Document:

Exhibit 10.7

                     SEVERANCE AGREEMENT AND MUTUAL RELEASE

THIS SEVERANCE  AGREEMENT AND MUTUAL RELEASE (the  "Agreement")  is executed and
entered  into this _____ day of  __________,  2000 by and between  Douglas  Cole
("Cole"),    and   NetAmerica.com    Corporation,    a   Delaware    corporation
("NetAmerica.com" or the "Company").

                                 R E C I T A L S

         WHEREAS,  on or about April 1, 1999,  Cole and the Company entered into
an  employment  agreement,  attached  hereto as  Attachment  A (the  "Employment
Agreement");

         WHEREAS, Cole is also a director of the Company;

         WHEREAS, the parties mutually agree that it is in their respective best
interests to bring the employment relationship between Cole and the Company to a
conclusion;

         WHEREAS,  the Company  would like Cole to provide  consulting  services
during a transition period and remain as a director of the Company; and

         WHEREAS, the parties intend to provide for such employment  termination
and transition and other services in this Agreement.

         NOW THEREFORE,  in  consideration  of the mutual covenants and promises
contained herein and other good and valuable consideration,  receipt of which is
hereby acknowledged , the parties hereto covenant and agree as follows:

         1.  Termination  of  Employment.  As of February  7, 2000,  the parties
mutually agree that Cole's employment with the Company ceased. Furthermore, Cole
delivered a written  resignation  as of such date (the  "Resignation")  from his
position as an officer of the Company.

         2. Interim  Responsibilities During Transition Period. From February 7,
2000  through  March 31,  2000 or such later  time as the  parties  agree,  Cole
continued  or will  continue to assume such  responsibilities  and perform  such
tasks as the Board of Directors shall assign.

         3. Consulting Services.  Upon execution of this Agreement,  the Company
hereby  retains  Cole as a  consultant,  to advise it with  respect  to  certain
aspects of its business. In connection therewith,  Cole hereby agrees to perform
such reasonable and necessary  consulting services relating to the restructuring
of  NetAmerica.com's  business  to focus on the  operations  of its  subsidiary,
RateXchange, Inc., as may be requested by the Company and its executive officers
from time to time  until  May 1,  2000 or such  later  time as the  parties  may
mutually agree (the "Consulting Period"). Cole hereby accepts such retention and
shall in good faith  perform  such  services,  for and on behalf and in the best
interests of the Company  during the Consulting  Period.  It is agreed that Cole
shall not be  required  to spend any  specific  period or periods of time at the
offices or premises of the Company in providing the services hereunder, but will
be  available  to consult  with the  Company at  mutually  convenient  times and
places.  Cole may  provide  the  services  hereunder  in person,  by  telephone,
facsimile, e-mail or other correspondence as he and the Company mutually agree.

<PAGE>

         4.  Directorship.  Cole agrees to continue serving as a director of the
Company  for a period of three (3)  months or such  earlier or later time as the
parties may mutually  agree.  The Company  agrees to pay Cole the standard  rate
paid to  non-employee  directors  for each director  meeting plus  out-of-pocket
expenses.

         5. Consideration. In consideration for the covenants and agreements set
forth in Sections 1-4 above, and the parties' mutual releases,  on the terms and
conditions of this Agreement, the parties acknowledge and agree as follows:

         (a) Until the  expiration of the Consulting  Period,  the Company shall
pay to Cole a consulting  fee of $14,000 per month for the  consulting  services
Cole renders to the Company during the Consulting Period.

         (b) Upon  execution of this  Agreement,  the Company agrees to pay Cole
$14,000  per  month  for  six  (6)  months  in  severance  pay  less  applicable
withholdings.  Each  payment  will be made by the fifth (5th) day of each month.
Notwithstanding the foregoing,  after the Company receives at least $7.5 million
in additional  financing,  any unpaid severance  payments will be paid in a lump
sum payment within ten (10) days of the Company's receipt of such funds.

         (c) Cole  agrees to comply with  Sections 6, 7 and 8 of the  Employment
Agreement,   which  are   incorporated   herein  by  reference,   pertaining  to
Non-Competition,  Confidentiality and Remedies.  The  Non-Competition  provision
will be limited to non-competition  with the Company's operations on the date of
the  execution  of  this  Agreement.  All  other  terms  and  provisions  of the
Employment Agreement shall terminate upon the execution of this Agreement.

