WASHINGTON, D.C. 20549


                                    FORM 8-K

                                 CURRENT REPORT
                     PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

    Date of Report (Date of earliest event reported): 11/28/2001

                             RATEXCHANGE CORPORATION
               (Exact Name of Registrant as Specified in Charter)

        DELAWARE                      001-15831                  11-2936371
----------------------------         ------------              ---------------
State or Other Jurisdiction          (Commission                (IRS Employer
      of Incorporation)              File Number)            Identification No.)

        (Address of Principal Executive Offices)         (Zip Code)

   Registrant's telephone number, including area code (415) 274-5650

     (Former Name or Former Address, if Changed Since Last Report)

Item 5. Other Events

It has  come  to the  Company's  attention  that  the  renegotiated  terms  of a
severance  agreement  with the former  Chairman and CEO were  inadvertently  not
reflected in the June 30, 2001 and September 30, 2001 financial statements.  The
net  impact  on the  Company's  income  statement  for the  nine  months  ending
September 30, 2001 will be an increase in  compensation  expense of $129,000 and
an increase in interest expense of $10,000.

In May 2001, the Company renegotiated the terms of the severance included in its
employment agreement with Donald Sledge,  former Chairman and CEO of RateXchange
Corporation.  Upon his leaving the Company, Mr. Sledge was originally to receive
one year's salary, or $300,000,  in addition to a $150,000  severance payment in
cash and the accelerated vesting of certain stock option grants. The Company did
not accrue this original  obligation as the terms were being renegotiated at the
time. In lieu of the original agreement, the Company renegotiated these terms to
payments of $25,000 cash in May 2001, $25,000 cash in July 2001 and the issuance
of a  $400,000  two-year  convertible  promissory  note  from the  Company  with
interest at 7.0% per annum.  The  principal can be converted to shares of common
stock  at  $2.75  per  share  conversion  rate  at any  time  during  the  term.
Additionally,  an option to  purchase  300,000  shares of common  stock that was
granted to Mr. Sledge was terminated as part of the negotiation.

The Company's  second  quarter Form 10Q did not account for $400,000 in deferred
compensation  expense  and  the  associated   promissory  note  as  a  long-term
liability.  Furthermore,  the related accrued interest expense was not reflected
in the second and third quarter statements.  Additionally, the offsetting impact
of not  accounting  for the  terminated  option  resulted in the  recognition of
excess  compensation  expense  of  $68,000  in the  second  quarter  of 2001 and
$203,000 in the third quarter of 2001.

The  Company  is in the  process  of filing  amendments  to its Form 10Q for the
second  quarter  of year 2001 and the Form 10Q for the third  quarter of 2001 in
order to properly reflect the impact of this renegotiated agreement.

Mr. Sledge remains a member of the Company's Board of Directors.


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.

                                       RATEXCHANGE CORPORATION

Date:    November 28, 2001
                                    By: /s/ John T. Blunt, Jr.
                                    John T. Blunt, Jr.
                                    Senior Vice-President, Finance

                                                                       EXHIBIT A

                                [GRAPHIC OMITTED]

                                  May 25, 2001

Via Hand Delivery

Donald H. Sledge
27 Cherry Hills Court
Alamo, CA  94507

                            RE: Separation Agreement
Dear Mr. Sledge:

         I write to set forth the terms of RateXchange Corporation's ("Company")
offer to you in  consideration  of your separation from your employment with the
Company and chairmanship of the board of directors

         The effective date of your separation will be May 25, 2001  ("Effective
Date"),  unless  you waive  your  right to the  additional  time and agree to an
earlier  date.  The  Company  offers  you the  following  Terms  of  Separation,
including applicable effective dates:

     1.   If you sign this  document  on or  before  June 15,  2001,  and do not
          rescind, you will receive the following:

          a.   A lump sum payment of $25,000 net of  applicable  taxes,  paid on
               the  Effective  Date and  another  payment  of  $25,000  upon the
               Company's receipt of new private financing or July 1, 2001, which
               ever is first.

          b.   A  convertible  promissory  note from the  Company  to you,  with
               principle  amount of $400,000 and term of (2) years.  Interest on
               the note  will  accrue at 7.0% per  annum.  The  principle,  plus
               interest accrued will be due and payable at the end of the term.

