.

         (g)      Indemnification and Contribution.

                  (i)   Indemnification  by  the  Company.   The  Company  shall
indemnify,  to the extent permitted by law, the Holder, each person who controls
the Holder (within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act) and its respective officers, directors,  partners, members,
employees,  agents and  representatives,  against all  actions,  suits,  claims,
damages, losses, costs, expenses or proceedings (collectively,  "Losses") caused
by any untrue or alleged  untrue  statement  of material  fact  contained in any
registration  statement,  prospectus or preliminary  prospectus or any amendment
thereof or supplement  thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements  therein,
in light of the circumstances  under which made, not misleading,  except insofar
as the same are caused by or contained in any  information  furnished in writing
to the  Company  by the Holder  expressly  for use  therein  or by the  Holder's
failure to deliver a copy of the  registration  statement or  prospectus  or any
amendments  or  supplements  thereto  after the Company has furnished the Holder
with a  sufficient  number of copies of the same and except  insofar as the same
are caused by or contained  in any  prospectus  if the Holder  failed to send or
deliver a copy of any subsequent prospectus or prospectus supplement which would
have corrected such untrue or alleged untrue  statement of material fact or such
omission or alleged omission of a material fact with or prior to the delivery of
written  confirmation  of the sale by the Holder after the Company has furnished
the Holder with a sufficient number

<PAGE>

of copies of the same. In connection with an underwritten  offering, the Company
will indemnify  such  underwriters,  each person who controls such  underwriters
(within  the  meaning of Section 15 of the  Securities  Act or Section 20 of the
Exchange Act) and their respective  officers,  directors,  partners,  employees,
agents and  representatives to the same extent as provided above with respect to
the indemnification of the Holder.

                  (ii)   Indemnification  by  Holder.  In  connection  with  any
registration  statement  in which the Holder is  participating,  the Holder will
furnish to the Company in writing  such  information  as the Company  reasonably
requests  for  use  in  connection  with  any  such  registration  statement  or
prospectus and, to the extent permitted by law, will indemnify the Company, each
person  who  controls  the  Company  (within  the  meaning  of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and their respective officers,
directors,  partners,  employees,  agents and representatives against any Losses
arising  out of or based  upon any  untrue  or  alleged  untrue  statement  of a
material fact contained in any registration  statement,  prospectus,  or form of
prospectus,  or arising out of or based upon any omission or alleged omission of
a  material  fact  required  to be  stated  therein  or  necessary  to make  the
statements  therein,  in  light  of the  circumstances  under  which  made,  not
misleading,  to the extent, but only to the extent,  that such untrue or alleged
untrue  statement  is  contained  in, or such  omission  or alleged  omission is
required to be  contained  in, any  information  so  furnished in writing by the
Holder  to the  Company  expressly  for use in such  registration  statement  or
prospectus and that such statement or omission was relied upon by the Company in
preparation of such  registration  statement,  prospectus or form of prospectus;
provided,  however,  that the Holder shall not be liable in any such case to the
extent  that the Holder has  furnished  in writing to the  Company  prior to the
filing  of any  such  registration  statement  or  prospectus  or  amendment  or
supplement thereto information expressly for use in such registration  statement
or prospectus or any amendment or supplement thereto which corrected or made not
misleading,  information  previously  furnished to the Company,  and the Company
failed to include such information  therein.  In no event shall the liability of
the Holder hereunder be greater in amount than the dollar amount of the proceeds
(net of payment of all  expenses)  received  by the Holder  upon the sale of the
Warrant Shares giving rise to such  indemnification  obligation.  Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such indemnified party.

                  (iii) Conduct of  Indemnification  Proceedings.  If any Person
shall be entitled to indemnity  pursuant to this Section 13(g), such indemnified
party shall give prompt  written  notice to the party or parties from which such
indemnity is sought of the  commencement of any proceeding with respect to which
such indemnified party seeks  indemnification  or contribution  pursuant hereto;
provided,  however, that the failure to so notify the indemnifying parties shall
not relieve the indemnifying  parties from any obligation or liability except to
the extent that the  indemnifying  parties have been prejudiced by such failure.
The  indemnifying  parties shall have the right,  exercisable  by giving written
notice to an indemnified party promptly after the receipt of written notice from
such  indemnified  party of such  proceeding,  to  assume,  at the  indemnifying
parties' expense,  the defense of any such proceeding,  with counsel  reasonably
satisfactory to such indemnified party;  provided,  however, that an indemnified
party or  parties  (if more  than  one  such  indemnified  party is named in any
proceeding)  shall  have  the  right  to  employ  separate  counsel  in any such
proceeding and to participate in the defense thereof,  but the fees and expenses
of such  counsel  shall be at the expense of such  indemnified  party or parties
unless the parties to such  proceeding  include  both the  indemnified  party or
parties and the indemnifying party or parties,  and there exists, in the opinion
of  the  indemnified  party(ies)'  counsel,  a  conflict  between  one  or  more
indemnifying  parties  and one or more  indemnified  parties,  in which case the
indemnifying  parties  shall,  in  connection  with any one such  proceeding  or
separate  but  substantially   similar  or  related   proceedings  in  the  same
jurisdiction,  arising out of the same general allegations or circumstances,  be
liable for the fees and expenses of not more than one separate firm of attorneys
(together with appropriate local counsel) at any time for such indemnified party
or parties. If an indemnifying party assumes the defense of such proceeding, the
indemnifying  parties will not be subject to any  liability  for any  settlement
made by the indemnified  party without its or their consent (such consent not to
be unreasonably withheld).

                  (iv) Contribution. If the indemnification provided for in this
Section 13(g) is unavailable to an indemnified  party or is insufficient to hold
such indemnified  party harmless for any Losses in respect of which this Section
13(g) would  otherwise  apply by its terms,  then each  applicable  indemnifying
party, in lieu of indemnifying such indemnified  party, shall have an obligation
to  contribute  to the amount  paid or payable  by such  indemnified  party as a
result of such  Losses,  in such  proportion  as is  appropriate  to reflect the
relative fault of the indemnifying  party, on the one hand, and such indemnified
party,  on the  other  hand,  in  connection  with the  actions,  statements  or
omissions that resulted in such Losses as well as any other  relevant  equitable
considerations.  The relative fault of such indemnifying party, on the one hand,
and indemnified  party, on the other hand,  shall be



<PAGE>

determined by reference to, among other things,  whether any action in question,
including any untrue or alleged untrue  statement of a material fact or omission
or alleged  omission to state a material  fact, has been taken by, or relates to
information  supplied by, such indemnifying  party or indemnified party, and the
parties'  relative intent,  knowledge,  access to information and opportunity to
correct or prevent any such action,  statement  or omission.  The amount paid or
payable  by a party as a result of any  Losses  shall be deemed to  include  any
legal or other fees or expenses  incurred by such party in  connection  with any
proceeding,  to the extent  such  party  would  have been  indemnified  for such
expenses  under  Section  13(g)(iii),  if the  indemnification  provided  for in
Section  13(g)(i) or Section  13(g)(ii) was available to such party. The Company
and the Holder  agree that it would not be just and  equitable  if  contribution
pursuant to this Section  13(g)(iv) were determined by pro rata allocation or by
any other  method of  allocation  that does not take  account  of the  equitable
considerations   referred  to  in  the  second   sentence  of  this   paragraph.
Notwithstanding  the  provisions of this Section  13(g)(iv),  the Holder,  as an
indemnifying  party, shall not be required to contribute any amount in excess of
the amount by which the net proceeds  received by the Holder  exceeds the amount
of any damages that the Holder has  otherwise  been required to pay by reason of
such untrue or alleged  untrue  statement  or omission or alleged  omission.  No
person  adjudged guilty of fraudulent  misrepresentation  (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution  from any
person who was not guilty of such fraudulent misrepresentation.

