Exhibit 10.6
                                      FINAL
                                    ORIGINAL

              SETTLEMENT AGREEMENT AND FULL GENERAL MUTUAL RELEASE

                  This  Settlement  Agreement  and Full General  Mutual  Release
("Agreement")  is made and entered  into this 28th day of August,  2000,  by and
between  the  Parties  identified  in the  next  paragraph,  in  compromise  and
settlement  of any and all disputes  between  them,  and for the other  purposes
indicated below.

                  The  Parties  to this  Agreement  are,  on the one  hand,  (1)
Ultimate  Markets,  Inc.  ("CLAIMANT");  and on the other hand, (2)  RateXchange
Corporation ("RATEXCHANGE").

                  By entering into this  Agreement,  the Parties do not admit or
concede  the  validity  of any claims or causes of action  alleged or that might
otherwise  have been  alleged,  and do not admit or concede any liability of any
kind in connection with such claims or causes of action.

                  In  consideration  of the  mutual  promises  and  other  terms
contained herein,  all of which are deemed by the Parties to constitute good and
valid consideration for this Agreement, the Parties hereby agree and covenant as
follows:

                  1. Mutual  Release.  Upon  delivery  of the items  required by
Section 2 (a)-(d) of this Agreement,  this Agreement shall  constitute,  and the
Parties  hereby  enter into,  a full  general  mutual  release as to any and all
actual or potential  claims,  including  cross-claims,  third party claims,  and
claims  for  indemnification  and/or  contribution,  as to any and all events or
actions occurring through the date of this Agreement, and except as


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to the rights and obligations created by the Agreement, the Parties hereby fully
and forever release and discharge each other,  their  successors,  predecessors,
subsidiaries,   parents,  affiliates,   shareholders,   principals,   directors,
officers, investors, employees, agents, independent contractors,  attorneys, and
assigns,  both past and  present,  from all  claims,  causes of action,  losses,
liabilities,  and  demands  of any kind  whatsoever,  whether  or not  asserted,
whether or not accrued,  whether contingent or otherwise,  whether liquidated or
unliquidated,  and whether known or unknown,  including but not limited to those
relating  in any way to, or arising in any way from,  the  relationship  between
CLAIMANT and RATEXCHANGE,  including any actual or contemplated  business and/or
compensation arrangements,  and/or any and all conduct, actions, or omissions of
either  Party.  The  terms  "RATEXCHANGE,"  "CLAIMANT,"  and  "Parties"  as used
throughout this Agreement are specifically defined to include  RATEXCHANGE's and
CLAIMANT's  successors,   predecessors,   subsidiaries,   parents,   affiliates,
shareholders,  principals,  directors,  officers, investors,  employees, agents,
independent contractors, attorneys, and assigns, both past and present.

                  Each Party is aware that it may hereafter  discover  claims or
facts in addition to or different from those it now knows or believes to be true
with respect to the subject matter of this  Agreement.  Nevertheless,  it is the
intention of the Parties to fully,  finally,  and forever settle and release the
matters identified  herein, and all claims related thereto,  which do now exist,
which may heretofore have existed, or which may hereafter accrue. In furtherance
of such intention, the releases given herein shall be and shall


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remain  in  effect  as  full  and   complete   releases  of  all  such   matters
notwithstanding the discovery or existence of any additional or different claims
or facts related thereto.

                  2.  Additional  Consideration  to Claimant.  Immediately  upon
execution of this Agreement,  RATEXCHANGE shall deliver to CLAIMANT: (a) 175,000
fully paid and nonassessable  shares (the "Shares") of RATEXCHANGE common stock,
par  value  $0.001  free and  clear of all liens  and  encumbrances  (except  as
described in this Agreement and attached agreements);  (b) a Registration Rights
Agreement  in the form  attached  hereto  as  Exhibit  A  ("Registration  Rights
Agreement")  executed by RATEXCHANGE;  (c) a warrant (the "Warrant") to purchase
an additional  175,000 shares of RATEXCHANGE common stock at a purchase price of
$5.00 per share in substantially  the form attached hereto as Exhibit B; and (d)
$100,000  by wire  transfer  of  immediately  available  funds to an  account of
Claimant  directed in writing by the Claimant as payment on its pending  invoice
to  RATEXCHANGE.  Within  sixty (60) days of  execution  of this  Agreement  and
pursuant  to  the  Registration  Rights  Agreement,   RATEXCHANGE  will  file  a
registration  statement with the Securities  Exchange Commission covering resale
of the Shares by CLAIMANT  and will use its best efforts to register the Shares.
The sale of the  registered  Shares  shall be  restricted  by  agreement  of the
parties,  such that (i) Claimant shall be able to sell a maximum of one-sixth of
the 175,000 Shares  (approximately 29,167 shares) per month (on a non-cumulative
basis),  for the six (6) months following the execution of this Agreement,  (ii)
the  first  sale  under  this  restriction  may not  occur  before  the 30th day
following execution of this Agreement; and


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(iii)  after  expiration  of the six (6) month  period,  sale of the  registered
shares shall not be restricted by this Agreement.

                  3.   Investment   Representations.   In  connection  with  the
execution  and  delivery  of  this  agreement,  CLAIMANT  makes  the  investment
representations and warranties set forth on Exhibit C, hereto.

                  4.  Confidentiality.  The Parties agree that the terms of this
Agreement  shall  be  and  always  remain  confidential  to the  fullest  extent
permissible by law. The Parties agree to exercise  maximum good faith to protect
and preserve such confidentiality.

                  5.  Non-Disparagement.  The Parties  shall each  refrain  from
making any critical, disparaging, or suggestive remarks or allusions of any kind
about  the  other  or  the  other's  current  or  former  officers,   directors,
shareholders, or employees.

                  6.  Non-Assignment.  The  Parties  warrant  that they have not
previously  assigned or made  subject to  subrogation  rights,  or  purported to
assign  or make  subject  to  subrogation  rights,  any claim or cause of action
settled or  released by this  Agreement  or related  thereto,  and they agree to
indemnify  and hold each  other  harmless  against  any claim or cause of action
based  on  any  such  assignment  or  subrogation  or  purported  assignment  or
subrogation.

