EMPLOYMENT AGREEMENT

THIS EMPLOYMENT  AGREEMENT  (this  "Agreement") is entered into as of January 1,
2002 between RATEXCHANGE CORPORATION, a Delaware corporation (the "Company") and
Robert E. Ford (the "Executive").

WHEREAS, the parties desire to enter into this Agreement setting forth the terms
and  conditions  for the  employment  relationship  of the  Executive  with  the
Company.

NOW, THEREFORE, it is AGREED as follows:

1. Employment. The Executive is hereby employed as President and Chief Operating
Officer of the  Company  for a period  commencing  on the date hereof and ending
three years after the date hereof.  As President and Chief Operating  Officer of
the Company, the Executive shall handle all day-to-day activities of the Company
as customarily  performed by persons serving in such  capacities.  He shall also
perform such other duties as the Board of Directors of the Company may from time
to time direct.  The Executive agrees to serve the Company faithfully and to the
best of his  ability and to devote his full time,  attention  and efforts to the
business  and  affairs of the  Company  during the term of his  employment.  The
Executive   hereby  confirms  that  he  is  under  no  contractua1   commitments
inconsistent  with his obligations  set forth in this  Agreement.  The Executive
shall be entitled  without prior written  consent to hold positions on the Board
of Directors of entities  that do not compete  with the Company.  The  Executive
has, as of the date of this  Agreement,  disclosed  to the Board of Directors of
the Company the  positions  the  Executive  currently  holds on other  Boards of
Directors, and the Company has consented to such positions.

2. Location of Services.  During the term of this Agreement, the Executive shall
be  principally  located at the offices of the Board of Directors of the Company
located in the San Francisco, California metropolitan area.

3. Salary.  The Company  shall pay the  Executive an annual Base Salary equal to
$125,000,  which shall be  increased  to $175,000  upon the reaching of mutually
agreed upon milestones to be defined by the Executive an the Company's  Chairman
and CEO sometime  before the close of the first quarter 2002. The Base Salary of
the  Executive  shall  not be  decreased  at any  time  during  the term of this
Agreement from the amount then in effect unless the Executive  otherwise  agrees
in  writing.  Participation  in  deferred  compensation,   discretionary  bonus,
retirement,  and other employee  benefit plans and in fringe  benefits shall not
reduce the Base Salary.  The Base Salary shall be payable to the  Executive  not
less frequently than monthly.


                                      -1-
<PAGE>

4. Bonuses. Upon the signing of this Agreement,  the Executive shall be entitled
to receive a bonus of $145,000, to be paid and recognized as follows:

     (a)  In Cash:  $45,000 in cash will be paid to the  Executive  on the first
          business  day of  January  2002 to make up for the ten (10)  months of
          deferred   salary   stemming  from   significant   reductions  in  the
          Executive's base salary during 2001.

     (b)  In Options:  In lieu of the remaining $100,000 being paid in cash, the
          Executive  will be granted  the number of options  equal to the result
          derived by dividing $100,000 by the share price at closing of the 2001
          Private  Placement  overseen by Murphy & Durieu  "Private  Placement";
          this $100,000  represents the  Executive's  deferred  signing bonus of
          $25,000  for  2001  that  has not  been  paid,  plus  $75,000  for the
          Executive's  2001 annual bonus for meeting  performance  objectives in
          2001,  calculated as 50% of the Executive's 2001 annual base salary of
          $150,000.  These options will vest over two years;  50% on the date of
          this Agreement, 25% on the first anniversary of this Agreement and 25%
          on the second anniversary of this Agreement  according to the terms of
          the RateXchange 2001 Stock Option and Incentive Plan.

     (c)  If for any reason  whatsoever  the Private  Placement is not closed at
          any time,  the  $145,000  bonus  described  in (a) and (b) above shall
          remain in effect, with terms and timing of payment subject to mutually
          satisfactory  rescheduling  as  determined  by the  Executive  and the
          Company's Chairman and CEO.