         (h)      Transfers.

                  (i) If the Holder transfers Warrant Shares  constituting 1% or
more of the Common Stock then  outstanding,  the Holder may also transfer to its
transferee  the right to have its  Warrant  Shares  included  in a  registration
pursuant to Section  12(a)  hereof;  provided,  that the transfer of such rights
shall  include all rights and  obligations  set forth under this Section 12, and
provided, further, that no such transfer shall be deemed to obligate the Company
to issue notices  hereunder to any additional  person,  except to the extent the
Company shall have received actual notice of such transfer to such person. At no
time shall there be more than one "Holder" for purposes of Section 12 hereof.

                  (ii) Any assignment or transfer of the registration rights set
forth herein shall be subject to the  assumption by the  transferee of the terms
and conditions set forth in Section 13 hereof applicable to the transferor,  and
any proposed  transferee  shall execute such documents and instruments  that the
Company may reasonably  require to evidence that such transferee is bound by the
terms and conditions set forth in Section 13 hereof.

14.               General.

         (a)  Governing  Law.  This Warrant  shall be governed by and  construed
according  to the laws of the State of  Delaware  (excluding  the  choice of law
rules thereof).

         (b) Delays or  Omissions.  No delay or omission to exercise  any right,
power,  or remedy accruing to either party upon any breach or default under this
Warrant,  shall be deemed a waiver of any other breach or default theretofore or
thereafter occurring.  Any waiver,  permit,  consent, or approval of any kind or
character  on the part of either  party of any  breach  or  default  under  this
Warrant,  or any  waiver  on the  part of  either  party  of any  provisions  or
conditions  of this Warrant,  must be in writing and shall be effective  only to
the extent  specifically set forth in such writing.  All remedies,  either under
this Warrant or by law or otherwise afforded to either of the parties,  shall be
cumulative and not alternative.

         (c) References. Unless the context otherwise requires, any reference to
a "Section" refers to a section of this Warrant.

         (d) Captions. Captions of sections have been added only for convenience
and shall not be deemed to be a part of this Warrant.


<PAGE>


                  IN WITNESS  WHEREOF,  RateXchange  Corporation has caused this
Warrant to be executed by its officer thereunto duly authorized.

Dated: September 17, 2000


                                    RATEXCHANGE CORPORATION

                                    By:       /s/ Donald H. Sledge
                                          ---------------------------------
                                          Name:  Donald H. Sledge
                                          Title: Chief Executive Officer


<PAGE>

ANNEX I

                               NOTICE OF EXERCISE

To: RATEXCHANGE CORPORATION

         (1) The undersigned  hereby irrevocably elects to purchase _____ shares
of  Common  Stock  of  RATEXCHANGE  CORPORATION,  pursuant  to the  terms of the
attached  Warrant,  and tenders  herewith payment of the purchase price for such
shares in full.

         (2) In exercising  this Warrant,  the  undersigned  hereby confirms and
acknowledges  that the shares of Common Stock are being acquired  solely for the
account of the  undersigned  and not as a nominee for any other  party,  and for
investment,  and that the undersigned shall not offer, sell or otherwise dispose
of any such shares of Common  Stock  except  under  circumstances  that will not
result in a violation of the  Securities  Act of 1933, as amended,  or any state
securities laws.

         (3) Please issue a certificate or certificates representing said shares
of Common Stock, and pay any cash for any fractional share to:

         Name                        Address                    No. Shares
         ----                        -------                    ----------







         (4)  Please  issue a new  Warrant  for the  unexercised  portion of the
attached Warrant in the name of the undersigned  and/or,  if the undersigned has
completed an Assignment  Form in the form of Annex II to this  Warrant,  in such
other names and amounts as is specified in such Assignment Form.

Dated: _____________________                Holder: ____________________________


                                            By: ________________________________
                                            Name:
                                            Title:





<PAGE>


                                                                        ANNEX II

                                 ASSIGNMENT FORM

         FOR VALUE RECEIVED,  the undersigned  registered  owner of this Warrant
hereby  sells,  assigns and transfers  unto the Assignee  named below all of the
rights of the  undersigned  under this  Warrant,  with  respect to the number of
shares of Common Stock set forth below:

Name of Assignee                 Address                           No. of Shares
----------------                 -------                           -------------






and does hereby irrevocably constitute and appoint  ____________________________
Attorney  to  make  such  transfer  on  the  books  of  RATEXCHANGE  CORPORATION
maintained for such purpose, with full power of substitution in the premises.

         The  undersigned  also  represents  that,  by  assignment  hereof,  the
Assignee  acknowledges  that this  Warrant and the shares of Common  Stock to be
issued upon  exercise  hereof are being  acquired  for  investment  and that the
Assignee  shall not offer,  sell or  otherwise  dispose  of this  Warrant or any
shares of stock to be issued upon  exercise  hereof  except under  circumstances
which will not result in a violation of the  Securities Act of 1933, as amended,
or any state securities laws.  Further,  the Assignee has acknowledged that upon
exercise of this  Warrant,  the  Assignee  shall,  if  requested by the Company,
confirm in writing,  in a form  satisfactory to the Company,  that the shares of
stock so purchased are being  acquired for investment and not with a view toward
distribution or resale.

Dated: _____________________                Holder: ____________________________


                                            By: ________________________________
                                            Name:
                                            Title:

<PAGE>



                                     WARRANT

THIS WARRANT AND THE SHARES OF COMMON STOCK REPRESENTED BY THIS WARRANT HAVE NOT
BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE  "SECURITIES
ACT"),  OR UNDER THE  SECURITIES  LAW OF ANY STATE OR OTHER  JURISDICTION.  SUCH
WARRANTS AND SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR
IN CONNECTION WITH, THE DISTRIBUTION  THEREOF.  SUCH WARRANTS AND SHARES MAY NOT
BE OFFERED,  SOLD, PLEDGED,  OR TRANSFERRED UNLESS (I) A REGISTRATION  STATEMENT
UNDER THE ACT IS IN EFFECT AS TO THESE SECURITIES AND SUCH OFFER,  SALE, PLEDGE,
OR TRANSFER IS IN  COMPLIANCE  WITH  APPLICABLE  SECURITIES  LAW OF ANY STATE OR
OTHER  JURISDICTION  OR (II) THERE IS AN  OPINION OF COUNSEL OR OTHER  EVIDENCE,
SATISFACTORY TO THE COMPANY,  THAT AN EXEMPTION  THEREFROM IS AVAILABLE AND THAT
SUCH  OFFER,  SALE,  PLEDGE,  OR  TRANSFER  IS  IN  COMPLIANCE  WITH  APPLICABLE
SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION.