                  7.   Authorization.   The  persons  executing  this  Agreement
represent  and warrant that they are duly and validly  authorized  to do so, and
that all requisite  corporate  and/or  partnership  action has been obtained and
that no further action is necessary to make this Agreement and all  transactions
contemplated  hereby  valid  and  binding  upon  each of the  Parties  hereto in
accordance with the terms hereof

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                  8. Binding on Successors. This Agreement shall be binding upon
and inure to the benefit of the Parties hereto and their successors and assigns.

                  9. Integrated Agreement. This Agreement is, and is intended by
the Parties to be, an  integrated  agreement,  setting  forth all the  promises,
undertakings,  understandings,  and  warranties  that have been made between the
parties.  The Term Sheet  between the parties dated July 23, 1999 and all rights
and  obligations  thereunder  are  hereby  terminated.  There  are no  promises,
understandings,  or warranties  by or between the Parties  other than  contained
herein.  No  representation  or promise  pertaining  to this  Agreement,  or the
subject matter  thereof,  shall be binding upon any of the Parties hereto except
as expressly provided herein.

                  10. Legal Advice.  Each Party has received  independent  legal
advice  from its  attorneys  with  respect  to the  advisability  of making  the
settlement provided for herein and with respect to the advisability of executing
this Agreement.

                  11. No Prior Representations.  Except as expressly provided in
this Agreement,  no Party (nor any officer,  agent, employee,  representative or
attorney of or for any Party) has made any  statement or  representation  to any
other Party regarding any fact relied upon in entering into this Agreement,  and
each Party does not rely upon any  statement,  representation  or promise of any
other Party (or any officer, agent, employee, representative or attorney for any
other Party),  in executing this Agreement or in making the settlement  provided
for herein.


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                  12.  Investigation of Facts.  Each Party to this Agreement has
made such  investigation of the facts  pertaining to this Agreement,  and of all
the matters pertaining thereto, as it deems necessary.

                  13. Agreement  Understood.  Each Party or  representative  has
read this Agreement and understands the contents hereof.

                  14. Good Faith.  Each Party  represents and warrants that this
Agreement is entered into in good faith and will be performed in all respects in
good faith.

                  15.  Binding  Upon  Execution.  This  Agreement  shall  become
effective  and shall be  binding  upon the  Parties  hereto  only upon  complete
execution of the Agreement.

                  16. Further Instruments. The Parties shall execute any further
or  additional  instruments  and they shall  perform any acts,  which may become
necessary in order to effectuate and carry out the purposes of this Agreement.

                   17.  Severability.  The  provisions  of  this  Agreement  are
severable.  If any provision of this Agreement other than the General Release in
numbered   Paragraph  1  is  deemed   overbroad   by  a  tribunal  of  competent
jurisdiction,  such provision shall be narrowed by the tribunal as necessary for
the provision to become  enforceable  and compliant with  applicable law. If any
provision of this Agreement other than the General Release in numbered Paragraph
1 is found to be invalid,  illegal, void, or unenforceable,  such provision will
be regarded as stricken  from the  Agreement and will not affect the validity or
enforceability of the remainder of the Agreement. If numbered Paragraph us


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found to be invalid, illegal, void, or unenforceable, then this entire Agreement
shall be null and void and all payments made pursuant to numbered Paragraph 2 of
this Agreement shall be returned to RATEXCHANGE.

                  18. Governing Law. This Agreement shall be construed according
to and governed by the laws of California; the provisions of paragraph 11 (c) of
the Registration Rights Agreement are incorporated as if fully set forth herein.

                  19. Signatures. This Agreement may be signed in counterparts.

ULTIMATE MARKETS, INC.                     RATEXCHANGE CORPORATION

By:  /s/ Arthur Bushonville                By:  /s/ Donald H. Sledge
     ----------------------                     --------------------


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                                    EXHIBIT A

             to Settlement Agreement and Full General Mutual Release

                          REGISTRATION RIGHTS AGREEMENT

         REGISTRATION  RIGHTS AGREEMENT (this  "Agreement"),  dated as of August
28, 2000, by and among RATEXCHANGE  CORPORATION,  a corporation  organized under
the laws of the State of Delaware (the "Company"), and ULTIMATE MARKETS, INC., a
corporation organized under the laws of Delaware ("Ultimate Markets").

         WHEREAS:

         A. The Company and  Ultimate  Markets  have  entered  into a Settlement
Agreement and Full General Mutual Release dated the date hereof (the "Settlement
Agreement").  In  connection  with the  Settlement  Agreement,  the  Company has
agreed,  upon the terms and subject to the conditions  contained therein,  among
other  things,  to issue to Ultimate  Markets  175,000  shares of the  Company's
common stock, $0.000l par value per share (the "Shares").

         B. To induce  Ultimate  Markets to execute and  deliver the  Settlement
Agreement,   the  Company  has  agreed  to  provide   Ultimate  Markets  certain
registration  rights  with  respect  to  resale  of the  Shares  in open  market
transactions  under the  Securities  Act of 1933, as amended,  and the rules and
regulations  thereunder,  or any similar  successor statute  (collectively,  the
"Securities Act"), and applicable state securities laws;

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
covenants  contained  herein  and other  good and  valuable  consideration,  the
receipt  and  sufficiency  of which are hereby  acknowledged,  the  Company  and
Ultimate Markets, intending to be legally bound, hereby agree as follows:

         1.       DEFINITIONS.

                  As used in this Agreement,  the following terms shall have the
following meanings:

                           (i)  "register,"   "registered,"  and  "registration"
refer  to a  registration  effected  by  preparing  and  filing  a  Registration
Statement or Statements in compliance  with the  Securities  Act and pursuant to
Rule 415 under the  Securities  Act or any successor rule providing for offering
securities on a continuous  basis ("Rule 415"),  and the declaration or ordering
of effectiveness of such Registration  Statement by the United States Securities
and Exchange Commission (the "SEC").


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                           (ii)  "Registrable  Securities" means (1) the Shares;
(ii) any  shares of common  stock of the  Company  issued as a result of a stock
split or a stock dividend on the Shares;  and (iii) any  securities  received in
exchange  for or in  replacement  of any  Registrable  Securities  in a  capital
reorganization, merger or consolidation of the Company.