         (d) Upon  execution of this  Agreement,  the Company  agrees to pay the
cost of Cole's  health  insurance  premiums  for a period of twelve (12) months.
Each payment will be made by the seventh (7th) day of each month.

         (e) Upon execution of this Agreement,  the Company agrees to pay Cole a
performance  bonus of $115,000 for his services as Chief Executive Officer which
were outside his duties as defined in his Employment Agreement.

         (f) Upon  execution of this  Agreement,  the Company  agrees to pay all
amounts it owes Cole for unpaid  salary,  bonuses and/or  expenses.  The Company
also agrees to issue all  options  that were  approved  for Cole by the Board of
Directors prior to the execution of this Agreement.

         (g) Cole shall be  entitled  to keep his  current  computer  and office
equipment.

         (h) Within thirty (30) days of the expiration of the Consulting Period,
the Company  agrees to register on Form S-8, or on an  alternative  form to Form
S-8, all shares issuable upon exercise of the options issued under the Company's
1999 or 2000 Stock  Option  Plans or outside such plans and owned by Cole at the
end of the Consulting  Period.  The Company agrees to maintain the effectiveness
of this registration for a period of at least one (1) year.

                                      -2-

<PAGE>

         6. Release of Cole's Claims Against the Company.

         (a) Excluding claims for breach or enforcement of this Agreement,  Cole
does hereby irrevocably and unconditionally  release and forever discharge,  for
himself and for his heirs,  executors,  administrators and assigns,  any and all
claims of any nature  whatsoever  against  the  Company,  its current and former
officers, directors,  shareholders,  employees,  representatives,  attorneys and
agents as well as its predecessors, parent companies, subsidiaries,  affiliates,
successors  and  assigns,  which  Cole  has or had  against  them or any of them
arising out of or by reason of any cause, matter or thing whatsoever existing as
of the date of execution of this Agreement,  whether known to the parties at the
time of execution of this  Agreement or not including  without  limitation,  any
claims arising out of, or relating in any manner whatsoever to the employment of
Cole by the Company and his separation from the Company. This FULL WAIVER OF ALL
CLAIMS includes,  without limitation,  any claims,  demands, or causes of action
arising out of, or relating in any manner  whatsoever to the Civil Rights Act of
1964 and 1991, as amended,  the Age Discrimination in Employment Act of 1967, as
amend, the Older Workers Benefit  Protections Act, the Fair Labor Standards Act,
the Labor Management  Relations Act, the Employee Retirement Income Security Act
of 1974, the Americans with Disabilities  Act, or any other applicable  federal,
state,  or local  statute  or  regulation,  or any  common  law cause of action,
including  without  limitation,  claims  for  breach of any  express  or implied
contract, the covenant of good faith and fair dealing, tort, wrongful discharge,
constructive discharge, personal injury, emotional distress,  defamation, fraud,
or any claims for  attorneys'  fees or other costs.  Cole further  covenants and
agrees that upon being paid the amounts  provided  for in Section 5, above,  the
Company is not further  indebted to him in any amount for any reason,  including
any fringe benefits or other forms of compensation.

         (b) Cole represents and warrants that he has not assigned or subrogated
any of his rights, claims and causes of action,  including any claims referenced
in this Agreement, or authorized any other person or entity to assert such claim
or claims on his behalf and he agrees to indemnify and hold harmless the Company
against any assignment of said right, claims and/or causes of action.

         (c) Cole  represents  that he has not filed any  complaints  or charges
against the Company with any local,  state or federal court or agency based upon
events occurring prior to the date of execution of this Agreement.  Cole further
represents  and  agrees  that he  will  not in the  future  file,  instigate  or
encourage  the filing of any  proceeding  or lawsuit  by any party  against  the
Company in any local, state or federal court or agency.  Cole further represents
and agrees that he shall not in the future  cooperate or participate in any such
lawsuit or proceedings except in accordance with this Agreement and as otherwise
required by law. It is understood  and agreed that Cole's  promises set forth in
this Section 6 are of critical importance to this Agreement.  Any breach by Cole
of the  provisions  of this  Section  shall be deemed a material  breach of this
Agreement.

