Exhibit 10.4

                        RATEXCHANGE EMPLOYMENT AGREEMENT
                                 (PAUL WESCOTT)

         This Employment  Agreement (this "Agreement") is entered into effective
as of the  5th  day  of  July,  2000  (the  "Effective  Date"),  by and  between
RateXchange  Corporation,  a Delaware  corporation (the "Company"),  and Paul A.
Wescott ("Employee"). The Company and Employee agree as follows:

         1. Employment.  The Company hereby Employee,  and Employee accepts such
employment, upon the terms and conditions set forth in this Agreement.

         2. Position and Duties.  During  Employee's  employment  hereunder,  he
shall  serve as the  Company's  Executive  Vice  President  and Chief  Operating
Officer, and shall perform such employment duties as the Company shall assign to
him from time to time.  Employee  agrees to serve the Company  faithfully and to
the  best of his  ability  and to  devote s his full  time,  attention,  and his
efforts  to the  business  and  affairs  of the  Company  during the term of his
employment. Employee hereby confirms that he is under no contractual commitments
inconsistent  with his obligations set forth in this Agreement.  Employee agrees
that,  during the term of this  Agreement,  he will not  render or  perform  any
services for any corporation,  firm, entity, or person,  other than the Company,
without the prior written consent of the Company,  except that Employee shall be
entitled  without  prior  written  consent  to hold  positions  on the  Board of
Directors of entities that do not compete with the Company.  Employee has, as of
the date of this  Agreement,  disclosed to the Board of Directors of the Company
the positions  Employee  currently  holds on other Boards of Directors,  and the
Company has consented to such positions.

         3. Term.  Unless  terminated  at an  earlier  date in  accordance  with
Section 5 of this  Agreement,  the term of this  Agreement (the "term") shall be
three years commencing on the Effective Date.

         4.  Compensation  and Benefits.  As compensation for all services to be
rendered by Employee under this Agreement, the Company shall provide to Employee
the following:

                  4.01 Base  Salary.  . The  Company  shall pay to  Employee  an
annual  base  salary  of  $250,000.00  less  legally  required   deductions  and
authorized withholdings, payable in periodic installments in accordance with the
standard payroll practices of the Company in effect from time to time.  Employee
shall be eligible for annual salary  increases  which shall be determined by the
Company in its sole discretion.

                  4.02 Incentive Bonus. Employee shall be eligible for an annual
incentive bonus (a "Bonus") of up to 50% of his annual base salary, less legally
required or legally  authorized  deductions and withholdings.  The amount of any
Bonus paid to Employee  shall be based upon criteria upon which the Employee and
the Company shall  mutually  agree.  The amount of any Bonus payable to Employee
for the  remaining  years of the Term shall be  determined by the Company in its
sole discretion,  based upon the eligibility criteria upon which the Company and
Employee have agreed.



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                  4.03.  Stock Options.  Employee shall be entitled to receive a
grant of options to acquire  250,000  shares of Company  stock  pursuant  to the
terms and  subject  to the  conditions  of the stock  plan in which the  Company
employees participate.

                  4.04.  Other  Compensation.  Employee  shall  be  entitled  to
participate  in any other  compensation  or bonus,  including  stock  option and
equity  incentive  plans the Company  makes  generally  available  to its senior
executives  in  accordance  with the terms of such plans and  subject to (i) the
Company's  right to at any time amend or terminate  any such plan or program and
(ii) terms not less favorable  than those granted to any other senior  executive
of the Company.

                  4.05  Indemnification.  Employee  shall be  indemnified by the
Company in accordance  with the Company's  policies  applicable to the Company's
officers and/or directors.


       5.         Termination.

                  5.01  Termination  Due  to  Employee's  Death  or  Disability.
Employee's  employment pursuant to this Agreement shall terminate  automatically
prior  to the  expiration  of the  Term in the  event  of  Employee's  death  or
Disability,  as defined  herein.  "Disability"  shall mean a physical  or mental
impairment of Employee  which results in Employee's  inability to perform one or
more  of the  essential  functions  of  Employee's  position,  with  or  without
reasonable accommodation, provided Employee has exhausted Employee's entitlement
to any applicable  leave,  if Employee  desires to take such leave and satisfies
all eligibility requirements for such leave.