                           (iii)  "Registration  Statement"  means  one or  more
registration  statements of the Company under the Securities Act registering all
of the Registrable Securities.

         2.       REGISTRATION.

                  Within  60  days   following  the  date  hereof  (the  "Filing
Deadline"),  the Company  shall file with the SEC, a  Registration  Statement on
Form S-3 (or, if Form S-3 is not then  available,  on such form of  Registration
Statement  as is  then  available  to  effect  a  registration  of  all  of  the
Registrable  Securities)  covering the resale by Ultimate Markets in open market
transactions of the Registrable Securities. The Registration Statement (and each
amendment  or  supplement   thereto,   and  each  request  for  acceleration  of
effectiveness  thereof)  shall be  provided  to (and  subject  to the review by)
Ultimate  Markets and its counsel at least five (5)  business  days prior to its
filing or other submission.

         3.       OBLIGATIONS OF THE COMPANY.

         In connection with the registration of the Registrable Securities,  the
Company shall have the following obligations:

                  a. The  Company  shall  prepare  and file with the SEC,  on or
before the Filing Deadline, the Registration Statement required by Section 2 and
shall  use its best  efforts  to cause  such  Registration  Statement  to become
effective as soon as practicable after such filing.  The Company shall keep such
Registration  Statement  effective  pursuant  to Rule 415 at all times until the
date on which all of the Registrable  Securities may be immediately  sold to the
public without  registration  pursuant to Rule 144 under the Securities Act (the
"Registration  Period"). The Registration Statement (including any amendments or
supplements  thereto  and  prospectuses  contained  therein  and  all  documents
incorporated  by reference  therein)  filed pursuant to this Agreement (i) shall
comply in all material  respects with the requirements of the Securities Act and
the rules and regulations of the SEC  promulgated  thereunder and (ii) shall not
contain any 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. The financial statements of the Company included in the Registration
Statement or  incorporated  by  reference  therein will comply as to form in all
material  respects with  applicable  accounting  requirements  and the published
rules and regulations of the SEC applicable with respect thereto. Such financial
statements shall be prepared in accordance with U.S. generally accepted


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accounting principles, consistently applied, during the periods involved (except
(i) as may be otherwise  indicated  in such  financial  statements  or the notes
thereto, or (ii) in the case of unaudited interim statements, to the extent they
may not include  footnotes or may be condensed or summary  statements) and shall
fairly present in all material respects the consolidated  financial  position of
the Company and its  consolidated  subsidiaries  as of the dates thereof and the
consolidated  results of their  operations  and cash flows for the periods  then
ended  (subject,  in the case of unaudited  statements,  to immaterial  year-end
adjustments).

                  b.  The  Company  shall  prepare  and  file  with the SEC such
amendments  (including   post-effective   amendments)  and  supplements  to  the
Registration   Statement  and  the  prospectus   used  in  connection  with  the
Registration  Statement as may be necessary to keep the  Registration  Statement
effective at all times during the Registration  Period, and, during such period,
comply with the provisions of the Securities Act with respect to the disposition
of  all  Registrable  Securities  of the  Company  covered  by the  Registration
Statement  until  such  time as all of such  Registrable  Securities  have  been
disposed of in accordance  with the intended  methods of disposition by Ultimate
Markets as set forth in the Registration Statement.

                  c. The Company shall furnish to Ultimate Markets and its legal
counsel  promptly  after the same is filed with the SEC one  signed  copy of the
Registration  Statement and any amendment thereto,  and such number of copies of
each  preliminary  prospectus  and  prospectus  and each amendment or supplement
thereto as Ultimate Markets may reasonably request to facilitate  disposition of
the Registrable Securities.

                  d. The Company  shall use its best efforts to (i) register and
qualify the Registrable  Securities covered by the Registration  Statement under
such other  securities  or "blue sky" laws of such  jurisdictions  in the United
States as Ultimate Markets reasonably  requests,  (ii) prepare and file in those
jurisdictions  such  amendments   (including   post-effective   amendments)  and
supplements  to such  registrations  and  qualifications  as may be necessary to
maintain the effectiveness  thereof during the Registration  Period,  (iii) take
such other  actions as may be  necessary  to  maintain  such  registrations  and
qualifications in effect at all times during the Registration  Period,  and (iv)
take all  other  actions  reasonably  necessary  or  advisable  to  qualify  the
Registrable Securities for sale in such jurisdictions;  provided,  however, that
the  Company  shall not be required in  connection  therewith  or as a condition
thereto to (a)  qualify to do business  in any  jurisdiction  where it would not
otherwise be required to qualify but for this Section 3(d),  (b) subject  itself
to general  taxation  in any such  jurisdiction,  (c) file a general  consent to
service of process in any such  jurisdiction,  (d) provide any undertakings that
cause  the  Company  undue  expense  or  burden,  or (e) make any  change in its
certificate  of  incorporation  or  by-laws,  which in each  case  the  Board of
Directors of the Company  determines to be contrary to the best interests of the
Company and its stockholders.

                  e. As promptly as  practicable  after  becoming  aware of such
event,  the Company shall notify  Ultimate  Markets by telephone or facsimile of
the happening of


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any  event,  of which  the  Company  has  knowledge,  as a result  of which  the
prospectus included in the Registration  Statement,  as then in effect, includes
an untrue  statement  of a material  fact or omission  to state a material  fact
required to be stated  therein or necessary to make the  statements  therein not
misleading,  and use its best  efforts  promptly  to  prepare  a  supplement  or
amendment to the  Registration  Statement  to correct  such untrue  statement or
omission  and deliver such number of copies of such  supplement  or amendment to
Ultimate Markets as it may reasonably request.

                  f. The  Company  shall use its best  efforts  to  prevent  the
issuance  of  any  stop  order  or  other  suspension  of  effectiveness  of the
Registration  Statement,  and,  if  such an  order  is  issued,  to  obtain  the
withdrawal  of such order at the earliest  practicable  date  (including in each
case by amending or  supplementing  the  Registration  Statement)  and to notify
Ultimate  Markets of the issuance of such order and the resolution  thereof (and
if the Registration Statement is supplemented or amended, deliver such number of
copies of such supplement or amendment to Ultimate  Markets as it may reasonably
request).

                  g. The Company  shall use its best  efforts to promptly  cause
all the  Registrable  Securities  covered by the  Registration  Statement  to be
listed on the AMEX or any other national securities exchange on which the common
stock of the Company is then listed.

                  h. The Company shall provide a transfer  agent and  registrar,
which may be a single entity, for the Registrable  Securities not later than the
effective date of the Registration Statement.