         (d) Cole agrees that he will not disclose, disseminate and/or publicize
any of the terms of this Agreement,  any of the factual  allegations  underlying
any  claims  the  Company  or Cole  may have  against  one  another,  any of the
underlying  facts of this Agreement or  negotiations  regarding this  Agreement,
directly or indirectly,  specifically or generally, to any person,  corporation,
association or  governmental  agency,  except (a) as required by law; (b) to the
extent

                                      -3-

<PAGE>

necessary to report income to appropriate  taxing  authorities;  (c) pursuant to
privileged  communications;  or  (d)  in  response  to  an  order  of  court  or
governmental  agency of competent  jurisdiction  or subpoena issued under proper
authority;  provided that notice of receipt of such judicial  order,  inquiry or
subpoena shall be immediately  communicated to the Company,  telephonically  and
confirmed  immediately  thereafter in writing, so that the Company will have the
opportunity to intervene and assert what rights it has to nondisclosure prior to
the response to the order, inquiry or subpoena.

         7. Release of the Company's Claims Against Cole.

         (a) Excluding  claims for breach or enforcement of this Agreement,  the
Company for itself, its legal representatives, subsidiaries, affiliates, agents,
successors in interest and assigns, irrevocably and unconditionally releases and
forever discharges Cole from any and all claims of any nature whatsoever against
Cole, or his affiliates, agents, employees,  attorneys,  successors and assigns,
which the  Company has or had  against  Cole  arising out of or by reason of any
cause,  matter or thing whatsoever  existing as of the date of execution of this
Agreement,  whether  known to the parties at the time of the  execution  of this
Agreement or not,  including without  limitation,  any claims arising out of, or
relating in any manner  whatsoever to the  employment of Cole by the Company and
his separation from the Company.  The Company  acknowledges that this release of
claims  specifically  includes,  but is not  limited  to, any and all claims for
breach of  contract,  breach of the  covenant  of good  faith and fair  dealing,
intentional or negligent misrepresentation,  conspiracy, negligence of any kind,
libel,  slander or any other wrongful  conduct based upon events occurring prior
to the date of the execution of this Agreement.

         (b) The Company  represents  and  warrants  that it has not assigned or
subrogated any of its rights,  claims and causes of action  including any claims
referenced in this  Agreement or authorized any other person or entity to assert
such claim or claims on its behalf and  agrees to  indemnify  and hold  harmless
Cole against any assignment of said rights, claims and/or causes of action.

         (c) The  Company  represents  that it has not filed any  complaints  or
charges against Cole with any local, state or federal court or agency based upon
the events  occurring  prior to the date of  execution  of this  Agreement.  The
Company  further  represents  and agrees  that it will not in the  future  file,
instigate  or  encourage  the filing of any  proceeding  or lawsuit by any party
against Cole in any local, state or federal court or agency. The Company further
represents  and agrees that it shall not in the future  cooperate or participate
in any such lawsuit or proceeding  except in accordance  with this Agreement and
as otherwise  required by law. It is  understood  and agreed that the  Company's
promises  as set forth in this  Section  7 are of  critical  importance  to this
Agreement.  Any breach by the Company of the provisions of this Section shall be
deemed a material breach of this Agreement.

         (d) The Company  agrees that it will not disclose,  disseminate  and/or
publicize  any of the terms of this  Agreement,  any of the factual  allegations
underlying  any claims the Company or Cole may have against one another,  any of
the underlying facts of this Agreement or negotiations regarding this Agreement,
directly or indirectly,  specifically or generally, to any person,  corporation,
association or  governmental  agency,  except (a) as required by law; (b) to the
extent necessary to report income to appropriate taxing  authorities;  or (c) in
response to an order

                                      -4-

<PAGE>

of a court or governmental  agency of competent  jurisdiction or subpoena issued
under proper authority;  provided that notice of receipt of such judicial order,
inquiry or subpoena shall be immediately  communicated  to Cole,  telephonically
and  confirmed  immediately  thereafter  in writing,  so that Cole will have the
opportunity to intervene and assert what rights he has to nondisclosure prior to
the response to the order, inquiry or subpoena.