                  5.02  Termination  by  the  Company  for  Cause.  Company  may
terminate  Employee's  employment  pursuant  to  this  Agreement  prior  to  the
expiration  of the Term in the event that there is cause  ("Cause") to terminate
Employee's employment, which shall be defined as any of the following:

                           (a) Employee's  material  breach of any obligation to
the Company under the terms of this Agreement;

                           (b) Employee's conviction,  or the entry of a plea of
guilty or nolo contendere by Employee of any felony or any crime involving moral
turpitude; or

                           (c)  Any   acts  of   Employee   constituting   gross
negligence or misconduct in connection with his employment with the Company,  or
Employee's breach of any fiduciary duty to the Company or Employee's  failure to
carry out any reasonable directive of the Company, any conduct by Employee which
is detrimental to the Company,  or any failure by Employee to comply with any of
the policies or performance standards of the Company.

The  Company's  determination  that  there  is  Cause  to  terminate  Employee's
employment  shall be subject to the dispute  resolution  procedures  pursuant to
Section 16 of this Agreement.



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                  5.03 Termination by the Company without Cause. The Company may
terminate Employee's employment at any time prior to the expiration of the Term,
without prior notice and for any reason  including,  but not limited to, a sale,
merger,  or "change of control" in the  ownership of the  Company,  provided the
Company  pays to  Employee  the  severance  pay and  accelerates  the vesting of
Company stock options as described in Section 5.05(d).

                  5.04  Termination  by  Employee.  Employee may  terminate  his
employment  at any time during the term of this  Agreement  by giving sixty (60)
days' prior written notice thereof to the Company's  Board of Directors.  In the
event of  termination  by Employee  under this  Section,  the Company may at its
option elect to have Employee cease to provide  services  immediately,  provided
that during such 60-day notice period  Employee shall be entitled to continue to
receive his base salary,

                  5.05      Effect of Termination.

                           (a)  Survival  of  Provisions.   Notwithstanding  any
termination or expiration of this  Agreement,  or any  termination of Employee's
employment with the Company pursuant to Section 5, Employee, in consideration of
Employee's  employment  hereunder to the date of such termination or expiration,
shall remain bound by the provisions of this Agreement which specifically relate
to periods,  activities, or obligations upon or subsequent to the termination of
Employee's employment, including, but not limited to, the provisions of Sections
6, 7, and 8.

                           (b)  Termination  due to Death or Disability.  In the
event Employee's  employment  terminates prior to the expiration of the Term due
to his death or  Disability,  the Company shall pay to Employee or to Employee's
estate (i) Employee's base salary earned through the date of  termination,  (11)
the  portion of any annual  Bonus under  Section  4.02 of this  Agreement  which
previously  had been  approved by the  Company  but was unpaid as of  Employee's
death or Disability and (iii) a lump sum or periodic payment  severance equal to
six (6) months of  Employee's  Base  Salary at the time of  Employee's  death or
Disability.  Employee  (or, in the event of death,  Employee's  estate) shall be
entitled to such  compensation  as described in this  paragraph only if Employee
(or the authorized  representative  of Employee's  estate) signs a comprehensive
general  release of claims in a form  acceptable  to  Company.  Payments of such
compensation  shall  not  commence  until  after  Employee  (or  the  authorized
representative  of his estate)  signs such a release,  and after any  revocation
period  referenced in such release has expired.  If Employee (or the  authorized
representative  of his Estate)  does not sign such a general  release of claims,
Employee (or his estate) shall not be entitled to receive any compensation under
the  provisions  of this  Agreement  except for  Employee's  base salary  earned
through the date of death or Disability.  In the case of Disability, if Employee
violates  any of the  provisions  of  Sections  7 or 8 of  this  Agreement,  the
Company's  obligations  to pay the  unpaid  portion  of any  approved  Bonus  to
Employee shall cease on the date of such violation.

                           (c)   Termination  for  Cause.  In  the  event  of  a
termination  for Cause under  Section  5.02,  Employee  shall not be entitled to
receive any further compensation under the provisions of this Agreement,  except
for his base salary earned through the date of termination.