          4.      OBLIGATIONS OF ULTIMATE MARKETS.

          In connection with the  registration  of the  Registrable  Securities,
Ultimate Markets shall have the following obligations:

                  a. It shall be a condition precedent to the obligations of the
Company to complete the registration  pursuant to this Agreement with respect to
the Registrable  Securities  that Ultimate  Markets shall furnish to the Company
such information regarding itself the Registrable  Securities held by it and the
intended method of disposition of the Registrable Securities held by it as shall
be reasonably required to effect the registration of such Registrable Securities
and shall execute such  documents in connection  with such  registration  as the
Company may  reasonably  request.  At least five (5) business  days prior to the
first anticipated filing date of the Registration  Statement,  the Company shall
notify Ultimate  Markets of any  information the Company  requires from Ultimate
Markets.

                  b. Ultimate  Markets,  by its  acceptance  of the  Registrable
Securities,  agrees to cooperate with the Company as reasonably requested by the
Company  in  connection  with the  preparation  and  filing of the  Registration
Statement hereunder.


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                  c.  Ultimate  Markets  agrees  to  effect  all  sales  of  the
Registrable Securities in accordance with applicable law.

                  d. Ultimate Markets  acknowledges and agrees that, pursuant to
the terms of the Settlement Agreement, (i) it may sell a maximum of one-sixth of
the  Registrable  Securities  (approximately  29,167  shares)  per  month  (on a
non-cumulative  basis)  during  the six (6)  months  following  the  date of the
Settlement Agreement and (ii) the first sale under this restriction may occur no
earlier than the 30th day following the date of the Settlement Agreement.

                  e. Ultimate Markets  acknowledges and agrees that, pursuant to
the terms of a Registration  Rights Agreement dated as of March 27, 2000, by and
among the Company and the Initial Investors named therein (the "Investors"), (i)
the Company is required to give  written  notice of the  intended  filing of the
Registration  Statement  to each  Investor  who is a party  to the  Registration
Rights  Agreement  and (ii)  within  fifteen  (15)  days  after the date of such
notice,  each such  Investor  may include  registrable  securities  held by such
Investor in the Registration  Statement.  Ultimate Markets further  acknowledges
and agrees that the Company is not restricted or precluded  under this Agreement
or otherwise from granting  registration right to additional persons or entities
with respect to the Company's securities.

          5.      EXPENSES OF REGISTRATION.

          All reasonable expenses incurred by the Company or Ultimate Markets in
connection with registrations,  filings or qualifications pursuant to Sections 2
and 3 above (excluding  brokers' fees and similar selling expenses),  including,
without limitation, all registration,  listing and qualifications fees, printers
and accounting fees and the fees and  disbursements  of counsel for the Company,
and the reasonable fees and disbursements of Ultimate Market's counsel, shall be
borne by the  Company.  In  addition,  the  Company  shall  pay all of  Ultimate
Market's  costs and  expenses  (including  reasonable  legal  fees)  incurred in
connection with the enforcement of its rights hereunder.

          6.      INDEMNIFICATION.

          In the event any Registrable Securities are included in a Registration
Statement under this Agreement:

                  a. To the extent permitted by law, the Company will indemnify,
hold harmless and defend (i) Ultimate Markets, and (ii) its directors, officers,
employees and agents and each person who controls  Ultimate  Markets  within the
meaning  of  Section 15 of the  Securities  Act or Section 20 of the  Securities
Exchange  Act of 1934,  as  amended  (the  "Exchange  Act"),  if any  (each,  an
"Indemnified  Person"),  against any joint or several losses,  claims,  damages,
liabilities  or expenses  (collectively,  together with actions,  proceedings or
inquiries by any regulatory or self-regulatory  organization,  whether commenced
or threatened, in respect thereof "Claims") to which any of them


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may become  subject  insofar as such Claims arise out of or are based upon:  (i)
any  untrue  statement  or alleged  untrue  statement  of a  material  fact in a
Registration  Statement or the omission or alleged  omission to state  therein a
material fact required to be stated or necessary to make the statements  therein
not  misleading,  (ii) any untrue  statement  or alleged  untrue  statement of a
material  fact  contained  in any  preliminary  prospectus  if used prior to the
effective  date  of such  Registration  Statement,  or  contained  in the  final
prospectus  (as  amended or  supplemented,  if the Company  files any  amendment
thereof or supplement  thereto with the SEC) or the omission or alleged omission
to state  therein  any  material  fact  necessary  to make the  statements  made
therein,  in light of the circumstances  under which the statements therein were
made, not misleading, or (iii) any violation or alleged violation by the Company
of the Securities  Act, the Exchange Act, any state  securities law, or any rule
or  regulation  thereunder  relating  to the  offer  or sale of the  Registrable
Securities  (the  matters in the  foregoing  clauses  (i) through  (iii)  being,
collectively,  "Violations").  Subject to the  restrictions set forth in Section
6(c) with respect to the number of legal  counsel,  the Company shall  reimburse
Ultimate Markets and each other  Indemnified  Person,  promptly as such expenses
are  incurred and are due and payable,  for any  reasonable  legal fees or other
reasonable  expenses  incurred  by  them in  connection  with  investigating  or
defending  any such Claim.  Notwithstanding  anything to the contrary  contained
herein, the indemnification  agreement contained in this Section 6(a): (i) shall
not apply to a Claim  arising out of or based upon a Violation  which  occurs in
reliance upon and in  conformity  with  information  furnished in writing to the
Company  by  such  Indemnified  Person  expressly  for  use in the  Registration
Statement or any such amendment  thereof or supplement  thereto;  (ii) shall not
apply to amounts paid in settlement of any Claim if such  settlement is effected
without the prior  written  consent of the Company,  which  consent shall not be
unreasonably withheld; and (iii) with respect to any prospectus, shall not inure
to the benefit of any Indemnified  Person if the untrue statement or omission of
material fact  contained in such  prospectus  was corrected on a timely basis in
the prospectus,  as then amended or supplemented,  if such corrected  prospectus
was timely made  available by the Company  pursuant to Section 3(c) hereof,  and
the Indemnified  Person was promptly advised in writing not to use the incorrect
prospectus  prior to the use giving  rise to a  Violation  and such  Indemnified
Person,  notwithstanding  such advice,  used it. Such indemnity  shall remain in
full force and effect  regardless of any  investigation  made by or on behalf of
the  Indemnified  Person  and shall  survive  the  transfer  of the  Registrable
Securities by Ultimate Markets pursuant to Section 9.