     (d)  2002 Annual Bonus:  The  Executive  will earn an Annual Bonus up to an
          amount equal to 60% of his 2002 adjusted Base Salary of $175,000.  The
          2002  Annual  Bonus will be earned upon the  Company  becoming  EBITDA
          positive by the end of the third  quarter and  continuing  through the
          fourth  quarter of fiscal year 2002.  The  Company's  Chairman and CEO
          will  determine  the  amount  of the  bonus,  with  approval  from the
          Company's Compensation Committee.

The Company's  Chairman and CEO may, in his sole  discretion,  award  additional
bonuses to the Executive based upon achievement of Company  objectives.  Such an
award is subject to Compensation Committee approval.

5.  Participation  in the Executive  Benefit Plans.  In addition to the benefits
noted below,  the Executive shall be entitled to participate,  on the same basis
as  other  executive  employees  of the  Company,  in any  stock  option,  stock
purchase,  pension,  thrift,  profit-sharing,   group  life  insurance,  medical
coverage,  education, or other retirement or employee pension or welfare plan or
benefits  that the  Company  has  adopted  or may adopt for the  benefit  of its
employees.  The  Executive  shall  be  entitled  to  participate  in any  fringe
benefits,  which  are  now or  may  be or  become  applicable  to the  Company's
executive employees generally.

The Executive shall promptly be reimbursed for all reasonable  expenses which he
may incur in  connection  with his  services  hereunder in  accordance  with the
Company's normal reimbursement policies as established from time to time.


                                      -2-
<PAGE>

6. Stock Options.

(a) Subject to approval by the Company's Board of Directors, in consideration of
the  Executive's  acceptance of  employment  hereunder,  the Executive  shall be
granted  options to purchase an  aggregate  of 400,000  shares of the  Company's
common stock, par value $.000l per share ("Common Stock"),  at an exercise price
to be equal to the closing  price of the Common  Stock as listed on The American
Stock  Exchange  LLC on the date of the close of the Private  Placement,  and on
terms to be set forth in one of the  Company's  standard  forms of stock  option
agreement  to be entered  into  between  the Company  and the  Executive.  These
options  shall be granted  within three (3) business days after the close of the
Private Placement.  The vesting of such options shall be as follows:

(i)  options  to  purchase  100,000  shares  shall  vest as of the  date of this
Agreement.

(ii) options to purchase  100,000 shares shall vest on the first  anniversary of
this Agreement, subject to continued employment as of such date.

(iii) the balance of 200,000  option shares shall vest 1/24th per month over the
remaining two years following the first  anniversary of this Agreement,  subject
to continued employment as of such date.

(b) Each of the options will have a term of ten years from the date of grant. To
the extent  eligible,  the options  will be issued as  incentive  stock  options
within the meaning and subject to the limitations of Section 422 of the Internal
Revenue Code.

7. Sale of the Company.

(a) During  the term of this  Agreement  or the  Severance  Period  (as  defined
below),  upon  (i) a sale  of  all or  substantially  all of the  assets  of the
Company,  (ii) a merger of the Company with another  entity where the Company is
not the surviving  entity or where the  stockholders of the Company  immediately
prior to the merger own less than fifty percent (50%) of the voting stock of the
Company  following the merger,  or (iii) a change in the membership of the Board
of Directors such that  individuals  who, as of the date hereof,  constitute the
Board of Directors (the "Incumbent Board") cease for any reason to constitute at
least a  majority  of the  Board  of  Directors;  provided,  however,  that  any
individual becoming a director subsequent to the date hereof whose election,  or
nomination for election by the Company's shareholders, was approved by a vote of
at least a majority of the directors then  comprising the Incumbent  Board shall
be considered as though the individual were a member of the Incumbent Board, but
excluding,  for this purpose,  any individual whose initial assumption of office
occurs as a result of an actual or threatened  election  contest with respect to
the election or removal of directors or other actual or threatened  solicitation
of proxies or consents by or on behalf of a person other


                                      -3-
<PAGE>

than the Company's Board of Directors, the Executive shall receive $500,000 from
the Company and all of the Executive's  options that have been granted  pursuant
to the terms set forth in this Agreement shall vest immediately.