         8. Tax Obligations. It is understood and agreed that Cole is liable for
all tax obligations,  if any, with respect to the payments and sums set forth in
Section 4 or 5, above.  The Company makes no warranty as to any tax consequences
of such payments,  and a determination  of the tax consequences of such payments
are the sole responsibility of Cole.

         9. Independent  Contractor Status.  With respect to Section 3 above, it
is expressly understood and agreed that Cole is an independent contractor and is
not  in  any  manner  an  agent  or  employee  of  the  Company  (or  any of its
subsidiaries), nor is Cole authorized or empowered to conduct business under the
name of, or for the account of, the Company (or any of its  subsidiaries)  or to
incur obligations of any kind, express or implied,  on behalf of the Company, or
to make any promise, warranty or representation on behalf of the Company (or any
of its subsidiaries) with respect to any of its or their products or services.

         10.  Indemnification.  With respect to Sections 2, 3 and 4 above,  Cole
shall  indemnify  the Company from and against any and all  expenses  (including
attorneys' fees),  judgments,  fines, claims, causes of action,  liabilities and
other amounts paid (whether in settlement or otherwise  actually and  reasonably
incurred) by the Company in connection  with such action,  suit or proceeding if
(i) the Company was made a part to any action,  suit or  proceeding by reason of
the fact that Cole rendered advice or services  pursuant to this Agreement,  and
(ii) Cole did not act in good faith and in a manner reasonably  believed by Bole
to be in or not opposed to the  interests of the Company,  and,  with respect to
any criminal  action or proceeding,  did not reasonably  believe his conduct was
lawful.

         11. Survival of Representations, Etc. All representations,  warranties,
and  agreements  made  herein  shall  survive  for a period  of five  (5)  years
following execution of this Agreement.

         12. Twenty-One Day Consideration  Period. Cole acknowledges that he has
been allowed  twenty-one  (21) days to consider this  Agreement and the releases
and waivers contained herein. Cole further acknowledges that he has been advised
to consult with counsel and that he has consulted  with counsel  regarding  this
Agreement.

         13. Seven Day Revocation Period. The parties agree that Cole shall have
a period of seven (7) days following the execution of this Agreement in which to
revoke  the  Agreement  and that the  Agreement  shall not become  effective  or
enforceable until the revocation period has expired (See Attachment B).

         14. Civil Code Section  1542.  Each party  expressly  waives all rights
under  Section  1542 of the Civil  Code of the State of  California,  which each
party understands provides as follows:

                                      -5-

<PAGE>

                  A general release does not extend to claims which the creditor
                  does not know or  suspect  to exist in his favor a the time of
                  executing  the  release,  which  if  known  by him  must  have
                  materially affected his settlement with the debtor.

         15. Miscellaneous.

         (a)  Binding  Effect;  Assignment.  This  Agreement  shall inure to the
benefit  of and be binding  upon the  parties  hereto,  their  respective  legal
representatives and successors. This Agreement may not be assigned.

         (b) Further Assurances;  Cooperation. Each party shall, upon reasonable
request  by the other  party,  execute  and  deliver  any  additional  documents
necessary  or  desirable  to  complete  the  transactions  contemplated  by this
Agreement, pursuant to and in the manner contemplated by this Agreement.

         (c) Entire Agreement.  This Agreement  constitutes the entire agreement
between the parties hereto and supersedes all prior arrangements, understandings
and agreements,  oral or written, between the parties hereto with respect to the
subject matter hereof.

         (d) Dispute Resolution.  Except as otherwise expressly provided in this
Agreement,  any civil  claim  which  arises out of or relates in any way to this
Agreement  shall be settled by binding and exclusive  arbitration in California,
in accordance with the following terms and procedures:

                  (i) The party with a civil  claim must  notify the other party
in writing by certified  mail within the times set forth by statute for filing a
civil claim of its desire to have the claim resolved by arbitration.

                  (ii) Upon notice of a timely  civil  claim,  the parties  will
agree upon an  arbitrator  or, if unable to agree,  will request a list from the
Federal Mediation and Conciliation Service from which the parties will alternate
strikes  until  only  one name  remains.  The last  remaining  name  will be the
arbitrator.