                  b. In connection with any  Registration  Statement in which an
Investor is participating,  Ultimate Markets agrees to indemnify,  hold harmless
and defend, to the same extent and in the same manner set forth in Section 6(a),
the  Company,  each  of its  directors,  each  of its  officers  who  signs  the
Registration  Statement,  its  employees,  agents and each  person,  if any, who
controls the Company  within the meaning of Section 15 of the  Securities Act or
Section 20 of the Exchange  Act, and any other  stockholder  selling  securities
pursuant to the  Registration  Statement or any of its  directors or officers or
any person who controls such  stockholder  within the meaning of the  Securities
Act or the Exchange Act (collectively and together with an Indemnified


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Person,  an  "Indemnified  Party"),  against  any Claim to which any of them may
become subject, under the Securities Act, the Exchange Act or otherwise, insofar
as such Claim arises out of or is based upon any Violation,  in each case to the
extent (and only to the extent) that such Violation  occurs in reliance upon and
in  conformity  with  written  information  furnished to the Company by Ultimate
Markets  expressly for use in connection with such Registration  Statement;  and
subject to Section  6(c)  Ultimate  Markets  will  reimburse  any legal or other
expenses  (promptly  as such  expenses  are  incurred  and are due and  payable)
reasonably  incurred by them in connection with  investigating  or defending any
such Claim;  provided,  however,  that the indemnity agreement contained in this
Section 6(b) shall not apply to amounts paid in  settlement of any Claim if such
settlement is effected  without the prior written  consent of Ultimate  Markets,
which consent shall not be unreasonably withheld;  provided,  further,  however,
that  Ultimate  Markets  shall be liable under this  Agreement  (including  this
Section  6(b) and  Section  7) for only that  amount as does not  exceed the net
proceeds  actually  received  by it as a  result  of  the  sale  of  Registrable
Securities pursuant to such Registration Statement.  Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
such  Indemnified  Party and  shall  survive  the  transfer  of the  Registrable
Securities by Ultimate Markets pursuant to Section 9.  Notwithstanding  anything
to the contrary contained herein,  the  indemnification  agreement  contained in
this Section 6(b) with respect to any preliminary  prospectus shall not inure to
the  benefit of any  Indemnified  Party if the untrue  statement  or omission of
material fact by Ultimate  Markets  contained in the preliminary  prospectus was
corrected on a timely basis in the prospectus,  as then amended or supplemented,
and the Indemnified Party failed to utilize such corrected prospectus.

                   c.  Promptly  after  receipt  by  an  Indemnified  Person  or
Indemnified  Party  under this  Section 6 of notice of the  commencement  of any
action  (including  any  governmental   action),   such  Indemnified  Person  or
Indemnified  Party shall,  if a Claim in respect  thereof is to made against any
indemnifying  party under this  Section 6, deliver to the  indemnifying  party a
written notice of the commencement  thereof,  and the  indemnifying  party shall
have the right to assume  control of the defense  thereof with counsel  mutually
satisfactory  to the  indemnifying  party  and  the  Indemnified  Person  or the
Indemnified Party, as the case may be; provided, however, that such indemnifying
party shall not be entitled to assume such defense and an Indemnified  Person or
Indemnified  Party  shall  have the right to  retain  its own  counsel  with the
reasonable fees and expenses to be paid by the  indemnifying  party,  if, in the
reasonable   opinion  of  counsel  retained  by  the  indemnifying   party,  the
representation by such party's counsel of the Indemnified  Person or Indemnified
Party  and the  indemnifying  party  would be  inappropriate  due to  actual  or
potential  conflicts of interest between such Indemnified  Person or Indemnified
Party and any other party  represented by such counsel in such proceeding or the
actual or potential  defendants  in, or targets of, any such action include both
the Indemnified  Person or the Indemnified Party and the indemnifying  party and
any such  Indemnified  Person or Indemnified  Party  reasonably  determines that
there may be legal defenses  available to such Indemnified Person or Indemnified
Party which are in conflict with those available to such indemnifying party. The
indemnifying party shall pay for only one separate legal


<PAGE>


counsel for the Indemnified  Persons or the Indemnified  Parties, as applicable,
and such legal  counsel  shall be  selected  by  Ultimate  Markets,  if Ultimate
Markets is entitled to  indemnification  hereunder,  or by the  Company,  if the
Company is entitled to indemnification  hereunder, as applicable. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified  Person or Indemnified  Party under this Section 6,
except to the extent that the indemnifying  party is actually  prejudiced in its
ability to defend such action.  The  indemnification  required by this Section 6
shall be made by periodic  payments of the amount  thereof  during the course of
the  investigation  or defense,  as such expense,  loss,  damage or liability is
incurred and is due and payable.

          7.      CONTRIBUTION.

          To  the  extent  any  indemnification  by  an  indemnifying  party  is
prohibited or limited by law, the indemnifying  party agrees to make the maximum
contribution  with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided,  however, that
(i) no contribution shall be made under  circumstances where the maker would not
have been  liable for  indemnification  under the fault  standards  set forth in
Section 6, (ii) no person  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,  and (iii) contribution (together with any indemnification or
other  obligations under this Agreement) by Ultimate Markets shall be limited in
amount  to the net  amount  of  proceeds  received  by it from  the sale of such
Registrable Securities.