               You will have the option to elect to  convert  the  principle  to
               shares of the Company's common stock at any time during the term.
               Upon your  election to convert  the  principle

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

Letter to Donald H. Sledge
May 25, 2001
Page 2 of 2

               you will receive shares based upon the principle value, including
               accrued interest, at the Conversion Price of $2.75.

               The  Company  reserves  the right to pay the balance of the note,
               plus accrued  interest,  at any time during the term.  Upon early
               payment,  you will  have the  option  to elect  cash  payment  or
               payment  in shares  based  upon the  principle  value,  including
               accrued interest, at the Conversion Price of $2.75.

               You will have  "piggyback"  registration  rights  and,  upon your
               election to convert,  the Company will make best business efforts
               to  register  your  conversion  shares  for  resale  in its  next
               registration  filing with the Securities and Exchange  Commission
               including registration filings made on Forms S-1 or S-3.

               Should the Company  prepay the note,  and you chose to convert at
               the time,  the Company will register the converted  shares within
               90 days.

               The  promissory  note will be in  substantially  the same form as
               Exhibit A, attached hereto.

          c.   In addition to the 900,000  options that have  previously  vested
               under  the  terms  of your  "Out-of-Plan"  option  grant  and the
               100,000 shares granted to you for your Board  participation,  you
               have vested an additional  300,000 shares,  effective  January 1,

               The  balance of  300,000  option  shares  from your "Out of Plan"
               grant will terminate on the Effective Date and will not vest.

               The exercise  period for the 1,300,000  vested option shares will
               be extended to allow for your exercise within two (2) years after
               the Effective Date.

          d.   You will  continue to serve as a member of the Board of Directors
               of RateXchange Corporation pursuant to the terms of your election
               on September 27, 1999 and the Amended and Restated By-Laws of the
               Company, Article VII.

          e.   You can retain your  laptop  computer,  flat  screen  monitor and
               miscellaneous office equipment currently in your possession.

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

Letter to Donald H. Sledge
May 25, 2001
Page 3 of 3

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

                                       RATEXCHANGE CORPORATION

                                       /s/ D. Jonathan Merriman
                                       D. Jonathan Merriman
                                       President and Chief Executive Officer.


DATE:         May 25, 2001                  BY:  /s/ Donald H. Sledge
      ------------------------------           ---------------------------------
                                                  Donald H. Sledge

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

                                                                       EXHIBIT B

                                 PROMISSORY NOTE

$400,000                                                            May 25, 2001

                  FOR  VALUE   RECEIVED,   RateXchangeCorporation,   a  Delaware
corporation (the "Maker"),  promises to pay to Donald H. Sledge, or assigns (the
"Holder"), at 185 Berry Street, Suite 3515, San Francisco,  California 94107, or
at such other place as the Holder of this Note may from time to time  designate,
on May 25, 2003 (or such earlier date as provided below) the principal amount of
four hundred thousand DOLLARS  ($400,000),  together with interest on the unpaid
principal amount hereof from the date hereof,  until paid in full, said interest
to be due and payable on May 25, 2003 (or such earlier date as provided  below),
at a rate per annum  (computed on the basis of a 365-day year and applied to the
actual  number of days elapsed in each  interest  calculation  period)  equal to
seven percent  (7.0%).  All payments  hereunder shall be made in lawful money of
the United  States of America,  except as  otherwise  provided  herein,  without

                  The  unpaid  principal  amount of this Note may be  prepaid in
whole  or in  part  at any  time or  times  without  premium  or  penalty.  Each
prepayment  shall  be  applied  first to the  payment  of all  interest  accrued
hereunder  on the  date of any  such  prepayment,  and the  balance  of any such
prepayment  shall be applied to the principal  amount hereof.  As described more
fully  below,  Holder may elect  conversion  upon notice from Maker of intent to
prepay.  Holder  will  receive  no less that ten (10)  business  days  notice of
Maker's intent to prepay.