                  (iii)  The  arbitrator  shall  have  no  authority  to add to,
subtract from, or otherwise modify the terms of this Agreement or to make awards
beyond  those  provided  for by the statute or other cause of action under which
the claim arises.

                  (iv)  Any  party  to the  arbitration  may be  represented  by
counsel.  All decisions of the  arbitrator  made in accordance  with this policy
shall be final and conclusively binding upon the parties. The parties agree that
the  arbitrator's  award may be entered as a judgment by any court of  competent
jurisdiction, unless the award is vacated, modified or corrected.

                  (i)   Issues   of   procedure,   arbitrability,   appeal,   or
confirmation,  vacation or  correction of award shall be governed by the Federal
Arbitration Action, 9 U.S.C. ss.ss.1-16.

         (e)  Attorney  Fees.  In any  action or  proceeding  arising  out of or
related  to this  Agreement,  the  prevailing  party  shall be  entitled  to its
reasonable  attorney fees and related  costs,

                                      -6-

<PAGE>

including fees and costs  incurred  prior to formal  initiation of any action or
proceeding,  and including  fees and costs incurred for collecting or attempting
to collect any judgment or award.

         (f)  Amendments  and  Waivers.  This  Agreement  may not be modified or
amended  except by an instrument or  instruments  in writing signed by the party
against whom enforcement of any such  modification or amendment is sought.  Cole
may, by an instrument in writing,  waive compliance by the Company with any term
or  provision  of this  Agreement  on the part of the Company to be performed or
complied with. The Company may, by an instrument in writing, waive compliance by
Cole,  with any term or  provision  of this  Agreement on the part of Cole to be
performed or complied  with.  Any waiver of a breach of any term or provision of
this Agreement shall not be construed as a waiver of any subsequent breach.

         (g) Headings:  Severability.  The headings  contained in this Agreement
are for convenience of reference only and shall not affect the interpretation or
construction hereof. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or  unenforceability  without rendering invalid
or  unenforceable  the  remaining  terms and  provisions  of this  Agreement  or
affecting  the validity or  enforceability  of any of the terms or provisions of
this Agreement in any other jurisdiction.  If any provision of this Agreement is
so broad as to be unenforceable,  such provision shall be interpreted to be only
so broad as is enforceable.

         (h)  Jurisdiction.  This  Agreement  shall be governed in all respects,
whether as to validity,  construction,  capacity,  performance, or otherwise, by
the laws of the State of California. The parties to this Agreement hereby submit
to the jurisdiction of the courts of the State of California.

         (i) Voluntary  Agreement.  This Agreement is freely entered into by the
undersigned parties upon advice of counsel.

         (j) Agreement not an Admission.  The parties  hereby  acknowledge  that
neither this Agreement nor the payments made hereunder nor the acceptance of the
same,  may be treated as an  admission of any legal  responsibility,  liability,
wrongdoing  or fault of any kind  whatsoever.  Such  responsibility,  liability,
wrongdoing and fault being expressly denied.

         (k)  Execution  in  Counterparts.  This  Agreement  may be  executed in
counterparts,  each of which shall be deemed an original  and all of which shall
be deemed to be one and the same instrument.

         (l)  Construction.  It is agreed and  understood  that the general rule
that  "ambiguities  are to be construed  against the drafter" shall not apply to
this  Agreement.  The parties agree that this Agreement is a part of negotiation
and was drafted by all parties.  In the event any language of this  Agreement is
found to be ambiguous,  each party shall have an opportunity to present evidence
as to the  actual  intent of the  parties  with  respect  to any such  ambiguous
language.

         (m) Amendments and Modifications. Any amendment or modification of this
Agreement must be in writing and signed by each party.

