RATEXCHANGE


Via Hand Delivery

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

Dear Mr. Ford:

I am pleased to offer you a position  with  RateXchange,  Inc.  (the  "Company")
contingent upon the successful completion of your background verification.  This
letter represents a summary of the key points that you and I discussed.

Role - RateXchange is project  driven and everyone has project  responsibilities
that are  dynamic.  We would  like  you to step  into a role as Chief  Operating
Officer, reporting to Jon Merriman, President/CEO.

Compensation - The Company has discussed both annual  compensation and long-term
wealth accumulation concepts.

         o        We will pay you an annual  salary of $125,000  beginning  upon
                  your start date with  RateXchange.  Your annual salary will be
                  increased  to $150,000  and you will  receive a $25,000  bonus
                  immediately   after  the  close  of  the  strategic  round  of
                  financing.  You will have the  opportunity  to earn a year-end
                  incentive  bonus  of up to 50% of  your  post-strategic  round
                  salary, to be determined by the CEO.

         o        We will  recommend  to the Board of  Directors  of the Company
                  that at the next  specially  scheduled  board  meeting  you be
                  granted stock options  entitling you to purchase up to 150,000
                  shares of Common Stock of the Company at the then current fair
                  market  value at  close,  on your  start  date.  100% of these
                  options  will vest six  months  after your start date with the
                  company  and  shall  otherwise  be  subject  to the  terms and
                  conditions of the  RateXchange  Corporation  2000 Stock Option
                  and Incentive Plan.

         o        We will  recommend  to the Board of  Directors  of the Company
                  that at the next  specially  scheduled  board  meeting  you be
                  granted stock options  entitling you to purchase up to 150,000
                  shares of Common  Stock of the Company at a strike price equal
                  to the valuation of strategic  round price per share.  100% of
                  these  options  will vest  immediately  after the close of the
                  strategic  round funding and shall otherwise be subject to the
                  terms and conditions of the RateXchange Corporation 2000

185 Berry Street, Suite 3515
                             San Francisco CA 94107
                                                  415 371-9800 Fax: 415 371-9801

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Letter to Robert Ford
Page 2 of 2

                  Stock Option and  Incentive  Plan. If in the event a strategic
                  round is not closed within six months of your start date,  50%
                  of these options will vest at a strike price equal to $4.00 on
                  your  six  month  anniversary  with  the  Company,   with  the
                  remaining  options  vesting  at a rate of 20,000  options  per
                  month or  accelerating  fully  upon an  eventual  closing of a
                  strategic round, whichever comes first.

         o        The vesting of the stock options granted to you as outlined in
                  the previous two bullets above will accelerate,  regardless of
                  whether  or not a  strategic  round  is  closed,  and you will
                  additionally be entitled to receive a payment of $300,000 upon
                  the:

         o        Sale of all or substantially all of our assets; or

         o        Merger of our Company with another entity where we are not the
                  surviving entity or where our stockholders  immediately  prior
                  to the merger own less than 50% of our voting stock  following
                  the merger.

         o        If your  employment  with the  Company is  terminated  without
                  cause,  you will be paid your current salary for twelve months
                  following  termination plus a lump sum payment equal to 50% of
                  your current annual salary on the termination date.

         o        RateXchange   has  completed  the  development  of  a  defined
                  benefits program.  You are immediately  eligible for insurance
                  coverage and will receive an Orientation  Packet that contains
                  complete program details.

As with most  employment  agreements,  this offer is for  "at-will"  employment.
Employment  at-will may be terminated by you or RateXchange at any time, for any
reason.  You agree that the terms of your employment are  confidential  and thus
are  not to be  discussed  with  other  RateXchange  employees.  This  offer  is
conditional  upon your  acceptance  of the terms stated in this  letter.  If you
agree to accept employment on the terms stated in this letter,  please sign this
letter and return the original to us as soon as possible.

185 Berry Street, Suite 3515
                             San Francisco CA 94107
                                                  415 371-9800 Fax: 415 371-9801

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Letter to Robert Ford
Page 3 of 3


Lastly,  we know you share our mutual  interest in building a firm where  people
have a high level of integrity,  respect,  who trust each other, work hard, have
fun, and build security for the future. We are excited about the impact you will
make in shaping  this firm and  enthusiastically  hope that you will  accept our
offer.

Regards,

/s/ D. Jonathan Merriman

Jon Merriman                                         2-19-01
President/CEO                                        Date


AGREED, ACKNOWLEDGED, AND ACCEPTED:

/s/ Robert E. Ford                           2-19-01
------------------------------               -------
Robert E. Ford                                Date

Start Date: February 19, 2001

185 Berry Street, Suite 3515
                             San Francisco CA 94107
                                                  415 371-9800 Fax: 415 371-9801