(b)  Notwithstanding  any  other  provision  of this  Agreement  or of any other
agreement,  contract,  or understanding  heretofore or hereafter entered into by
the Executive with the Company, except an agreement,  contract, or understanding
hereafter entered into that expressly  modifies or excludes  application of this
paragraph (an "Other  Agreement"),  and  notwithstanding  any formal or informal
employment  agreement or other arrangement for the direct or indirect  provision
of compensation to the Executive (including groups or classes of participants or
beneficiaries  of  which  the  Executive  is a  member),  whether  or  not  such
compensation  is deferred,  is in cash, or is in the form of a benefit to or for
the Executive (a "Benefit  Arrangement"),  if the  Executive is a  "disqualified
individual,"  as defined in Section  280G(c) of the  Internal  Revenue Code (the
"Code"),  any right to receive any payment or other benefit under this Agreement
shall not become  exercisable or vested or shall be forfeited to the extent that
such right to exercise,  vesting,  payment, or benefit,  taking into account all
other  rights,  payments,  or  benefits  to or  for  the  Executive  under  this
Agreement, all Other Agreements,  and all Benefit Arrangements,  would cause any
payment or benefit to the  Executive  under this  Agreement  to be  considered a
"parachute payment" within the meaning of Section 280G(b)(2) of the Code as then
in effect (a  "Parachute  Payment").  In the event that the  receipt of any such
right to  exercise,  vesting,  payment,  or  benefit  under this  Agreement,  in
conjunction with all other rights, payments, or benefits to or for the Executive
under any Other Agreement or any Benefit  Arrangement  would cause the Executive
to be considered to have received a Parachute Payment under this Agreement, then
the Executive  shall have the right,  in the  Executive's  sole  discretion,  to
designate those rights,  payments,  or benefits under this Agreement,  any Other
Agreements, and any Benefit Arrangements that should be reduced or eliminated so
as to avoid having the payment or benefit to the Executive  under this Agreement
be deemed to be a Parachute Payment.

8.  Standards.   The  Executive   shall  perform  the  Executive's   duties  and
responsibilities  under  this  Agreement  in  accordance  with  such  reasonable
standards  as may be  established  from time to time by the Chairman and CEO and
Board of Directors of the Company. The reasonableness of such standards shall be
measured against standards for executive performance generally prevailing in the
Company's industry.

9. Voluntary Absences: Vacations. The Executive shall be entitled to annual paid
vacation of at least four weeks  (twenty days) per year or such longer period as
the Board of Directors of the Company may approve.  The timing of paid vacations
shall be scheduled in a reasonable manner by the Executive.

10. Termination of Employment.

(a) The  Executive  may  terminate  his  employment at any time after the 60-day
notice  period in Section 11 has elapsed.  The Board of Directors of the Company
may terminate


                                      -4-
<PAGE>

the Executive's  employment at any time,  subject to payment of the compensation
described below.

(b) In the case of (i) any  termination  other than  "termination  for cause" as
defined  below,  or (ii) any  termination  by the Executive for "Good Reason" as
defined  below,  the  Executive  shall  continue to receive  for twelve  months,
commencing on the date of such  termination (the "Severance  Period"),  his full
Base Salary,  any bonus that has been earned but not paid before  termination of
employment,  plus a lump sum  payment  of 50% of his full base  salary;  and all
other benefits and  compensation  that the Executive would have been entitled to
under this Agreement in the absence of termination of employment  (collectively,
the "Severance Amount"); provided, further, that all of Executive's options that
have been granted  pursuant to the terms set forth in this Agreement  shall vest
immediately upon such termination.

(c) The Executive shall have no right to receive  compensation or other benefits
from the Company for any period  after  termination  for cause by the Company or
termination by the Executive other than termination with good reason, except for
any vested retirement  benefits to which the Executive may be entitled under any
qualified  employee  pension  plan  maintained  by the Company and any  deferred
compensation to which the Executive may be entitled.