<PAGE>





                                               Warrant to Purchase up to 500,000
                                                          Shares of Common Stock


                        WARRANT TO PURCHASE COMMON STOCK

                                       of

                             RATEXCHANGE CORPORATION

                          Void after December 17, 2005
      (subject to earlier termination in accordance with the terms hereof)

         This certifies that, for value received, Amerex Bandwidth, Ltd., or its
registered assigns (the "Holder"),  is entitled,  subject to the terms set forth
below, to purchase from  RATEXCHANGE  CORPORATION,  a Delaware  corporation (the
"Company"),  up to 500,000  shares of the voting common stock,  $.0001 par value
per share ("Common  Stock"),  of the Company,  as constituted on the date hereof
(the "Warrant  Issue Date"),  upon  surrender of this Warrant,  at the principal
office of the Company  referred to below,  with the notice of exercise  attached
hereto duly executed,  and simultaneous  payment therefor in lawful money of the
United States or otherwise as hereinafter provided, at the Exercise Price as set
forth in Section 2 below. The shares of Common Stock  exercisable  hereunder are
subject to vesting as provided below.

1. Term of Warrant.  Subject to the terms and  conditions  set forth  herein and
except as provided  below,  this Warrant  shall be  exercisable,  in whole or in
part,  for shares of Common Stock which have vested (as provided  below)  during
the term  commencing on the Warrant Issue Date and ending at 5:00 p.m.,  Eastern
Standard Time, on December 17, 2005, and shall be void thereafter.

2.  Exercise  Price.  The exercise  price (the  "Exercise  Price") at which this
Warrant may be exercised shall be, per share, 120% of the average of the closing
trading  price  quoted on The  American  Stock  Exchange LLC as published in the
Eastern  Edition of The Wall Street  Journal for the twenty  (20)  trading  days
prior to and including August 15, 2000.

3. Vesting. All shares of Common Stock exercisable hereunder shall vest upon the
earlier of (i)  September  17, 2005,  or (ii) a minimum of  $5,000,000  of total
gross commodity  value of transactions is executed by ABI on the ETS;  provided,
however,  that no single Trade shall represent more than $1,000,000 of the gross
commodity value.

4.                Exercise of Warrant.

         (a) The purchase rights  represented by this Warrant are exercisable by
the Holder in whole or in part at any time  following  vesting of such shares as
described  in Section 3 above,  during the term hereof as described in Section 1
above,  by the surrender of this Warrant and the Notice of Exercise  attached as
Annex I hereto duly  completed  and  executed  on behalf of the  Holder,  at the
principal  office of the Company (or such other  office or agency of the Company
as it may  designate  by notice in writing  to the Holder at the  address of the
Holder appearing on the books of the Company),  upon payment (i) in cash payable
to the Company,  (ii) by wire transfer of immediately  available funds, (iii) by
cancellation by the Holder of indebtedness of the Company to the Holder, or (iv)
by some  combination of (i), (ii) and (iii), in each case, of the purchase price
of the shares to be purchased.

         (b) This Warrant shall be deemed to have been exercised  immediately as
of the close of and time of its  surrender for exercise as provided  above,  and
the person  entitled to receive the shares of Common  Stock  issuable  upon such
exercise  shall be  treated  for all  purposes  as the  holder of record of such
shares as of such date and time.  As  promptly as  practicable  on or after such
date and in any  event  within  ten (10) days  thereafter,  the  Company  at its
expense shall issue and deliver a certificate or certificates  for the number of
shares issuable upon such exercise to the person or persons  entitled to receive
the same.  In the event that this Warrant is  exercised in part,  the Company at


<PAGE>

its expense  shall  execute and deliver a new Warrant of like tenor  exercisable
for the number of shares for which this Warrant may then be exercised.

5. No Fractional  Shares or Scrip.  No fractional  shares or scrip  representing
fractional shares shall be issued upon the exercise of this Warrant.  In lieu of
any  fractional  share to which the Holder  would  otherwise  be  entitled,  the
Company  shall make a cash payment equal to the fair market value of a share (as
determined according to Section 4(c) above) multiplied by such fraction.

6. Replacement of Warrant. On receipt of evidence reasonably satisfactory to the
Company of the loss,  theft,  destruction  or mutilation of this Warrant and, in
the case of loss,  theft or destruction,  on delivery of an indemnity  agreement
reasonably  satisfactory in form and substance to the Company or, in the case of
mutilation,  on surrender and  cancellation of this Warrant,  the Company at its
expense  shall execute and deliver,  in lieu of this  Warrant,  a new warrant of
like tenor and amount.

7. Rights of Stockholders.  Subject to Sections 10 and 12 of this Warrant, until
this Warrant shall have been exercised as provided herein,  the Holder, as such,
shall not be  entitled to vote or receive  dividends  or be deemed the holder of
Common  Stock or any other  securities  of the  Company  that may at any time be
issuable on the exercise  hereof for any purpose,  nor shall anything  contained
herein be construed to confer upon the Holder,  as such,  any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof,  or to give or
withhold  consent to any corporate  action  (whether upon any  recapitalization,
issuance of stock,  reclassification  of stock,  change of par value,  change of
stock to no par value,  consolidation,  merger,  conveyance, or otherwise) or to
receive notice of meetings,  or to receive  dividends or subscription  rights or
otherwise.

8. Transfer of Warrant.

         (a)  Warrant  Register.  The  Company  shall  maintain a register  (the
"Warrant Register") containing the names and addresses of the Holder or Holders.
Any Holder of this  Warrant or any  portion  thereof  may change its  address as
shown on the Warrant  Register by written notice to the Company  requesting such
change. Any notice or written communication required or permitted to be given to
the  Holder  may be  delivered  or given by mail to such  Holder as shown on the
Warrant  Register and at the address shown on the Warrant  Register.  Until this
Warrant is transferred on the Warrant  Register of the Company,  the Company may
treat the Holder as shown on the Warrant  Register as the absolute owner of this
Warrant for all purposes, notwithstanding any notice to the contrary.

         (b) Warrant  Agent.  The Company may, by written  notice to the Holder,
appoint an agent for the purpose of maintaining the Warrant Register referred to
in Section  8(a)  above,  issuing  the  Common  Stock or other  securities  then
issuable upon the exercise of this Warrant,  exchanging this Warrant,  replacing
this Warrant or any or all of the foregoing.  Thereafter, any such registration,
issuance,  exchange,  or  replacement,  as the case may be, shall be made at the
office of such agent.