                  At the  Holder's  option,  at any time within the term of this
Note, the Holder may elect to convert the unpaid  principal amount of this Note,
together with all accrued interest  hereunder through the date of such election,
in whole or in part, into shares of common stock issued by Maker; such shares to
be valued for  purposes  of such  conversion  at $2.75.  The number of shares of
common stock  issuable  upon  conversion  of this Note as provided  herein shall
equal the quotient  obtained by dividing the amount of principal and interest of
this Note so desired to be converted by the per share  purchase  price of $2.75.
In order to exercise the foregoing  conversion right, the Holder shall surrender
this Note to Maker at Maker's principal office address,  185 Berry Street, Suite
3515, San Francisco,  California  94107 (or at such other address as Maker shall
specify  in  writing  to  the  Holder),   accompanied  by  written  notice  (the
"Conversion  Notice") to Maker  stating  that the Holder  elects to convert this
Note or, if less than the entire unpaid principal amount,  plus accrued interest
through  the date of the  Conversion  Notice,  is to be  converted,  the portion
thereof  to be  converted.  As soon as  practicable  after  receipt  of any such
Conversion Notice, and in any event within twenty (20) business days thereafter,
Maker  will  cause to be issued  in the name of and  delivered  to the  Holder a
certificate for the number of duly  authorized,  validly issued,  fully paid and
nonassessable  whole  shares of  common  stock of  Maker,  plus,  in lieu of any
fractional share to which the Holder would otherwise be entitled,  cash equal to
the amount of such fractional share.

                  The  occurrence  of any  one or more  of the  following  shall
constitute an event of default ("Event of Default") hereunder:

                  (1)  Failure to pay,  when due,  the  principal  and  interest
                  payable  hereunder  on the date on  which  such  principal  or
                  interest  is due  (whether  upon  maturity  hereof,  upon  any
                  prepayment date, upon acceleration, or otherwise);

                  (2) The  commencement  by Maker of any  case,  proceeding,  or
                  other action seeking reorganization,  arrangement, adjustment,
                  liquidation,  dissolution,  or  composition of it or its debts
                  under  any  law  relating  to   bankruptcy,   insolvency,   or
                  reorganization,  or relief of debtors,  or seeking appointment
                  of a receiver,  trustee,  custodian, or other similar official
                  for it or for all or any substantial part of its property;

                  (3) The commencement of any case, proceeding,  or other action
                  against  Maker  seeking to have any order for relief  entered,
                  adjustment, liquidation,  dissolution, or composition of Maker
                  or its debts under any law relating to bankruptcy, insolvency,
                  reorganization,  or relief of debtors,  or seeking appointment
                  of a receiver,  trustee,  custodian, or other similar official
                  for Maker or for all or any substantial  part of the assets or
                  property  of  Maker,  and  (i)  Maker  shall,  by  any  act or
                  omission,   indicate   its   consent  to,   approval   of,  or
                  acquiescence in such case, proceeding, or action, or (ii) such
                  case,  proceeding,  or action results in the entry of an order
                  for relief which is not fully stayed within seven (7) business
                  days after the entry thereof, or (iii) such case,  proceeding,
                  or action remains undismissed for a period of sixty (60) days;

                  (4) Any  failure of the Maker to issue and  deliver any shares
                  of common  stock as provided  herein upon  conversion  of this

Upon the occurrence of any such Event of Default hereunder, the entire principal
amount  hereof,   and  all  accrued  and  unpaid  interest  thereon,   shall  be
accelerated,  and shall be  immediately  due and  payable,  at the option of the
Holder,  without  demand  or  notice,  and  in  addition  thereto,  and  not  in
substitution  therefor, the Holder shall be entitled to exercise any one or more
of the rights and remedies  provided by applicable law. Failure to exercise said
option or to pursue such other rights and remedies shall not constitute a waiver
of such option or such other rights and remedies or of the right to exercise any
of the same in the event of any subsequent Event of Default hereunder.

                  The Maker  promises to pay all  reasonable  costs and expenses
(including  without  limitation  reasonable  attorneys' fees and  disbursements)
incurred in connection with the collection hereof, and to perform each and every
covenant or agreement to be performed by the Maker under this Note.

                  Any payment on this Note  coming due on a Saturday,  a Sunday,
or a day which is a legal  holiday in the place at which a payment is to be made
hereunder  shall be made on the next  succeeding  day which is a business day in
such place,  and any such  extension of the time of payment shall be included in
the computation of interest hereunder.