(d) The term  "termination  for cause'  shall mean  termination  by the  Company
because of the Executive's (i) fraud or material  misappropriation  with respect
to the business or assets of the  Company;  (ii)  persistent  refusal or failure
materially  to perform  his duties and  responsibilities  to the  Company  for a
period of at least ten (10) days,  which continues after the Executive  receives
notice of such refusal or failure;  (iii) conduct that constitutes disloyalty to
the Company and which  materially  harms the Company or conduct that constitutes
breach of fiduciary duty involving  personal  profit;  (iv)  conviction,  or the
entry of a plea of guilty or nolo  contendere by the  Executive,  of a felony or
crime,  or willful  violation of any law, rule, or regulation,  involving  moral
turpitude;  (v) the use of drugs or alcohol which interferes materially with the
Executive's  performance of his duties; or (vi) material breach of any provision
of this Agreement.

(e)  The  term  resignation  for  "Good  Reason"  shall  mean  that  Executive's
resignation  occurs within three months of one of the following  events:  (i) an
involuntary  reduction of Executive's job duties or  responsibilities;  (ii) the
Chairman and CEO or Board  decides that  Executive  report to someone other than
the Chairman and CEO; or (iii) any  involuntary  reduction of  Executive's  Base
Compensation.

(f) The  Executive's  employment  pursuant  to this  Agreement  shall  terminate
automatically prior to the expiration of the term of this Agreement in the event
of the Executive's death or disability.  In the event the Executive's employment
terminates  prior to the  expiration  of the term of this  Agreement  due to his
death  or  disability,  the  Executive  shall  not be  entitled  to any  further
compensation under the provisions of this Agreement,  except for his base salary
earned  through  the date of  termination,  and the  portion of any bonus  which
previously had been approved by the Company but was unpaid as of the


                                      -5-
<PAGE>

Executive's  death or disability.  The Executive (or, in the event of death, the
Executive's  estate)  shall be entitled to such unpaid  portion of any  approved
bonus only if the Executive (or the authorized representative of the Executive's
estate) signs a comprehensive  general release of claims in a form acceptable to
Company.  Payments of such  approved but unpaid  bonus shall not commence  until
after the Executive (or the authorized  representative of his estate) signs such
a release,  and after any  revocation  period  referenced  in such  release  has
expired. If the Executive (or the authorized  representative of his Estate) does
not sign such a general  release of claims,  the Executive (or his estate) shall
not be  entitled  to  receive  any  compensation  under the  provisions  of this
Agreement  except for the  Executive's  base salary  earned  through the date of
death or disability. In the case of disability, if the Executive violates any of
the provisions of Sections 13 or 14 of this Agreement, the Company's obligations
to pay the unpaid portion of any approved Bonus to the Executive  shall cease on
the date of such violation.

11. Termination by the Executive.  The Executive may terminate his employment at
any time  during the term of this  Agreement  by giving  sixty (60) days'  prior
written notice thereof to the Board of Directors of the Company. In the event of
termination  by the  Executive  under this  Section  11, the  Company may at its
option  elect  to have the  Executive  cease to  provide  services  immediately,
provided that during such 60-day  notice period the Executive  shall be entitled
to continue to receive his base salary the Executive's  salary and benefits will
terminate at the end of the 60-day notice period and his options will be subject
to the terms and  conditions  of the  applicable  RateXchange  Stock  Option and
Incentive Plan.

12. Return of Proprietary  Property.  The Executive  agrees that all property in
the  Executive's  possession that he obtains or is assigned in the course of his
employment  with the Company,  including,  without  limitation,  all  documents,
reports, manuals,  memoranda,  customer lists, credit cards, keys, access cards,
and all other  property  relating in any way to the business of the Company,  is
the exclusive property of the Company, even if the Executive authored,  created,
or assisted in authoring or creating such property.  The Executive  shall return
to the Company all such property  immediately  upon termination of employment or
at such earlier time as the Company may request.