         (c) Transferability and  Nonnegotiability of Warrant.  This Warrant may
not be transferred or assigned in whole or in part without  compliance  with all
applicable  federal  and  state  securities  laws  by  the  transferor  and  the
transferee  (including  the delivery of  investment  representation  letters and
legal opinions reasonably  satisfactory to the Company, if such are requested by
the Company) and any stockholders  agreement to which the transferor is a party.
Subject to the  provisions of this Warrant with respect to  compliance  with the
Securities  Act, title to this Warrant may be transferred by endorsement (by the
Holder  executing the Assignment  Form attached as Annex II hereto) and delivery
in the same manner as a negotiable  instrument  transferable  by endorsement and
delivery.

         (d) Exchange of Warrant  Upon a Transfer.  On surrender of this Warrant
for  exchange,  properly  endorsed  on the  Assignment  Form and  subject to the
provisions of this Warrant with respect to compliance  with the Act and with the
limitations  on  assignments  and transfers and contained in this Section 8, the
Company  at its  expense  shall  issue to or on the  order  of the  Holder a new
warrant or warrants  of like  tenor,  in the name of the Holder or as the Holder
(on payment by the Holder of any applicable  transfer taxes) may direct, for the
number of shares issuable upon exercise hereof.


<PAGE>

         (e) Compliance  with  Securities  Laws. The Holder of this Warrant,  by
acceptance hereof, acknowledges that this Warrant and the shares of Common Stock
to be issued upon exercise hereof are being acquired solely for the Holder's own
account and not as a nominee for any other party,  and for investment,  and that
the Holder  shall not offer,  sell or  otherwise  dispose of this Warrant or any
shares  of  Common  Stock  to  be  issued  upon  exercise  hereof  except  under
circumstances  that  will not  result  in a  violation  of the Act or any  state
securities  laws.  Further,  the Holder of this Warrant,  by acceptance  hereof,
represents that it is an accredited  investor within the meaning of Regulation D
under the Securities  Act. Upon exercise of this Warrant,  the Holder shall,  if
requested  by the Company,  confirm in writing,  in a form  satisfactory  to the
Company,  that the shares of Common Stock so purchased are being acquired solely
for the  Holder's  own  account and not as a nominee  for any other  party,  for
investment, and not with a view toward distribution or resale.

9. Reservation of Stock. The Company covenants that throughout the period during
which this Warrant is exercisable, the Company shall reserve from its authorized
and  unissued  Common  Stock a  sufficient  number of shares to provide  for the
issuance of Common Stock upon the  exercise of this  Warrant  and,  from time to
time,  shall take all steps necessary to amend its Certificate of  Incorporation
to provide sufficient  reserves of shares of Common Stock issuable upon exercise
of this  Warrant.  The  Company  further  covenants  that all shares that may be
issued upon the  exercise of rights  represented  by this Warrant and payment of
the  Exercise  Price,  all as set forth  herein,  will be free  from all  taxes,
encumbrances,  liens and  charges in respect of the issue  thereof  (other  than
taxes in  respect  of any  transfer  occurring  contemporaneously  or  otherwise
specified  herein).  The Company  agrees that its issuance of this Warrant shall
constitute  full  authority  to its  officers  who are charged  with the duty of
executing stock certificates to execute and issue the necessary certificates for
shares of Common Stock upon the exercise of this Warrant.

10. Notices.

         (a)  Whenever  the  Exercise  Price or  number  of  shares  purchasable
hereunder  shall be adjusted  pursuant to Section 12 hereof,  the Company  shall
issue a certificate  signed by its Chief  Financial  Officer  setting forth,  in
reasonable  detail,  the  event  requiring  the  adjustment,  the  amount of the
adjustment, the method by which such adjustment was calculated, and the Exercise
Price and number of shares  purchasable  hereunder  after giving  effect to such
adjustment,  and  shall  cause  a copy  of  such  certificate  to be  mailed  by
first-class mail, postage prepaid,  return receipt  requested,  to the Holder of
this Warrant.

         (b)      In the event:

                  (i) that the Company shall take a record of the holders of its
Common  Stock (or other  stock or  securities  at the time  receivable  upon the
exercise  of this  Warrant)  for the  purpose of  entitling  them to receive any
dividend or other  distribution,  or any right to subscribe  for or purchase any
shares of stock of any class or any other  securities,  or to receive  any other
right; or

                  (ii)  of  any  capital  reorganization  of  the  Company,  any
reclassification  of the capital  stock of the  Company,  any  consolidation  or
merger of the Company with or into another corporation, or any conveyance of all
or substantially all of the assets of the Company to another corporation; or

                  (iii) of any voluntary dissolution,  liquidation or winding-up
of the Company;

                  then,  and in each such case,  the Company shall mail or cause
to be mailed to the Holder or Holders a notice  specifying,  as the case may be,
(a) the date on which a record is to be taken for the purpose of such  dividend,
distribution  or right,  and stating the amount and character of such  dividend,
distribution  or  right,   or  (b)  the  date  on  which  such   reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up is to take place,  and the time,  if any is to be fixed,  as of which
the holders of record of Common Stock (or such stock or  securities  at the time
receivable  upon the  exercise  of this  Warrant)  shall be entitled to exchange
their shares of Common Stock (or such other stock or securities)  for securities
or  other  property  deliverable  upon  such  reorganization,  reclassification,
consolidation,  merger, conveyance, dissolution, liquidation or winding-up. Such
notice shall be mailed at least 20 days prior to the date therein specified.


<PAGE>

         (c) All such notices, advice and communications shall be deemed to have
been received (i) in the case of personal delivery, on the date of such delivery
and (ii) in the case of mailing, on the third business day following the date of
such mailing.

11.               Amendments.

         (a) Any term of this Warrant may be amended with the written consent of
the Company and the  Holder.  Any  amendment  effected in  accordance  with this
Section 11 shall be binding upon the Holder of this Warrant,  each future holder
of this Warrant, and the Company.

          (b) No waivers of, or exceptions to, any term,  condition or provision
of this  Warrant,  in any one or more  instances,  shall  be  deemed  to be,  or
construed as, a further or continuing waiver of, or exception to, any such term,
condition or provision.