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                           (d)  Termination  without  Cause.  In  the  event  of
termination  without  Cause under Section  5.03,  Employee  shall be entitled to
severance pay consisting of the following:  (1) base salary  continuation for 12
months  following the date of termination,  at the rate in effect at the time of
termination,  which shall be paid on the Company's  regular  paydays,  and (2) a
lump sum payment of $100,000. In the event of termination upon the occurrence of
a "change in control" in the  ownership of the Company,  Employee  shall receive
the  severance  pay listed in this section and any unvested  options to purchase
Company  stock or other  equity  incentive  plans  pursuant  to  Section  4 will
immediately  vest in full.  Employee  shall -only be  entitled to the  foregoing
severance pay if Employee signs a  comprehensive  general release of claims in a
form  acceptable  to the Company.  Employee's  severance  pay shall not commence
until the first  payday  after  Employee  signs  such a  release,  and after any
revocation period  referenced in such release has expired.  If Employee does not
sign such a general release of claims, Employee shall not be entitled to receive
any  compensation  under the  provisions of this  Agreement  except for his base
salary earned through the date of termination.  If Employee  violates any of the
provisions of Sections 7 or 8 of this  Agreement,  the Company's  obligations to
pay severance pay to Employee shall cease on the date of such violation.

                           (e) Termination  Occasioned by Employee. In the event
Employee  terminates  his employment  under Section 5.04,  Employee shall not be
entitled  to receive  any  further  compensation  under the  provisions  of this
Agreement, except for his base salary earned through the date of termination.

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

         7.  Confidential  Information.  Except as  permitted or directed by the
Company's  Board of  Directors,  during the time  Employee  is  employed  by the
Company or at any time thereafter,  Employee shall not divulge, furnish, or make
accessible to anyone or use in any way (other than in the ordinary course of the
business of the Company) any confidential or secret  information or knowledge of
the Company, whether developed by himself or by others. Such confidential and/or
secret  information  encompassed by this Section 7 includes,  but is not limited
to, the Company's  customer and supplier lists,  business plans,  and financial,
marketing,  and personnel information.  Employee agrees to refrain from any acts
or emissions that would reduce the value of any confidential or secret knowledge
or information to the Company,  both during his employment  hereunder and at any
time  after  the  termination  of  his  employment.  Employee's  obligations  of
confidentiality  under  this  Section  7 shall  not  apply to any  knowledge  or
information  that  is  now  published  publicly  or  that  subsequently  becomes
generally  publicly known, other than as a direct or indirect result of a breach
of this Agreement by Employee.

         8.    Patent and Related Matters.

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

                  8.02  Limitation.  The  provisions of this Section 8 shall not
apply to any Development meeting the following conditions:

                           (a)  such  Development  was  developed   entirely  on
Employee's own time; and

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

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

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

         9. Confidentiality of this Agreement. Employee agrees to keep the terms
of this  Agreement  confidential,  and not to  disclose  such terms to any other
RateXchange,  Inc.,  employee,  other  than  authorized  members of the Board of
Directors of the Company.

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



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         11. Governing Law,  Construction,  and Severability.  This Agreement is
made under and shall be governed by and construed in accordance with the laws of
the State of  California.  In the  event any  provision  of this  Agreement  (or
portion  thereof)  shall  be  held  illegal  or  invalid  for any  reason,  such
illegality or invalidity  will not in any way affect the legality or validity of
any other provision (or portion thereof) of this Agreement.

         12. Company Remedies.  Employee acknowledges that the remedy at law for
any breach of any of the provisions of Sections 6 or 7 will be  inadequate,  and
that the  Company  shall be  entitled,  in  addition  to any remedy at law or in
equity, to preliminary and permanent injunctive relief and specific performance.

         13. Entire  Agreement.  This  Agreement  contains the entire  agreement
between the Company and Employee  with respect to his  employment by the Company
and there are no undertakings, covenants, or commitments other than as set forth
herein.  This  Agreement  may not be  altered  or  amended,  except by a writing
executed  by the  party  against  whom such  alteration  or  amendment  is to be
enforced. This Agreement supersedes, terminates, replaces, and supplants any and
all prior  understandings or agreements  between the parties relating in any way
to the hiring or employment of Employee by the Company.

         14. Counterparts.  This Agreement may be simultaneously executed in any
number of counterparts, and such counterparts executed and delivered, each as an
original, shall constitute but one and the same instrument.