          8.      REPORTS UNDER THE EXCHANGE ACT.

          With a view to making  available  to Ultimate  Markets the benefits of
Rule 144  promulgated  under the  Securities  Act or any other  similar  rule or
regulation of the SEC that may at any time permit  Ultimate  Markets to sell the
Registrable  Securities to the public  without  registration  ("Rule 144"),  the
Company agrees to:

                  a.  file  with  the SEC in a timely  manner  and make and keep
available  all reports  and other  documents  required of the Company  under the
Securities  Act and the Exchange Act so long as the Company  remains  subject to
such  requirements  and the filing and  availability  of such  reports and other
documents as is required for the applicable provisions of Rule 144; and

                  b. furnish to Ultimate  Markets so long as it owns Registrable
Securities,  promptly upon request,  (i) a written statement by the Company that
it has complied with the reporting  requirements of Rule 144, (ii) a copy of the
most recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company,  and (iii) such other  information  as may be
reasonably requested to


<PAGE>


permit Ultimate Markets to sell such securities without registration pursuant to
Rule 144 or Rule 144A or any similar rule a regulation hereafter adopted.

          9.      ASSIGNMENT OF REGISTRATION RIGHTS.

          The rights of Ultimate Markets hereunder,  including the right to have
the Company register Registrable Securities pursuant to this Agreement, shall be
assignable  by  Ultimate  Markets to any  transferee  of all of its  Registrable
Securities  if: (i) Ultimate  Markets  agrees in writing with the  transferee or
assignee to assign such rights, and a copy of such agreement is furnished to the
Company after such assignment, (ii) the Company is furnished with written notice
of (a)  the  name  and  address  of  such  transferee  or  assignee  and (b) the
securities with respect to which such registration  rights are being transferred
or assigned, (iii) the transferee or assignee agrees in writing with the Company
to be bound by all of the provisions  contained  herein,  and (iv) such transfer
shall  have been made in  accordance  with the  applicable  requirements  of the
Settlement   Agreement  and   applicable   federal  and  state   securities  law
requirements.

          10.     AMENDMENT OF REGISTRATION RIGHTS.

          Provisions of this Agreement may be amended and the observance thereof
may  be  waived  (either  generally  or  in a  particular  instance  and  either
retroactively  or  prospectively),  in the case of an amendment,  by the written
agreement of the Company and Ultimate Markets or, in the case of a waiver,  with
the  written  consent  of the party  against  whom  such  waiver is sought to be
enforced.

          11.     MISCELLANEOUS.

                  a. Any  notices  required or  permitted  to be given under the
terms of this  Agreement  shall be sent by certified or registered  mail (return
receipt  requested)  or  delivered  personally  or by  courier  or by  confirmed
telecopy,  and shall be effective  five (5) days after being placed in the mail,
if mailed, or upon receipt or refusal of receipt, if delivered  personally or by
courier or confirmed  telecopy,  in each case addressed to the party to whom the
notice is being sent. The addresses for such communications shall be:

                  If to the Company:

                     RateXchange Corporation
                     Two Embarcadero Center, Suite 200
                     San Francisco, CA 94111
                     Telephone No.: (415) 393-0727
                     Facsimile No.: (415) 393-0721
                     Attention:    Donald Sledge and Christopher Aguilar, Esq.

                                       If to Ultimate Markets:


<PAGE>


                     Ultimate Markets, Inc.
                     68 E. Wacker Pl.
                     Suite 900
                     Chicago, IL 60601
                     Telephone No.: (312) 782-9880
                     Facsimile No.: (312) 782-9884
                     Attention:   Art Bushonville and Peter Schenk

         Each party hereto may from time to time change its address or facsimile
number for notices  under this  Section  11(a) by giving at least ten (10) days'
prior written notice to the other party.

                  b.  Failure of any party to exercise any right or remedy under
this  Agreement or otherwise,  or delay by a party in  exercising  such right or
remedy, shall not operate as a waiver thereof

                  c.  This  Agreement  shall be  governed  by and  construed  in
accordance  with the laws of the State of Illinois  applicable to contracts made
and to be performed in the State of Illinois.  The Company and Ultimate  Markets
irrevocably  consent to the  non-exclusive  jurisdiction  of the  United  States
federal  courts and state courts located in the State of Illinois in any suit or
proceeding  based on or arising under this Agreement and irrevocably  agree that
all claims in  respect  of such suit or  proceeding  may be  determined  in such
courts.  The Company and Ultimate  Markets  irrevocably  waive the defense of an
inconvenient  forum to the  maintenance of such suit or proceeding.  The Company
and Ultimate  Markets  further agree that service of process upon the Company or
Ultimate Markets,  as the case may be, mailed by first class mail to the address
set forth in Section 11(a) shall be deemed in every respect effective service of
process  upon the Company or Ultimate  Markets,  as the case may be, in any such
suit or  proceeding.  Nothing  herein  shall  affect the right of the Company or
Ultimate  Markets to serve  process in any other  manner  permitted  by law. The
Company and Ultimate Markets further agree that a final non-appealable  judgment
in any such suit or proceeding  shall be conclusive and may be enforced in other
jurisdictions by suit on such judgment or in any other lawful manner.

                  d. This Agreement and the Settlement  Agreement (including all
exhibits thereto)  constitute the entire agreement among the parties hereto with
respect to the subject  matter  hereof and thereof.  There are no  restrictions,
promises, warranties or undertakings,  other than those set forth or referred to
herein and therein.  This Agreement and the Settlement  Agreement  supersede all
prior  agreements and  understandings  among the parties hereto and thereto with
respect to the subject matter hereof and thereof.

                  e.  Subject  to the  requirements  of  Section 9 hereof,  this
Agreement  shall inure to the benefit of and be binding upon the  successors and
assigns of each of the parties hereto.

                                       10
<PAGE>

                  f. The  headings  in this  Agreement  are for  convenience  of
reference only and shall not limit or otherwise affect the meaning hereof.

                  g. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which shall  constitute one
and the same  agreement.  This  Agreement,  once  executed  by a  party,  may be
delivered to the other party hereto by facsimile  transmission of a copy of this
Agreement bearing the signature of the party so delivering this Agreement.

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

                  i. For purposes of this  Agreement,  the term  "business  day"
means  any day  other  than a  Saturday  or  Sunday  or a day on  which  banking
institutions  in the  State of New  York are  authorized  or  obligated  by law,
regulation or executive order to close.