12.  Adjustments.  The  Exercise  Price and the  number  of  shares  purchasable
hereunder are subject to adjustment from time to time as follows:

         (a) Merger,  Sale of Assets,  etc. If at any time while this Warrant or
any  portion  hereof  is  outstanding  and  unexpired,  there  shall  be  (i)  a
reorganization  (other  than  a  combination,   reclassification,   exchange  or
subdivision  of  shares  otherwise  provided  for  herein),  (ii)  a  merger  or
consolidation  of the  Company  with or into  another  corporation  in which the
Company is not the surviving entity or a merger (including a reverse  triangular
merger)  in which the  Company  is the  surviving  entity  but the shares of the
Company's  capital  stock  outstanding  immediately  prior  to  the  merger  are
converted  by virtue of the merger into other  property,  whether in the form of
securities,  cash,  or  otherwise,  or  (iii)  a  sale  or  transfer  of  all or
substantially  all of the Company's  properties  and assets,  then, as a part of
such reorganization,  merger, consolidation,  sale or transfer, lawful provision
shall be made so that the holder of this Warrant shall thereafter be entitled to
receive upon exercise of this Warrant,  during the period  specified  herein and
upon payment of the Exercise Price then in effect, the number of shares of stock
or other securities or property of the successor corporation resulting from such
reorganization,  merger,  consolidation,  sale or transfer  that a holder of the
shares  deliverable  upon  exercise of this Warrant  would have been entitled to
receive in such reorganization,  consolidation, merger, sale or transfer if this
Warrant   had   been   exercised   immediately   before   such   reorganization,
consolidation,  merger,  sale or transfer,  all subject to further adjustment as
provided in this Section 12. The  foregoing  provisions  of this  Section  12(a)
shall similarly apply to successive  reorganizations,  consolidations,  mergers,
sales and transfers and to the stock or securities of any other corporation that
are at the time receivable  upon the exercise of this Warrant.  If the per share
consideration  payable to the holder  hereof for shares in  connection  with any
such transaction is in a form other than cash or marketable securities, then the
value of such  consideration  shall be determined in good faith by the Company's
Board of Directors. In all events, appropriate adjustment (as determined in good
faith by the Company's  Board of Directors)  shall be made in the application of
the  provisions  of this  Warrant with respect to the rights and interest of the
Holder after the  transaction,  to the end that the  provisions  of this Warrant
shall be applicable  after that event, as near as reasonably may be, in relation
to any shares or other  property  deliverable  after that event upon exercise of
this Warrant.

         (b)  Reclassification,  etc.  If the  Company,  at any time  while this
Warrant  or  any  portion  hereof   remains   outstanding   and  unexpired,   by
reclassification of securities or otherwise,  shall change any of the securities
as to  which  purchase  rights  under  this  Warrant  exist  into  the same or a
different number of securities of any other class or classes, this Warrant shall
thereafter  represent the right to acquire such number and kind of securities as
would  have been  issuable  as the  result of such  change  with  respect to the
securities  that  were  subject  to  the  purchase  rights  under  this  Warrant
immediately  prior to such  reclassification  or other  change and the  Exercise
Price  therefor  shall  be  appropriately   adjusted,  all  subject  to  further
adjustment as provided in this Section 12.

         (c) Split,  Subdivision or Combination of Shares. If the Company at any
time while this Warrant or any portion hereof remains outstanding and unexpired,
shall split,  subdivide or combine the  securities as to which  purchase  rights
under this Warrant  exist,  into a different  number of  securities  of the same
class,  the  Exercise  Price  for  such  securities  shall  be   proportionately
decreased,  and the number of shares of such  securities  for which this Warrant
may be exercised shall be proportionately  increased,  in the case of a split or
subdivision,  or the Exercise


<PAGE>

Price for such securities shall be  proportionately  increased and the number of
shares of such  securities  for which this  Warrant  may be  exercised  shall be
proportionately decreased, in the case of a combination.

         (d) Adjustments for Dividends in Stock or Other Securities or Property.
If at any time while this Warrant or any portion hereof remains  outstanding and
unexpired the holders of the securities as to which  purchase  rights under this
Warrant exist at the time shall have  received,  or, on or after the record date
fixed for the determination of eligible stockholders, shall have become entitled
to  receive,  without  payment  therefor,  other  or  additional  stock or other
securities or property (other than cash) of the Company by way of dividend, then
and in each case, this Warrant shall represent the right to acquire, in addition
to the  number  of shares  of the  security  receivable  upon  exercise  of this
Warrant,  and without  payment of any  additional  consideration  therefor,  the
amount of such other or additional  stock or other securities or property (other
than  cash) of the  Company  that  such  holder  would  hold on the date of such
exercise  had it been the  holder  of  record of the  security  receivable  upon
exercise  of this  Warrant  on the date  hereof and had  thereafter,  during the
period from the date hereof to and including the date of such exercise, retained
such shares  and/or all other  additional  stock  available  by it as  aforesaid
during such  period,  giving  effect to all  adjustments  called for during such
period by the provisions of this Section 12.

         (e)  Certificate  as  to  Adjustments.  Upon  the  occurrence  of  each
adjustment  or  readjustment  pursuant  to this  Section  12, the Company at its
expense shall promptly  compute such  adjustment or  readjustment  in accordance
with the terms hereof and furnish to each Holder of this  Warrant a  certificate
setting forth such  adjustment or  readjustment  and showing in detail the facts
upon which such adjustment or readjustment is based. The Company shall, upon the
written  request,  at any  time,  of any  such  Holder,  furnish  or cause to be
furnished to such Holder a like certificate  setting forth: (i) such adjustments
and readjustments;  (ii) the Exercise Price at the time in effect; and (iii) the
number of shares and the  amount,  if any,  of other  property  that at the time
would be received upon the exercise of the Warrant.

         (f)  No  Impairment.  The  Company  shall  not,  by  amendment  of  its
Certificate of Incorporation or through any reorganization,  transfer of assets,
consolidation,  merger,  dissolution,  issue or sale of  securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but shall at all
times in good faith  assist in the carrying  out of all the  provisions  of this
Section  12  and  in the  taking  of all  such  action  as may be  necessary  or
appropriate in order to protect the rights of the Holder of this Warrant against
impairment.

13. Registration Rights.

         (a) Shelf  Registration.  After the Holder has  exercised in whole this
Warrant and the Other  Warrants  (as defined  below) for an  aggregate  exercise
price  that  equals or  exceeds  $1,000,000  and upon the  vesting of the shares
represented  by this Warrant (as described in Section 3, above)  ("Warrant No. 2
Vesting  Date") the Company shall prepare and file within five (5) business days
after  the  Warrant  No. 2  Vesting  Date a  registration  statement  under  the
Securities  Act to effect the "shelf"  registration  on a delayed or  continuous
basis under the Securities  Act of all Common Stock held by the Holder  pursuant
to the exercise of this Warrant.  (the "Warrant Shares").  The Company shall use
its  reasonable  best  efforts to cause such  registration  statement  to become
effective under the Securities Act after the date of filing.

         (b) Other  Warrants  Definition.  The "Other  Warrants"  shall mean the
certain four warrants  issued to the Holder on the date hereof,  one to purchase
up to 300,000  shares of Common  Stock and three each to  purchase up to 500,000
shares of Common Stock of the Company, in the form attached hereto.

         (c)  Expenses  of  Registration.  The  Company  shall  pay  any and all
registration  expenses incident to the filing of each registration  statement or
otherwise  incident to the performance by the Company of or its compliance with,
its  obligations  under this Section 13. The Holder  shall pay all  underwriting
discounts and commissions  and transfer  taxes, if any,  relating to the sale or
disposition of the Warrant Shares  included in such  registration  statement and
the fees of any counsel retained by the Holder in connection therewith.