13.  Confidential  Information.  Except as permitted or directed by the Board of
Directors  of the  Company,  during the time the  Executive  is  employed by the
Company or at any time thereafter,  the Executive shall not divulge, furnish, or
make  accessible to anyone or use in any way (other than in the ordinary  course
of the  business of the  Company)  any  confidential  or secret  information  or
knowledge  of the  Company,  whether  developed  by himself  or by others.  Such
confidential and/or secret information  encompassed by this Section 13 includes,
but is not limited to, the  Company's  customer  and  supplier  lists,  business
plans, and financial, marketing, and personnel information. The Executive agrees
to  refrain  from any acts or  omissions  that  would  reduce  the  value of any
confidential or secret knowledge or information to the Company,  both during his
employment  hereunder and at any time after the  termination of his  employment.
The Executive's  obligations of confidentiality  under this Section 13 shall not
apply to any knowledge or  information  that is now  published  publicly or that
subsequently becomes


                                      -6-
<PAGE>

generally  publicly known, other than as a direct or indirect result of a breach
of this Agreement by the Executive.

14. Patent and Related Matters.

(a) The Executive agrees to promptly disclose in writing to the Company complete
information concerning each and every invention, discovery, improvement, device,
design, process, or product made, developed,  perfected,  devised, conceived, or
first reduced to practice by the  Executive,  either solely or in  collaboration
with others, during the Executive's term of employment by the Company, or within
six  months  thereafter,  relating  to the  business,  products,  practices,  or
techniques  of the  Company  (hereinafter  referred to as  "Developments").  The
Executive, to the extent that the Executive has the legal right to do so, hereby
acknowledges  that  any and all of said  Developments  are the  property  of the
Company  and hereby  assigns  and agrees to assign to the Company any and all of
the  Executive's  right,  title,  and  interest  in and to any  and  all of such
Developments.

(b) The provisions of this Section 14 shall not apply to any Development meeting
the following conditions:

(i) such Development was developed entirely on the Executive's own time; and

(ii)  such  Development  was  made  without  the use of any  Company  equipment,
supplies, facilities, or trade secret information; and such Development does not
relate at the time of conception or reduction to practice to (i) to the business
of the Company,  or (ii) to the  Company's  actual or  demonstrably  anticipated
research or development; and

(iii) such  Development does not result from any work performed by the Executive
for the Company.

     (b)  Upon request and without  further  compensation  therefore,  but at no
          expense  to  the  Executive,  and  whether  during  the  term  of  the
          Executive's  employment  by the Company or  thereafter,  the Executive
          will do all lawful acts, including,  but not limited to, the execution
          of papers  and the  giving of  testimony,  that in the  opinion of the
          Company, its successors,  or assigns, may be necessary or desirable in
          obtaining,  sustaining,  reissuing,  extending,  or enforcing  Letters
          Patent,  and for  perfecting,  affirming,  and recording the Company's
          complete  ownership and title thereto,  and to cooperate  otherwise in
          all proceedings and matters relating thereto.

15. Restrictive Covenants.

(a) During the employment of the Executive under this Agreement and for a period
of one year after termination of such employment, the Executive shall not at any
time (i) compete on his own behalf,  or on behalf of any other person or entity,
with the Company


                                      -7-
<PAGE>

or any of its  affiliates  within  all  territories  in which the  Company  does
business with respect to the business of the Company or any of its affiliates as
such business  shall be conducted on the date hereof or during the employment of
the Executive under this Agreement; (ii) solicit or induce, on his own behalf or
on behalf of any other  person or entity,  any employee of the Company or any of
its affiliates to leave the employ of the Company or any of its  affiliates;  or
(iii)  solicit or induce,  on his own behalf or on behalf of any other person or
entity,  any  customer  of the  Company or any of its  affiliates  to reduce its
business with the Company or any of its affiliates.

(b) The Executive  shall not at any time during or subsequent to his  employment
by the  Company,  on his own behalf or on behalf of any other  person or entity,
disclose any proprietary  information of the Company or any of its affiliates to
any other person or entity other than on behalf of the Company or in  conducting
its business,  and the Executive shall not use any such proprietary  information
for his own personal advantage or make such proprietary information available to
others for use, unless such  information  shall have come into the public domain
other than through unauthorized disclosure.

(c) The  ownership  by the  Executive  of not  more  than  5% of a  corporation,
partnership or other enterprise shall not constitute a violation hereof.