                  [Remainder of Page Intentionally Left Blank]

                                       11
<PAGE>

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

                  RATEXCHANGE CORPORATION

                  By:  /s/ Donald H. Sledge
                  Name:  Donald H. Sledge
                  Its:  Chairman

                  ULTIMATE MARKETS, INC.

                  By:  /s/ Arthur Bushonville
                  Name:  Arthur Bushonville

                  Its:  CEO

                                       12
<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 "ACT"),  OR
UNDER THE  SECURITIES LAW OF ANY STATE OR OTHER  JURISDICTION.  SUCH WARRANT AND
SHARES  HAVE  BEEN  ACQUIRED  FOR  INVESTMENT  AND  NOT  WITH A VIEW  TO,  OR IN
CONNECTION  WITH, THE DISTRIBUTION  THEREOF.  SUCH WARRANT 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,
REASONABLY 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.

No. W-COMM - 103                           Warrant to Purchase up to 175,000
                                           Shares of Common Stock (subject to
                                           adjustment)

                        WARRANT TO PURCHASE COMMON STOCK

                                       of

                             RATEXCHANGE CORPORATION
                           Void after August 28, 2003
      (subject to earlier termination in accordance with the terms hereof)

          This certifies that, for value received,  ULTIMATE  MARKETS,  INC., 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 175,000 shares of the common stock, $.0001 par value per
share  ("Common  Stock"),  of the Company,  (the  "Warrant  Issue  Date"),  upon
surrender hereof, 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 number,
character  and  Exercise  Price of such  shares of Common  Stock are  subject to
adjustment 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, during the term commencing on the Warrant Issue Date and ending on


<PAGE>


5:00  p.m.,  Eastern  Standard  Time,  on  August  28,  2003,  and shall be void
thereafter.

          2. Exercise Price. The exercise price (the "Exercise  Price") at which
this Warrant may be exercised shall be $5.00 per share. The Exercise Price shall
be subject to adjustment as provided below.

          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),  subject to Section  3(c) below,  upon payment in cash or certified or
cashier's  check  payable to the  Company  or by wire  transfer  of  immediately
available funds 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
("Exercise Date"), 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.

          (c) Notwithstanding any provisions herein to the contrary, if the fair
market value of one share of Common Stock is greater than the Exercise  Price on
the Exercise  Date, in lieu of exercising  this Warrant for cash, the Holder may
elect to receive shares of Common Stock equal to the value (as determined below)
of this  Warrant (or the portion  hereof being  cancelled)  by surrender of this
Warrant  at the  principal  office of the  Company  together  with the  properly
endorsed  Notice of  Exercise  and notice of such  election  in which  event the
Company  shall issue to the Holder a number of shares of Common  Stock  computed
using the following formula:

                                    X=Y(A-B)
                                      -----
                                        A


<PAGE>


Where

                  X   =    the number of shares of Common  Stock to be issued to
                           the Holder;

                  Y   =    the  number of shares  of  Common  Stock  purchasable
                           under  the  Warrant  or,  if  only a  portion  of the
                           Warrant is being  exercised,  the number of shares of
                           Common  Stock  purchasable  in respect of the portion
                           hereof being cancelled on the Exercise Date;

                  A   =    the fair market  value of one share of the  Company's
                           Common Stock on the Exercise Date; and

                  B   =    Exercise Price (as adjusted to the Exercise Date).

For purposes of the above calculation,  fair market value of one share of Common
Stock shall be  determined  by the  Company's  Board of Directors in good faith;
provided,  however,  that if a public  market for the Common Stock exists at the
time of such  exercise,  the fair market value per share shall be the average of
the  closing  bid  and  asked   prices  of  the  Common   Stock  quoted  in  the
Over-The-Counter  Market  Summary or the last  reported sale price of the Common
Stock or the closing  price quoted on The Nasdaq  Stock  Market,  Inc.  National
Market or on any  exchange  on which the Common  Stock is listed,  whichever  is
applicable,  as published in the Eastern  Edition of The Wall Street Journal for
the five trading days prior to the Exercise Date. For purposes of Rule 144 under
the Securities Act, 17 CFR ss.230.144, the Company and the Holder agree that the
exercise of this Warrant in accordance with this Section 3(c) shall be deemed to
be a conversion  of such portion of the Warrant,  pursuant to the terms  hereof,
into Common Stock.

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 in good faith by the Board of Directors of the Company) 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 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  Stockholder.  Subject to Sections 9 and 11 of this Warrant,  until
this Warrant shall

<PAGE>

have been exercised as provided herein, the Holder,  shall not by virtue of this
Warrant  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, or 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 his  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).  Subject  to the  provisions  of this  Warrant  with  respect  to
compliance  with the  Securities  Act of 1933, as amended (the "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.


<PAGE>


          (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 and shall promptly  transfer the
Warrant on the Warrant Registry.

          (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. 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.

          (f) Legend. The certificate(s) evidencing any Common Stock issued upon
exercise of this Warrant shall bear a restrictive  stock legend in substantially
the form set forth below:

THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE  HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),  OR UNDER THE SECURITIES LAW
OF ANY STATE OR OTHER  JURISDICTION.  SUCH  SECURITIES  HAVE BEEN  ACQUIRED  FOR
INVESTMENT  AND NOT WITH A VIEW TO,  OR IN  CONNECTION  WITH,  THE  DISTRIBUTION
THEREOF. SUCH SECURITIES 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,  REASONABLY  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.

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


<PAGE>


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)  and will  upon such  issuance  be duly  authorized,  validly
issued, full paid and non-assessable  shares of Common Stock. 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  Executive  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  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


<PAGE>

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
received at least 20 days prior to the date therein specified.

         (c) All such notices, advice and communications shall be in writing and
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.

                   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:

          11.1. .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


<PAGE>

reorganization,  consolidation, merger, sale or transfer, all subject to further
adjustment  as provided in this  Section 11. The  foregoing  provisions  of this
Section   11.1   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.

          11.2.  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.

          11.3.  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.

          11.4.  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


<PAGE>

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.

                   11.5  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.