                  No  single  or  partial  exercise  by the  Holder of any right
hereunder shall preclude any other or further  exercise  thereof or the exercise
of any  other  rights.  No  delay  or  omission  on the  part of the  Holder  in
exercising any right hereunder shall operate as a waiver of such right or of any
other right under this Note.

                  If any mutilated Note is  surrendered to the Maker,  the Maker
shall execute and deliver to the Holder in exchange  therefor a new Note of like
tenor  and  principal  amount.  If there  shall be  delivered  to the  Maker (i)
evidence to its satisfaction of the  destruction,  loss or theft of the Note and
(ii) such  security  or  indemnity  as may be  required  by the Maker to save it
harmless,  then,  in the  absence of notice to the Maker that such Note has been
acquired by a bona fide  purchaser,  the Maker shall  execute and deliver to the
Holder,  in lieu of any such destroyed,  lost or stolen Note, a new Note of like
tenor and  principal  amount.  In case any such  mutilated,  destroyed,  lost or
stolen Note has become or is about to become due and  payable,  the Maker in its
discretion may,  instead of issuing a new Note, pay such Note. Upon the issuance
of any new Note under this paragraph, the Maker may require the payment from the


Holder of a sum  sufficient to cover any tax or other  governmental  charge that
may be imposed in relation thereto and any other expenses connected therewith.

                  Whenever used herein,  the words "Maker" and "Holder" shall be
deemed to include their respective successors and assigns.

                  This Note  shall be  governed  by and  construed  under and in
accordance with the laws of State of California(but  not including the choice of
law rules thereof).

                  IN WITNESS  WHEREOF,  the  undersigned  has duly executed this
Note, or has caused this Note to be duly  executed on its behalf,  as of the day
and year first hereinabove set forth.

                             RATEXCHANGE CORPORATION

                             By: /s/ D. Jonathan Merriman
                                   D. Jonathan Merriman
                                   Chief Executive Officer


                                                                       EXHIBIT C
                               [GRAPHIC OMITTED]

                                  May 25, 2001

                              Terms and Conditions

         Mr. Sledge  acknowledges that he has received the Separation  Agreement
from the Company,  dated May 25, 2001, and that he accepts each of the terms set
forth  therein  in  consideration  for  waiving  his  right  to  claims  against
RateXchange  Corporation,  its respective  subsidiaries and parent corporations,
its officers, directors, agents, employees, predecessors, successors and assigns
("Company") and each of them,  referred to in these Terms and Conditions and the
Separation Agreement.

Waiver of Claims. In exchange for the consideration  described in the Separation
Agreement,  you forever give up, waive and release any and all claims,  charges,
complaints,  grievances or promises of any and every kind you may have up to the
effective date of the Separation Agreement against the Company,  including,  but
not limited to, any and all claims for unreimbursed expenses, harassment, sexual
or  gender   discrimination,   age  discrimination,   race  or  national  origin
discrimination,  physical handicap and medical condition discrimination,  breach
of contract or wrongful termination from employment under California and federal
laws,  including  but not  limited  to the  United  States  Civil  Rights Act as
amended,  42 U.S.C.  Section 2000e et seq; the Age  Discrimination in Employment
Act of 1967, as amended,  29 U.S.C.  Section 621 et seq; and the California Fair
Employment and Housing Act, California Government Code Section 12900 et seq.

Waiver of California  Civil Code section 1542.  This is a full and final Release
applying to all unknown and unanticipated injuries or damages, including any and
all claims now  existing or which may arise in the  future,  arising out of said
employment or event as well as those not known or disclosed; you expressly waive
any  right  or  claim  of right to  assert  hereafter  that any  claim,  demand,
obligation  and/or cause of action has, through  ignorance,  oversight or error,
been omitted from the terms of this agreement,  and further  expressly waive any
right or claim of right that you may have under the law of any jurisdiction that
releases, such as those herein given do not apply to unknown or unstated claims.
It is your express  intent to waive any and all claims that you have against the
persons and entities herein released, including any which are presently unknown,
unsuspected, unanticipated or undisclosed. YOU EXPRESSLY WAIVE THE PROVISIONS OF

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

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

Terms and Conditions
Page 2 of 2

Confidentiality and Non-Disparagement.  You agree that the Separation Agreement,
including  these Terms and  Conditions are private and that you will not discuss
the fact that it exists or its terms with  anyone  else  except  your  attorney,
advisor, tax accountant, or as required by law. You also agree that you will not
disparage or otherwise injure the Company by your words or deeds.