         (d)  Registration  Procedures.  In connection with any registration and
the  registration  statement  effecting  such  registration,  the Company hereby
covenants and agrees that it shall:
<PAGE>

                  (i) take such  action as may be  necessary  so that:  (A) such
registration statement and any amendment thereto and any prospectus forming part
thereof  and any  amendment  or  supplement  thereto  (and each  report or other
document  incorporated  therein  by  reference  in each  case)  complies  in all
material  respects with the Securities  Act and the  Securities  Exchange Act of
1934, as amended (the "Exchange  Act") and the respective  rules and regulations
thereunder;  (B) such registration statement and any amendment thereto does not,
when it becomes  effective,  contain an 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 not misleading;  and (C) any prospectus  forming part of
such registration statement, and any amendment or supplement to such prospectus,
does not  include  an untrue  statement  of a  material  fact or omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;

                  (ii) notify the Holder as promptly  as  practicable  in any of
the following  circumstances:  (A) at any time when a prospectus relating to the
Warrant  Shares is required to be  delivered  under the  Securities  Act, of the
happening  of any  event as a result of which the  prospectus  included  in such
registration  statement contains an untrue statement of a material fact or omits
any fact necessary to make the statements  therein not  misleading,  and, at the
request of the Holder,  the Company will  prepare a  supplement  or amendment to
such  prospectus  so that,  as  thereafter  delivered to the  purchasers  of the
Warrant  Shares,  such  prospectus  will not  contain an untrue  statement  of a
material fact or omit to state any fact necessary to make the statements therein
not misleading;  (B) when such registration  statement and any amendment thereto
has been filed with the Securities and Exchange  Commission  (the  "Commission")
and when such registration statement or any post-effective amendment thereto has
become  effective;  (C) of  any  request  by the  Commission  for  amendment  or
supplements to such registration statement or the prospectus included therein or
for  additional  information;  (D) of the issuance by the Commission of any stop
order  suspending  the  effectiveness  of  such  registration  statement  or the
initiation  of any  proceedings  for that  purpose;  and (E) the  receipt by the
Company of any notification  with respect to the suspension of the qualification
of the securities  included  therein for sale  (including the Warrant Shares) in
any jurisdiction or the initiation of any proceeding for such purpose;

                  (iii) use its best  efforts to prevent  the  issuance,  and if
issued to obtain the withdrawal,  of any order  suspending the  effectiveness of
such registration statement at the earliest possible time;

                  (iv) use its best efforts to comply with the  requirements  of
any  applicable  blue sky laws of such  jurisdictions  as the Holder  reasonably
requests  and do any and all  other  acts and  things  which  may be  reasonably
necessary or advisable to enable the Holder to  consummate  the  disposition  in
such  jurisdictions of the Warrant Shares (provided,  however,  that the Company
will  not  be  required  to:  (A)  qualify  generally  to  do  business  in  any
jurisdiction  where it would not  otherwise  be required to qualify but for this
subparagraph,  (B) subject itself to taxation in any such jurisdictions,  or (C)
consent to general service of process in any such jurisdiction);

                  (v) cause the Warrant  Shares  included  in such  registration
statement to be listed on each  securities  exchange or quoted in each quotation
system on which  similar  securities  issued by the  Company  are then listed or
quoted; and

                  (vi)  cooperate  with the  Holder  to  facilitate  the  timely
preparation and delivery of certificates  representing  the Warrant Shares to be
sold pursuant to such registration  statement free of any restrictive legend and
registered in such names as the Holder may request in  connection  with the sale
of the Warrant Shares pursuant to such registration statement.

       The Holder  agrees  that,  upon receipt of any notice from the Company of
the happening of any event of the kind  described in Section  13(d)(ii)  hereof,
the Holder  will  immediately  discontinue  disposition  of the  Warrant  Shares
pursuant to a registration statement until the Holder's receipt of the copies of
the supplemented or amended prospectus contemplated by Section 13(d)(ii) hereof,
and, if so directed by the  Company,  the Holder will deliver to the Company (at
the expense of the Company) all copies in its  possession,  other than permanent
file copies then in the  Holder's  possession,  of the  prospectus  covering the
Warrant  Shares  current at the time of receipt of such  notice.  If the Company
shall give any such notice to suspend  the  disposition  of the  Warrant  Shares
pursuant to a registration statement, the Company shall extend the period during
which the registration  statement shall be maintained effective pursuant to this
Section 13 by the number of days during the period from and  including  the date
of the giving of


<PAGE>

such notice to and including the date when the Holder shall have received copies
of the supplemented or amended prospectus necessary to resume such dispositions.

         (e) Hold-Back  Agreements.  If the Company shall effect an underwritten
offering of its equity  securities,  the Holder shall not effect any public sale
or public distribution of securities of the Company of the same or similar class
or classes of the  securities  included in such  registration  statement  or any
securities  convertible into or exchangeable or exercisable for such securities,
including  a sale  pursuant to Rule 144 or Rule 144A under the  Securities  Act,
during the 15-day  period  prior to,  and during  such  period of time as may be
required  by the  managing  underwriter  of such  offering,  but not to exceed a
90-day period  beginning on, the effective  date of the  registration  statement
(except  pursuant to such offering),  except to the extent  otherwise  agreed in
writing by the managing underwriter of such offering.

         (f)      Black-Out Periods for Registration Statements.

                  (i)  Notwithstanding  anything to the contrary in this Section
13,  the  Company  may,  from time to time and at any time,  subject  to Section
13(f)(ii) herein, delay filing or effectiveness of the registration statement or
direct the Holder to suspend sales of the Warrant Shares registered  thereunder,
as  provided  herein,  in the  event of the  consummation  of,  or  negotiations
relating to, a material corporate  transaction (A) that would require additional
disclosure of material information by the Company in such registration statement
(or such filings),  (B) as to which the Company has a bona fide business purpose
for  preserving  confidentiality  and (C) which  renders the  Company  unable to
comply with Commission requirements, in each case under circumstances that would
make it impractical or inadvisable to cause such registration statement (or such
filings)  to  become   effective  or  to  promptly  amend  or  supplement   such
registration  statement on a post-effective  basis, as applicable (a "Suspension
Event").

                  (ii) In the case of a Suspension  Event,  the Company may give
notice (a  "Suspension  Notice")  to the Holder to suspend  sales of the Warrant
Shares so that the Company may correct or update such registration statement (or
such  filings).  Each such  suspension  shall  continue  only for so long as the
Suspension  Event or its  effect is  continuing,  and in no event  will any such
suspension  exceed  ninety (90) days (or 120 days in any  calendar  year) or all
such   suspensions   pursuant  to  this  Warrant  exceed  an  aggregate  of  one
hundred-eighty  (180) days.  The Holder agrees that it will not effect any sales
of the Warrant Shares pursuant to such registration  statement (or such filings)
at any time after it has received a Suspension Notice from the Company and prior
to the termination of such Suspension Event. If so directed by the Company,  the
Holder will  deliver to the Company all copies of the  prospectus  covering  the
Warrant Shares held by it at the time of receipt of the Suspension  Notice.  The
Holder may recommence  effecting  sales of the Warrant  Shares  pursuant to such
registration statement (or such filings) following further notice to such effect
(an "End of Suspension Notice") from the Company, which End of Suspension Notice
shall, in the case of a Suspension Event, be given by the Company not later than
five  (5) days  after  the  conclusion  of any  Suspension  Event  and  shall be
accompanied by copies of the  supplemented  or amended  prospectus  necessary to
resume such sales.