          11.6.  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.      General.

          12.1.  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).

          12.2. 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

<PAGE>

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.

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

          12.4.  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: August 28, 2000

                                       RATEXCHANGE CORPORATION


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

<PAGE>


                                                                         ANNEX I

                               NOTICE OF EXERCISE

To:    RATEXCHANGE CORPORATION

         (I) 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 the within 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 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>


                                    EXHIBIT C

             to Settlement Agreement and Full General Mutual Release

                    INVESTMENT REPRESENTATIONS AND WARRANTIES

                  1. Ultimate Markets  Representations and Warranties.  Ultimate
Markets hereby represents and warrants to RateXchange that:

                  (a)  Ultimate  Markets  understands  that the  Shares  and the
warrant being acquired by Ultimate  Markets under the  Settlement  Agreement and
Full General  Mutual  Release and the  RateXchange  common stock  issuable  upon
exercise of the Warrant (the Shares,  the warrant and such shares of RateXchange
common  stock   issuable  upon  exercise  of  the  warrant  being   referred  to
collectively as the "Securities")  have not been registered under the Securities
Act of 1933,  as  amended  (the  "Securities  Act") or  under  applicable  state
securities  laws,  in  reliance  upon  exemptions   contained  therein  and  any
applicable regulations  promulgated  thereunder or interpretations  thereof, and
cannot be offered for sale, sold or otherwise transferred unless such Securities
are subsequently so registered or qualify for exemption from registration  under
the Securities Act and applicable  state  securities  laws; and the certificates
representing  such Securities shall bear a legend  substantially in the form set
forth in Section 7(f) of the warrant.

                  (b) Ultimate  Markets is acquiring the  Securities  solely for
its own  account,  for  investment  and not with a view  toward  resale or other
distribution  within the meaning of the Securities Act except as provided by the
Registration  Rights  Agreement  between  the  parties  executed  simultaneously
herewith.

                  (c) Ultimate  Markets has such  knowledge  and  experience  in
financial and business  matters that it is capable of evaluating  the merits and
risks of its investment in the  Securities;  and it  understands  and is able to
bear any economic risks associated with such investment, including the necessity
of holding the  Securities  for an  indefinite  period of time,  inasmuch as the
Securities  may not be  transferred  except as  contemplated  hereunder  and the
inherent  risk  of  losing  all or  part of the  investment  in the  Securities.
Ultimate  Markets  has  relied  upon  its  own  accountants,  outside  auditors,
financial  and tax  advisors  and legal  counsel  for  matters  relating  to the
accounting,  tax,  financial  and  legal  treatment  and  effects  to it of  the
acquisition of the Securities by it.

                  (d) Ultimate  Markets  understands that the Securities will be
considered  "restricted  securities"  within  the  meaning of Rule 144 under the
Securities  Act;  that  Rule  144  may  not be  available  to  exempt  from  the
registration  requirements  of the Securities  Act the sale of such  "restricted
securities";  that if Rule 144 is available,  sales may be made in reliance upon
Rule 144 only in accordance  with the terms and  conditions of Rule 144,  which,
among other things,  generally requires that the Securities be held for at least
one year and that  sales  shall be made in  limited  amounts;  and  that,  if an
exemption for such sales by Ultimate  Markets is not available,  registration of
the Securities may be required,  but that  RateXchange is under no


<PAGE>

obligation to register the  Securities or to facilitate  compliance or to comply
with any exemption except pursuant to the registration rights agreement attached
as Exhibit A to the Settlement Agreement and Full General Mutual Release.

                  (e) Ultimate  Markets is an "accredited  investor"  within the
meaning of Rule 501 under the Securities Act.

                  (f) RateXchange has furnished  Ultimate Markets with copies of
RateXchange's  1999  Annual  Report on Form 10-K,  its Form 10-Q for the quarter
ended March 31, 2000 and its Current Report on Form 8-K dated July 20, 2000 (the
"Offering  Materials").  Ultimate Markets has carefully reviewed and understands
the  Offering  Materials.  Ultimate  Markets  has  had  the  opportunity  to ask
questions of the officers of RateXchange  concerning  RateXchange  and the terms
and  conditions  of an  investment  in  the  Securities.  RateXchange  has  made
available to Ultimate  Markets'  attorney or accountant all documents that he or
they have  requested  relating  thereto and has provided  answers to all of such
questions.  In evaluating an investment in the Securities,  Ultimate Markets has
not  relied  upon any  representations  or other  information  (whether  oral or
written)  other than as  contained  in any  documents or answers to questions so
furnished to it by RateXchange.

                  (g)  The  information  provided  in  the  Accredited  Investor
Questionnaire  submitted to RateXchange by Ultimate  Markets is true and correct
as of the date hereof

                  (h) Ultimate Markets is acquiring the Securities without being
furnished  any  offering  literature  or  prospectus  other  than  the  Offering
Materials  (including  the exhibits  thereto)  (and other than any  documents or
answers to questions described in subparagraph (f) above).

                  (i)  Ultimate  Markets  understands  that no  federal or state
agency has made any finding or determination as to the fairness of this offering
for investment, nor any recommendation or endorsement of the Securities.

                  (j) The foregoing  representations and warranties are true and
accurate as of the date of the investment in the Securities by Ultimate Markets.

                  2.  RateXchange  Representations  and Warranties.  RateXchange
hereby represents and warrants to Ultimate Markets that:

                  (a) RateXchange is a corporation duly formed, validly existing
and in good standing under the laws of the state of Delaware.

                  (b) The execution, delivery, and performance of this Agreement
by RateXchange has been duly and validly  authorized by all necessary  corporate
actions, does not require the approval,  consent,  authorization or act of other
persons and will not result in the breach or default of any  agreement  or other
instrument  binding on  RateXchange.  This Agreement  constitutes  the valid and
binding  obligation of  RateXchange,  enforceable in accordance  with its terms,
subject to applicable law.


<PAGE>


                  (c) The  Shares and the shares  subject to the  Warrant,  when
issued,  will  be duly  and  validly  authorized  and  issued,  fully  paid  and
nonassessable,  and free and clear of all liens,  restrictions  and encumbrances
(other than restrictions under the Settlement Agreement and applicable law).