Exhibit 10.5

                                  RATEXCHANGE


                                 August 28, 2000

Via FedEx to Maine and E-Mail

Paul Wescott
223 Southampton Avenue
Berkeley, CA 94707

                    RE: Notice of Separation from the Company

Dear Paul:
         I write pursuant to the terms in your Employment Agreement (Agreement),
dated July 5, 2000, between you and RateXchange Corporation ("Company").  A copy
of the  Agreement is attached as Exhibit A.  Specifically,  you and  RateXchange
Corporation mutually agree to separate and you will no longer be employed by the
Company.

         The effective date of your separation will be Sunday,  October 1, 2000.
In consideration of the terms of your Agreement and certain conversation between
the two of us  regarding  terms  of a  separation  the  Company  offers  you the
following Terms of Separation, including applicable effective dates:

1.    You will have until  August 28, 2000 to sign this  document and accept its
      terms;

2.    If you sign this document on or before  August 28, 2000,  you will receive
      the following elements of compensation:

         a.    Payment  of  your  present  salary,  according  to the  Company's
               regularly  scheduled  payroll,  based upon your annual  salary of
               $200,000, from October 1, 2000 through Mar 31, 2001;

         b.    Lump sum payment on April 1, 2001 of your present  salary,  based
               upon your  annual  salary of  $200,000,  for the term of April 1,
               2001 through September 30, 2001;

         c.    You will  receive a $50,000  lump sum on October  2, 2000,  and a
               second sum of $50,000 on April 2, 2001;

         d.    You will also receive the sum of $50,000 in  satisfaction  of all
               claims for bonuses for the year 2000. You will receive payment of
               50% on October 2, 2000 and the remaining 50% on January 2, 2001;



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

<PAGE>

Letter to Paul Wescott
8/28100
Page 2 of 2

         e.    Vesting of your 1999 NetAmerica.com  Corporation  Incentive Stock
               Options (ISO) will be as follows:

               1.   On January 1, 2001, 37,500 of your options will vest;

               2.   On April 1, 2001,  37,500 the  remainder of your ISO options
                    will vest;  and 3. Both #1 and #2 above will have a two year
                    exercise period beginning on October 1, 2000.

         f.    Vesting  of your  RateXchange  Corporation  Non  Qualified  Stock
               Options (NSO) will be as follows:

               1.   On February  24,  2001,  25 % or 62,500 of your options will
                    vest;

               2.   Beginning  March 24, 2001 through  September 24, 2001,  1136
                    (5,208) of your remaining NSO options will vest per month;

               3.   #1 above  will  have a two  year  exercise  period  starting
                    October 1, 2000; and

               4.   #2 above  will have a 90 day  exercise  period  starting  on
                    October 1, 2001.

3.    Except as otherwise provide herein, each of the terms and condition in the
      ISO and NSO Plans, both of which are incorporated  herein, shall remain in
      full force and effect.

4.    The  obligations  of the  Company to Wescott  provided  in this  Notice of
      Separation and Terms and Conditions  shall be binding upon the successors,
      assigns,  subsidiary and parent  corporation(s) of the Company,  and shall
      survive any sale, merger and/or change in control of the Company.

5.    By signing this document, you acknowledge and accept each of the Terms and
      Conditions set forth in Exhibit B, attached hereto.

                                  RATEXCHANGE CORPORATION


                                  /s/ Donald Sledge
                                  ----------------------------------------------
                                    Donald Sledge
                                    Chief Executive Officer

I ACKNOWLEDGE  AND ACCEPT THE TERMS OF THIS  DOCUMENT,  INCLUDING THE EXHIBITS A
AND B ATTACHED HERETO.

DATE:          8/28/00                         BY:   /s/  Paul Wescott
      --------------------------------            ------------------------------
                                                    Paul Wescott

Attachments

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