         (g)      Indemnification and Contribution.

                  (i)   Indemnification  by  the  Company.   The  Company  shall
indemnify,  to the extent permitted by law, the Holder, each person who controls
the Holder (within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act) and its respective officers, directors,  partners, members,
employees,  agents and  representatives,  against all  actions,  suits,  claims,
damages, losses, costs, expenses or proceedings (collectively,  "Losses") caused
by any untrue or alleged  untrue  statement  of material  fact  contained in any
registration  statement,  prospectus or preliminary  prospectus or any amendment
thereof or supplement  thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements  therein,
in light of the circumstances  under which made, not misleading,  except insofar
as the same are caused by or contained in any  information  furnished in writing
to the  Company  by the Holder  expressly  for use  therein  or by the  Holder's
failure to deliver a copy of the  registration  statement or  prospectus  or any
amendments  or  supplements  thereto  after the Company has furnished the Holder
with a  sufficient  number of copies of the same and except  insofar as the same
are caused by or contained  in any  prospectus  if the Holder  failed to send or
deliver a copy of any subsequent prospectus or prospectus supplement which would
have corrected such untrue or alleged untrue  statement of material fact or such
omission or alleged omission of a material fact with or prior to the delivery of
written  confirmation  of the sale by the Holder after the Company has furnished
the Holder with a sufficient number


<PAGE>

of copies of the same. In connection with an underwritten  offering, the Company
will indemnify  such  underwriters,  each person who controls such  underwriters
(within  the  meaning of Section 15 of the  Securities  Act or Section 20 of the
Exchange Act) and their respective  officers,  directors,  partners,  employees,
agents and  representatives to the same extent as provided above with respect to
the indemnification of the Holder.

                  (ii)   Indemnification  by  Holder.  In  connection  with  any
registration  statement  in which the Holder is  participating,  the Holder will
furnish to the Company in writing  such  information  as the Company  reasonably
requests  for  use  in  connection  with  any  such  registration  statement  or
prospectus and, to the extent permitted by law, will indemnify the Company, each
person  who  controls  the  Company  (within  the  meaning  of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and their respective officers,
directors,  partners,  employees,  agents and representatives against any Losses
arising  out of or based  upon any  untrue  or  alleged  untrue  statement  of a
material fact contained in any registration  statement,  prospectus,  or form of
prospectus,  or arising out of or based upon any omission or alleged omission of
a  material  fact  required  to be  stated  therein  or  necessary  to make  the
statements  therein,  in  light  of the  circumstances  under  which  made,  not
misleading,  to the extent, but only to the extent,  that such untrue or alleged
untrue  statement  is  contained  in, or such  omission  or alleged  omission is
required to be  contained  in, any  information  so  furnished in writing by the
Holder  to the  Company  expressly  for use in such  registration  statement  or
prospectus and that such statement or omission was relied upon by the Company in
preparation of such  registration  statement,  prospectus or form of prospectus;
provided,  however,  that the Holder shall not be liable in any such case to the
extent  that the Holder has  furnished  in writing to the  Company  prior to the
filing  of any  such  registration  statement  or  prospectus  or  amendment  or
supplement thereto information expressly for use in such registration  statement
or prospectus or any amendment or supplement thereto which corrected or made not
misleading,  information  previously  furnished to the Company,  and the Company
failed to include such information  therein.  In no event shall the liability of
the Holder hereunder be greater in amount than the dollar amount of the proceeds
(net of payment of all  expenses)  received  by the Holder  upon the sale of the
Warrant Shares giving rise to such  indemnification  obligation.  Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such indemnified party.

                  (iii) Conduct of  Indemnification  Proceedings.  If any Person
shall be entitled to indemnity  pursuant to this Section 13(g), such indemnified
party shall give prompt  written  notice to the party or parties from which such
indemnity is sought of the  commencement of any proceeding with respect to which
such indemnified party seeks  indemnification  or contribution  pursuant hereto;
provided,  however, that the failure to so notify the indemnifying parties shall
not relieve the indemnifying  parties from any obligation or liability except to
the extent that the  indemnifying  parties have been prejudiced by such failure.
The  indemnifying  parties shall have the right,  exercisable  by giving written
notice to an indemnified party promptly after the receipt of written notice from
such  indemnified  party of such  proceeding,  to  assume,  at the  indemnifying
parties' expense,  the defense of any such proceeding,  with counsel  reasonably
satisfactory to such indemnified party;  provided,  however, that an indemnified
party or  parties  (if more  than  one  such  indemnified  party is named in any
proceeding)  shall  have  the  right  to  employ  separate  counsel  in any such
proceeding and to participate in the defense thereof,  but the fees and expenses
of such  counsel  shall be at the expense of such  indemnified  party or parties
unless the parties to such  proceeding  include  both the  indemnified  party or
parties and the indemnifying party or parties,  and there exists, in the opinion
of  the  indemnified  party(ies)'  counsel,  a  conflict  between  one  or  more
indemnifying  parties  and one or more  indemnified  parties,  in which case the
indemnifying  parties  shall,  in  connection  with any one such  proceeding  or
separate  but  substantially   similar  or  related   proceedings  in  the  same
jurisdiction,  arising out of the same general allegations or circumstances,  be
liable for the fees and expenses of not more than one separate firm of attorneys
(together with appropriate local counsel) at any time for such indemnified party
or parties. If an indemnifying party assumes the defense of such proceeding, the
indemnifying  parties will not be subject to any  liability  for any  settlement
made by the indemnified  party without its or their consent (such consent not to
be unreasonably withheld).