         15. Waivers. No failure on the part of either party to exercise, and no
delay in  exercising,  any right or remedy  hereunder  shall operate as a waiver
thereof,  nor  shall  any  single  or  partial  exercise  of any right or remedy
hereunder preclude any other or further exercise thereof, or the exercise of any
other right or remedy  granted  hereby or by any related  document or by law. No
single or  partial  waiver of rights or  remedies  hereunder,  nor any course of
conduct of the parties,  shall be construed as a waiver of rights or remedies by
either party (other than as expressly and specifically waived).

         16. Dispute Resolution.  Any controversy,  claim or dispute of whatever
nature  arising out of or relating to this  Agreement or Employee's  employment,
including but not limited to  discrimination  claims,  whether such controversy,
claim, or dispute is based on statute, contract, tort, common law, or otherwise,
and whether such controversy, claim, or dispute existed prior to or arises after
the date of this  Agreement  (any such  controversy,  claim or  dispute  being a
"Dispute"),  shall be resolved in accordance  with the  procedures  set forth in
this Section 16 which procedures shall be the sole and exclusive  procedures for
the resolution of any Disputes (except as otherwise provided in Section 12). All
Disputes  shall be resolved by  arbitration  in San  Francisco,  California,  in
accordance  with the then  current  Non-Administered  International  Arbitration
Rules & Commentary  of the CPR Institute by a sole  arbitrator  who has had both
training and experience as an arbitrator of general corporate,  commercial,  and
employment  matters  and who is and for at least ten  years has been a  partner,
shareholder,  or member in a law firm. If the Company and Employee  cannot agree
on an arbitrator,  then the arbitrator shall be selected by the President of the
CPR  Institute  in  accordance  with the  criteria  set  forth in the  preceding
sentence. The arbitrator may decide any issue as to whether, or as to the extent
to which, any Dispute is subject to the arbitration



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and other Dispute resolution provisions in this Agreement.  The arbitrator must:
(i) base and  render his or her award on the  provisions  of this  Agreement  or
applicable  law and  (ii)  render  his or her  award  in  writing  including  an
explanation  of the reasons for such award and the  provisions of this Agreement
supporting such award. Judgment upon the award rendered by the arbitrator may be
entered by any court  having  jurisdiction  thereof the  statute of  limitations
applicable to the  commencement of a lawsuit shall apply to the  commencement of
an arbitration under this subsection.  The Employee acknowledges and agrees that
the Employee has been given the  opportunity  to negotiate  this  provision.  No
exercise  of any  rights  under  this  Section  16 shall  limit the right of the
Company or the  Employee  pursuant to this  Agreement  to commence  any judicial
proceeding to obtain injunctive  relief Reasonable  attorney's fees and expenses
of  arbitration  incurred  in any  Dispute  relating  to the  interpretation  or
enforcement  of this  Agreement  shall be paid by the  prevailing  party in such
Dispute.

         17.  Notices.  All  notices,  requests,  demands,  consents,  or  other
communications  required or permitted  under this Agreement  shall be in writing
and shall be deemed to have been duly given if delivered by overnight courier or
express mail service or by postage prepaid  registered or certified mail, return
receipt  requested  (the return  receipt  constituting  prima facie evidence the
giving of such  notice  request,  demand or other  communication),  by  personal
delivery,  or by fax with confirmation of receipt and a copy mailed with postage
prepaid,  to the  following  address or such other  address of which a party may
subsequently  give notice to the other party in accord  with the  provisions  of
this Section.  Notice is effective immediately if by personal delivery or by fax
with  confirmation  received  and a copy  mailed  the same day.  Notice  sent by
overnight courier or by registered or certified mail is effective the earlier of
actual  receipt  or the fifth  date after the date  mailed as  evidenced  by the
sender's certified or registered receipt.

         To the Company:            RateXchange Corporation
                                    185 Berry St., Suite 3515
                                    San Francisco, California 94107
                                    Attn:   Mr. Donald Sledge

         To Employee:               Paul Wescott
                                    223 Southampton Avenue
                                    Berkeley, CA 94707

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

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         IN WITNESS WHEREOF, the parties, intending to be legally bound thereby,
have signed this Agreement.

RATEXCHANGE:                           EMPLOYEE

RateXchange Corporation

By:                                    By: /s/ Paul A. Wescott
   ----------------------------------     --------------------------------------
   Don Sledge, Chief Executive Officer         Paul A. Wescott




















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