Non-Solicitation.  You will not,  directly  or  indirectly,  at any time  within
twelve (12) months of the Effective Date,  employ or retain,  or arrange to have
any other person or entity employ or retain, any Company employee, consultant or
agent, without the Company's prior written consent.

Advice of  Counsel.  You have been  advised of your right to consult an attorney
before  you  sign  the  Separation  Agreement.  You have had at least 21 days to
consider whether to sign the Separation  Agreement and seven (7) days thereafter
to  rescind.  You sign the  Separation  Agreement  voluntarily.  The  Separation
Agreement  must be signed by you and returned to the Company not later than June
15,  2001,  and not  rescinded  in order to be valid.  If the  Company  does not
receive the Separation Agreement by that date, it will be considered expired and

Return of Proprietary  Property.  You agree that all property in your possession
that you have  obtained or been assigned in the course of your  employment  with
the Company,  including,  without limitation,  all documents,  reports, manuals,
memoranda,  customer lists, credit cards, keys, access cards, computer equipment
and all other  property  relating in any way to the business of the Company,  is
the  exclusive  property  of the  Company,  even if you  authored,  created,  or
assisted in authoring or creating such property. You shall return to the Company
all such  property  immediately  upon  separation  from the  Company  or at such
earlier  time as the  Company may  request.  This clause does not apply to those
pieces of office equipment specified in the Separation Agreement.

Confidential Information. Except as permitted or directed by the Company's Board
of  Directors,  during the time you are  employed  by the Company or at any time
thereafter,  you 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 yourself or by others.  Such confidential and/or secret information
includes,  but is not limited to, the  Company's  customer and  supplier  lists,
business plans, and financial,  marketing, and personnel information.  You agree
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 your
employment  hereunder and at any time after the termination of your  employment.
Your  obligations of  confidentiality  under this section 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 these Terms and Conditions.

Governing Law, Construction,  and Severability. The Separation 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 the  Separation  Agreement,
including its Terms and Conditions (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 the
Separation Agreement and Terms and Conditions.

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

Terms and Conditions
Page 3 of 3

Company Remedies.  You acknowledges that the remedy at law for any breach of any
of the  provisions of the  Separation  Agreement and these Terms and  Conditions
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.

Entire Agreement. The Separation Agreement,  Promissory Note and these Terms and
Conditions contain the entire agreement between you and the Company with respect
to your employment by the Company and there are no undertakings,  covenants,  or
commitments other than as set forth herein. The Separation Agreement, Promissory
Note and these Terms and Conditions  may not be altered or amended,  except by a
writing executed by the party against whom such alteration or amendment is to be
enforced.  The  Separation  Agreement,  Promissory  Note  and  these  Terms  and
Conditions  supersede,  terminate,  replace,  and  supplant  any and  all  prior
understandings  or  agreements  between the  parties  relating in any way to the
hiring or employment of you by the Company.

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).

Dispute  Resolution.  Any  controversy,  claim,  or dispute of  whatever  nature
arising out of or relating to the Separation Agreement, its Terms and Conditions
or your 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 the Separation  Agreement (any such  controversy,
claim or dispute  being a "Dispute"),  shall be resolved in accordance  with the
procedures  set forth herein which  procedures  shall be the sole and  exclusive
procedures for the resolution of any Disputes. 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. Any court having jurisdiction thereof may
enter  judgment  upon the award  rendered  by the  arbitrator.  The  statute  of
limitations  applicable  to the  commencement  of a lawsuit  shall  apply to the
commencement  of arbitration  under this  subsection.  You acknowledge and agree
that you have  been  given the  opportunity  to  negotiate  this  provision.  No
exercise of any rights  under this  section  shall limit the right of you or the
Company  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 the Separation  Agreement or
these  Terms  and  Conditions  shall  be paid by the  prevailing  party  in such

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