AMENDMENT NO. 1

                  TO EMPLOYMENT AGREEMENT FOR DONALD H. SLEDGE


         THIS  AMENDMENT  NO. 1 is  entered  into as of this __ day of  October,
2000,  by and  between  RateXchange  Corporation,  a Delaware  corporation  (the
"Company"),  and  Donald H.  Sledge  ("Employee"),  a  resident  of the State of
California.

         WHEREAS,  Employee and the Company entered into an employment agreement
dated  September  15, 1999 (the  "Employment  Agreement")  pursuant to which the
Company agreed to employ Employee as Chief  Executive   Officer and President of
the Company;

         WHEREAS, the Employee currently also serves as Chairman of the Board of
Directors of the Company; and

         WHEREAS,  Employee  and the  Company  desire  to amend  the  Employment
Agreement to reflect  Employee's  change in status from Chief Executive  Officer
and President of the Company to Chairman Chief Strategist  (including merger and
acquisition) of the Company;

         NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and agreements of the parties  contained herein and in the Employment  Agreement
and  other  good and  valuable  consideration  the  receipt  of which is  hereby
acknowledged, the parties hereby agree that effective as of October 9, 2000:

         1.  Section 2.  Position  and Duties is hereby  amended to provide that
Employee's  title shall be Chairman and "Chief  Strategist"  of the Company.  As
Chief  Strategist of the Company,  Employee shall render  executive,  policy and
other management  services to the Company of the type  customarily  performed by
persons serving in such a capacity,  including  primary  responsibility  for the
Company's  mergers  and  acquisitions.  Employee  shall  report to  the Board of
Directors of the Company. Employee shall devote his attention and efforts to the
business and affairs of the Company on a part-time  basis during the term of the
Employee's employment.

         2.  Section  4.01  Base  Salary  is  hereby  amended  to  provide  that
Employee's annual base salary shall be $120,000.

         3.  Section  4.02  Incentive  Bonus is hereby  amended to provide  that
Employee shall not have an annual  guaranteed Bonus for the year 2000 or for any
future year during the remaining Term.

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         4.  Section  5.05.4  Termination  Without  Cause is hereby  amended  to
provide that for purposes of  calculating  any payments due under this  section,
Employee' annual base salary shall be deemed to be $300,000.

         5. Release and Waiver

                  (a) In exchange for the payment and benefits  described in the
Employment  Agreement  as amended by this  Amendment,  Employee  unconditionally
releases  and  discharges  the  Company,  its  directors,  officers,  agents and
employees (in their individual and representative  capacities),  its affiliates,
subsidiaries, successors and assigns (collectively, the "Releasees") relating to
any claims,  demands,  causes of action,  and damages,  known and unknown,  that
Employee  has or may  have  against  any of  the  Releasees,  including  without
limitation, any claims, demands, causes of action and damages arising out of any
action,  omission or decision  occurring up to and  including  the date Employee
executes  this  Amendment,  directly or  indirectly  relating to the  Employee's
employment with the Company, the Employment  Agreement,  or the amendment of the
Employment Agreement.  Employee agrees not to bring or voluntarily assist in the
prosecution of any lawsuits,  charges, appeals,  grievances or other proceedings
of any kind  against  any one or more of the  Releasees  concerning  any claims,
demands, causes of action or damages released by Employee in this Amendment, and
to the extent any such proceedings are pending, Employee agrees they are or will
promptly be withdrawn.

                  (b) The  Employee's  release and  agreement in Paragraph  5(a)
above  includes,  but is not limited to,  rights or claims  under the common law
(including  but not  limited to any  claims of breach of  contract  or  wrongful
discharge),  the Older Workers' Benefit   Protection Act, the Age Discrimination
in Employment  Act of 1967, The Equal Pay Act, Title VII of the Civil Rights Act
of 1964, the Civil Rights Act of 1991, the Americans with  Disabilities Act, the
Civil Rights Act of 1866, the Civil Rights Act of 1871, all as amended,  and any
and all other federal, state and local statutes,  ordinances,  executive orders,
court  orders  and  regulations   prohibiting   employment   discrimination   or
retaliation based on race, national origin,  gender, age, religion,  disability,
or any other prohibited  bases, the Employee  Retirement  Income Security Act of
1974,  as amended,  and any state and/or  local common law or statutory  claims.
Employee and the Company  mutually  understand  and agree that by entering  into
this Amendment,  the Company is not admitting to any violation of the Employee's
rights, or any duties or obligations owed to the Employee.

                  (c)  Employee  acknowledges  that  Employee has been given the
opportunity  to  consider  this  Amendment  for  up to 21  days.  Employee  also
acknowledges  that  Employee  was  advised  to consult  an  attorney  about this
Amendment and that Employee has had a fair and full opportunity to do so.

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Further,  Employee  understands that the Company is not responsible for expenses
Employee may incur in consulting any attorney.

                  (d) Employee may revoke this  Amendment  within seven calendar
days  following its  execution by notifying  the Company in writing  directed to
President  and  Chief  Executive  Officer,  RateXchange  Corporation,  185 Berry
Street, Suite 3515, San Francisco,  CA 94107. If Employee does so, the Amendment
is null and void.  In any case,  this  Amendment  does not become  effective and
enforceable until the seven-day  revocation period expires.  After such time, if
there has been no written  revocation as provided above, this Amendment shall be
fully effective, enforceable and irrevocable.

         6.  Employee  and the Company  understand  and agree that the terms and
conditions of Employment Agreement, as amended by this Amendment, constitute the
complete  agreement  between the parties and that there are no understandings or
agreements between the parties, except what has been set forth in the Employment
Agreement,  as amended by this  Amendment.  Employee agrees that in signing this
Amendment,  Employee  did not rely on any  statement  or promise by the Company,
other  than what is  written  In the  Employment  Agreement,  as amended by this
Amendment.  This Amendment may be modified only by a written  document signed by
Employee and the Company.

         7.  If  any  provision  of  this  Amendment  is  found  to be  invalid,
unenforceable or void for any reason whatsoever,  at the election of the Company
such provision shall be severed from the remaining provisions of this Amendment,
and  shall  not  effect  the  validity  or   enforceability  of  such  remaining
provisions. This Amendment shall be deemed to have been made and entered into in
the State of California and shall in all respects be interpreted,  enforced, and
governed  by the laws  thereof  (but  excluding  the  choice  of law  provisions
thereof) and, as applicable, federal law.

         8. The parties,  intending to be legally bound by this Amendment,  sign
and deliver it freely,  voluntarily  and without  coercion and with knowledge of
the  nature  and  consequences  of the terms and  conditions  of the  Amendment.

                            (signature page follows)

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         IN  WITNESS  WHEREOF,  each of the  parties  hereto  has  executed  and
delivered this Amendment No. 1 as of the date first above written.


                                            RATEXCHANGE CORPORATION

                                            By: /s/ D. Jonathan Merriman
                                               ---------------------------------
                                            Name: D. Jonathan Merriman
                                                 -------------------------------
                                            Title: Chief Executive Officer
                                                  ------------------------------


                                            ACCEPTED AND AGREED TO:

                                            /s/ Donald H. Sledge
                                               ---------------------------------
                                                Donald H. Sledge

                                                Oct. 5, 2000
                                                --------------------------------
                                                Date:
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