                  (iv) Contribution. If the indemnification provided for in this
Section 13(g) is unavailable to an indemnified  party or is insufficient to hold
such indemnified  party harmless for any Losses in respect of which this Section
13(g) would  otherwise  apply by its terms,  then each  applicable  indemnifying
party, in lieu of indemnifying such indemnified  party, shall have an obligation
to  contribute  to the amount  paid or payable  by such  indemnified  party as a
result of such  Losses,  in such  proportion  as is  appropriate  to reflect the
relative fault of the indemnifying  party, on the one hand, and such indemnified
party,  on the  other  hand,  in  connection  with the  actions,  statements  or
omissions that resulted in such Losses as well as any other  relevant  equitable
considerations.  The relative fault of such indemnifying party, on the one hand,
and indemnified  party, on the other hand,  shall be


<PAGE>

determined by reference to, among other things,  whether any action in question,
including any untrue or alleged untrue  statement of a material fact or omission
or alleged  omission to state a material  fact, has been taken by, or relates to
information  supplied by, such indemnifying  party or indemnified party, and the
parties'  relative intent,  knowledge,  access to information and opportunity to
correct or prevent any such action,  statement  or omission.  The amount paid or
payable  by a party as a result of any  Losses  shall be deemed to  include  any
legal or other fees or expenses  incurred by such party in  connection  with any
proceeding,  to the extent  such  party  would  have been  indemnified  for such
expenses  under  Section  13(g)(iii),  if the  indemnification  provided  for in
Section  13(g)(i) or Section  13(g)(ii) was available to such party. The Company
and the Holder  agree that it would not be just and  equitable  if  contribution
pursuant to this Section  13(g)(iv) were determined by pro rata allocation or by
any other  method of  allocation  that does not take  account  of the  equitable
considerations   referred  to  in  the  second   sentence  of  this   paragraph.
Notwithstanding  the  provisions of this Section  13(g)(iv),  the Holder,  as an
indemnifying  party, shall not be required to contribute any amount in excess of
the amount by which the net proceeds  received by the Holder  exceeds the amount
of any damages that the Holder has  otherwise  been required to pay by reason of
such untrue or alleged  untrue  statement  or omission or alleged  omission.  No
person  adjudged guilty of fraudulent  misrepresentation  (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution  from any
person who was not guilty of such fraudulent misrepresentation.

         (h)      Transfers.

                  (i) If the Holder transfers Warrant Shares  constituting 1% or
more of the Common Stock then  outstanding,  the Holder may also transfer to its
transferee  the right to have its  Warrant  Shares  included  in a  registration
pursuant to Section  12(a)  hereof;  provided,  that the transfer of such rights
shall  include all rights and  obligations  set forth under this Section 12, and
provided, further, that no such transfer shall be deemed to obligate the Company
to issue notices  hereunder to any additional  person,  except to the extent the
Company shall have received actual notice of such transfer to such person. At no
time shall there be more than one "Holder" for purposes of Section 12 hereof.

                  (ii) Any assignment or transfer of the registration rights set
forth herein shall be subject to the  assumption by the  transferee of the terms
and conditions set forth in Section 13 hereof applicable to the transferor,  and
any proposed  transferee  shall execute such documents and instruments  that the
Company may reasonably  require to evidence that such transferee is bound by the
terms and conditions set forth in Section 13 hereof.

14.               General.

         (a)  Governing  Law.  This Warrant  shall be governed by and  construed
according  to the laws of the State of  Delaware  (excluding  the  choice of law
rules thereof).

         (b) Delays or  Omissions.  No delay or omission to exercise  any right,
power,  or remedy accruing to either party upon any breach or default under this
Warrant,  shall be deemed a waiver of any other breach or default theretofore or
thereafter occurring.  Any waiver,  permit,  consent, or approval of any kind or
character  on the part of either  party of any  breach  or  default  under  this
Warrant,  or any  waiver  on the  part of  either  party  of any  provisions  or
conditions  of this Warrant,  must be in writing and shall be effective  only to
the extent  specifically set forth in such writing.  All remedies,  either under
this Warrant or by law or otherwise afforded to either of the parties,  shall be
cumulative and not alternative.

         (c) References. Unless the context otherwise requires, any reference to
a "Section" refers to a section of this Warrant.

         (d) Captions. Captions of sections have been added only for convenience
and shall not be deemed to be a part of this Warrant.


<PAGE>

                  IN WITNESS  WHEREOF,  RateXchange  Corporation has caused this
Warrant to be executed by its officer thereunto duly authorized.

Dated: September 13, 2000


                                    RATEXCHANGE CORPORATION

                                     By:   /s/ Donald H. Sledge
                                         --------------------------------
                                           Name:  Donald H. Sledge
                                           Title: Chief Executive Officer


<PAGE>


ANNEX I

                               NOTICE OF EXERCISE

To: RATEXCHANGE CORPORATION

         (1) The undersigned  hereby irrevocably elects to purchase _____ shares
of  Common  Stock  of  RATEXCHANGE  CORPORATION,  pursuant  to the  terms of the
attached  Warrant,  and tenders  herewith payment of the purchase price for such
shares in full.

         (2) In exercising  this Warrant,  the  undersigned  hereby confirms and
acknowledges  that the shares of Common Stock are being acquired  solely for the
account of the  undersigned  and not as a nominee for any other  party,  and for
investment,  and that the undersigned shall not offer, sell or otherwise dispose
of any such shares of Common  Stock  except  under  circumstances  that will not
result in a violation of the  Securities  Act of 1933, as amended,  or any state
securities laws.

         (3) Please issue a certificate or certificates representing said shares
of Common Stock, and pay any cash for any fractional share to:

         Name                        Address                    No. Shares
         ----                        -------                    ----------







         (4)  Please  issue a new  Warrant  for the  unexercised  portion of the
attached Warrant in the name of the undersigned  and/or,  if the undersigned has
completed an Assignment  Form in the form of Annex II to this  Warrant,  in such
other names and amounts as is specified in such Assignment Form.

Dated: _____________________                Holder: ____________________________


                                            By: ________________________________
                                            Name:
                                            Title:





<PAGE>


                                                                        ANNEX II

                                 ASSIGNMENT FORM

         FOR VALUE RECEIVED,  the undersigned  registered  owner of this Warrant
hereby  sells,  assigns and transfers  unto the Assignee  named below all of the
rights of the  undersigned  under this  Warrant,  with  respect to the number of
shares of Common Stock set forth below:

Name of Assignee                 Address                           No. of Shares
----------------                 -------                           -------------




and does hereby irrevocably constitute and appoint  ____________________________
Attorney  to  make  such  transfer  on  the  books  of  RATEXCHANGE  CORPORATION
maintained for such purpose, with full power of substitution in the premises.

         The  undersigned  also  represents  that,  by  assignment  hereof,  the
Assignee  acknowledges  that this  Warrant and the shares of Common  Stock to be
issued upon  exercise  hereof are being  acquired  for  investment  and that the
Assignee  shall not offer,  sell or  otherwise  dispose  of this  Warrant or any
shares of stock to be issued upon  exercise  hereof  except under  circumstances
which will not result in a violation of the  Securities Act of 1933, as amended,
or any state securities laws.  Further,  the Assignee has acknowledged that upon
exercise of this  Warrant,  the  Assignee  shall,  if  requested by the Company,
confirm in writing,  in a form  satisfactory to the Company,  that the shares of
stock so purchased are being  acquired for investment and not with a view toward
distribution or resale.

Dated: _____________________                Holder: ____________________________


                                            By: ________________________________
                                            Name:
                                            Title:


<PAGE>


                                   SCHEDULE G
                           ESTIMATED ABI MONTHLY COST

                             [To be attached by ABI]