                                      -7-

<PAGE>

                           THE  SIGNATORIES  HAVE  CAREFULLY  READ  THIS  ENTIRE
                           AGREEMENT.  ITS CONTENTS HAVE BEEN FULLY EXPLAINED BY
                           THE  RESPECTIVE  ATTORNEYS.   THE  SIGNATORIES  FULLY
                           UNDERSTAND  THE  FINAL  AND  BINDING  EFFECT  OF THIS
                           AGREEMENT.  THE ONLY  PROMISES  MADE TO ANY SIGNATORY
                           ABOUT THIS AGREEMENT, AND TO SIGN THIS AGREEMENT, ARE
                           CONTAINED  IN THIS  AGREEMENT.  THE  SIGNATORIES  ARE
                           SIGNING  THIS  AGREEMENT  VOLUNTARILY.   PLEASE  READ
                           CAREFULLY:   THIS  SEVERANCE   AGREEMENT  AND  MUTUAL
                           RELEASE  INCLUDES A RELEASE OF ALL KNOWN AND  UNKNOWN
                           CLAIMS.

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

                                  DOUGLAS COLE

                                  -----------------------------
                                  Douglas Cole

                                  NETAMERICA.COM CORPORATION

                                  By:_______________________________

                                  Its:______________________________

                                       -8-
<PAGE>

                                  ATTACHMENT A

                              EMPLOYMENT AGREEMENT

<PAGE>

                                  ATTACHEMENT B

                                 NON-REVOCATION
                        AS OF THE DATE SHOWN ON THIS FORM

         By  signing  below,  I  verify  that I have  chosen  not to  revoke  my
agreement to and execution of the Severance  Agreement  and Mutual  Release.  My
signature  confirms  my  renewed  agreement  to the  terms  of  that  Agreement,
including the release and waiver of any and all claims relating to my employment
with  NetAmerica.com  Corporation  and its successors,  assigns,  and affiliated
companies, and/or the termination of that employment.

------------------------                    ---------------------------
Signature*                                  Date

*Do not sign,  date, or return this document until seven (7) days after you sign
the Severance  Agreement and Mutual Release.  The Severance Agreement was signed
on __________________.Exhibit 10.14
                              EMPLOYMENT AGREEMENT

                                  (Philip Rice)

                This  Employment  Agreement  (this  "Agreement") is entered into
        effective as of the 29th day of February,  2000 (the "Effective  Date"),
        by  and  between   RateXchange,   Inc.,  a  Delaware   corporation  (the
        "Companv"), and Philip Rice ("Employee"). The Company and Employee agree
        as follows:

                1. Employment. The Company hereby employs 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  Chief  Financial  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 his fill time,  attention,  and 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. 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 Two  Hundred  Thousand  Dollars  ($200,000),  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.

<PAGE>

                        4.03.  Stock  Options.  Employee  shall be  entitled  to
       receive  a grant  of  options  to  acquire  Two  Hundred  Fifty  Thousand
       (250,000)  shares of Company  stock  pursuant to the terms and subject to
       the  conditions  of the  stock  plan  in  which  the  Company  employee's
       participate.

                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" 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.

                        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 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.

                                        2
<PAGE>

                         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,  Employee  shall not be entitled to
       any further  compensation under the provisions of this Agreement,  except
       for his base  salary  earned  through  the date of  termination,  and the
       portion of any 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.  Employee  (or,  in the event of death,
       Employee's  estate)  shall be  entitled  to such  unpaid  portion  of any
       approved  Bonus 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 approved but unpaid annual
       Bonus  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.

                              (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.
       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

                                        3
<PAGE>

       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  omissions  that would  reduce the value of any  confidential  or
       secret  knowledge  or  information  to  the  Company,   both  during  his
       employment  hereunder  and at  any  time  after  the  termination  of his
       employment.  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.

                        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

                                        4

<PAGE>

       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 tberefor, but at no expense to Employee, and whether
       during the tam 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  Areement.  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.

               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.

                                        5
<PAGE>

                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  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

                                        6
<PAGE>

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, Inc.
                                   185 Berry St., Suite 3515
                                   San Francisco, California 94107
                                   Attn: Mr. Donald Sledge

         To Employee:              Mr. Philip Rice
                                   P.O. Box 680
                                   Ross, CA 94957

         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.

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

RATEXCHANGE:                                    EMPLOYEE

RateXchange, Inc.

By:  /s/ Paul A. Wescott                        By:  /s/ Phillip Rice
     ------------------------------------            ---------------------------
      Paul A. Westcott, Executive Vice
      President and Chief Operating Officer

                                        7

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