(d) If any  portion  of  this  Section  15 is  found  by a  court  of  competent
jurisdiction to be invalid or unenforceable,  but would be valid and enforceable
if modified,  this Section 15 shall apply with such  modifications  necessary to
make this Section 15 valid and  enforceable.  Any portion of this Section 15 not
required  to be so  modified  shall  remain in full  force and effect and not be
affected thereby.  The Executive agrees that the Company shall have the right of
specific  performance  in the event of a breach by the Executive of this Section
15.

16.  Assignment.  The rights and obligations of the Company under this Agreement
shall  inure to the  benefit of and shall be  binding  upon the  successors  and
assigns of the  Company.  The  Executive  may not assign this  Agreement  or any
rights  hereunder.  Any  purported  or attempted  assignment  or transfer by the
Executive of this Agreement or any of the Executive's  duties,  responsibilities
or obligations hereunder shall be void.

17. Company Remedies.  The Executive acknowledges that the remedy at law for any
breach of any of the provisions of Sections 12, 13 or 15 will be inadequate, and
that the  Company  shall be  entitled,  in  addition  to any remedy at law or in
equity, to preliminary and permanent injunctive relief and specific performance.

18. Other Contracts. The Executive shall not, during the term of this Agreement,
have any other paid  employment  other than with a  subsidiary  of the  Company,
except with the prior approval of the Board of Directors.

19. Notices. All notices,  requests,  demands, consents, or other communications
required  or  permitted  under this  Agreement  shall be in writing and shall be
deemed to have been duly given if delivered by overnight courier or express mail
service or by postage  prepaid


                                      -8-
<PAGE>

registered or certified  mail,  return  receipt  requested  (the return  receipt
constituting  prima facie evidence the giving of such notice request,  demand or
other  communication),  by personal  delivery,  or by fax with  confirmation  of
receipt and a copy mailed with postage prepaid, to the following address or such
other address of which a party may  subsequently  give notice to the other party
in accord with the provisions of this Section.  Notice is effective  immediately
if by personal delivery or by fax with  confirmation  received and a copy mailed
the same day.  Notice sent by overnight  courier or by  registered  or certified
mail is effective the earlier of actual receipt or the fifth date after the date
mailed as evidenced by the sender's certified or registered receipt.

           To the Company: RateXchange Corporation
                           100 Pine Street, Suite 500
                           San Francisco, CA 94111
                           Attn: Chairman

              To Employee: Robert E. Ford
                           2813 Porto Rosa Way
                           San Carlos, CA 94070

20.  Attorneys  Fees.  Should any party hereto retain counsel for the purpose of
enforcing, or preventing the breach of, any provision hereof including,  but not
limited to, the institution of any action or proceeding, whether by arbitration,
judicial or  quasi-judicial  action,  or  otherwise,  to enforce  any  provision
hereof,  or for damages for any alleged breach of any provision hereof, or for a
declaration of such party's rights or  obligations  hereunder,  then whether the
matter is settled by negotiation,  or by arbitration or judicial  determination,
the prevailing  party shall be entitled to be reimbursed by the losing party for
all  costs  and  expenses  incurred  thereby,  including,  but not  limited  to,
reasonable attorney's fees for the services rendered to such prevailing party.

22. Amendments or Additions.  No amendments or additions to this Agreement shall
be binding unless in writing and signed by all parties hereto.

23. Section  Headings.  The section headings used in this Agreement are included
solely for convenience and shall not affect,  or be used in connection with, the
interpretation of this Agreement.

24. Severability. The provisions of this Agreement shall be deemed severable and
the  invalidity  or  unenforceability  of any  provision  shall not  affect  the
validity or enforceability of the other provisions hereof.

25.  Governing Law. This Agreement shall be governed by the laws of the State of
Delaware (other than the choice of law rules thereof).


                                      -9-
<PAGE>

RATEXCHANGE CORPORATION

          By: D. Jonathan Merriman
              Chairman & CEO
              ---------------------------------

      Signed:
              ---------------------------------

Title: President and COO

          By: Robert E. Ford
              ---------------------------------

          Signed:
                 ------------------------------


                                      -10-