<PAGE>

                                                                    Exhibit 10.6

                              EMPLOYMENT AGREEMENT

I, Stephen E. Carlson, agree to the terms and conditions of employment with
VelocityHSI, Inc. (the "Company") set forth in this Employment Agreement
("Agreement").

          1.   Term of Employment.  My employment under this Agreement shall
               ------------------
commence on April 1, 2000 and shall end on March 31, 2003 ("Expiration Date"),
or such earlier date on which my employment is terminated under Section 5 of
this Agreement (the "Term").

          2.   Nature of Duties.
               ----------------

          (a)  I shall be the Company's President and Chief Executive Officer.
As such, I shall work exclusively for the Company and shall have all of the
customary powers and duties associated with that position. I shall devote my
full business time and effort to the performance of my duties for the Company,
which I shall perform faithfully and to the best of my ability. I will report
directly to the Board of Directors.

          (b)  Subject to applicable laws, rules and regulations of any
regulatory body or governmental authority, including, without limitation,
appropriate restrictions based on statutory and common law duties of loyalty and
care, during the term of my employment, the Company will nominate me as a
director of the Company. I acknowledge that the appointment of the directors is
through a vote of the Company's shareholders, and accordingly, the Company can
not assure my appointment as a director.

          3.   Place of Performance.  I shall be based at the Company's
               --------------------
principal place of business, which shall be located within the vicinity of the
greater San Francisco Bay Area, as determined by the Company, except for
required travel on the Company's business.

          4.   Compensation and Related Matters.
               --------------------------------

          (a)  Base Salary. The Company shall pay me base salary at an annual
rate of $200,000, or such higher amount as it elects to pay me. The Company's
Board of Directors shall award me such annual increases to my base salary as
they deem appropriate in their sole discretion and once the Company has
increased my base salary, it thereafter shall not be reduced. My base salary
shall be paid in conformity with the Company's salary payment practices
generally applicable to other similarly situated Company executives.

          (b)  Bonuses. I shall be eligible for bonuses and other incentive
compensation under bonus and incentive compensation plans generally available to
other similarly situated Company executives. Pursuant to such plans, I shall be
eligible for an annual bonus targeted at 50% of my base salary and up to 100% of
base salary based on achievement of operating and performance criteria
established by the Board of Directors.

                                      -1-
<PAGE>

          (c)   Stock Options, Restricted Stock, and Incentive Plans. I shall be
eligible to participate in all stock option, restricted stock, and incentive
plans generally available to other similarly situated Company executives, and as
determined by the Company's Board of Directors. Upon or prior to the
distribution of VelocityHSI common stock to BRE Properties, Inc. shareholders, I
shall be given the opportunity to purchase 826,472 shares of the
Company's common stock (the "Shares"), at a price of $0.50 per share. The Shares
shall be subject to a Restricted Stock Agreement. Such agreement shall provide,
among other things that, conditioned upon continued employment hereunder, 16-
2/3% of the Shares shall vest on October 1, 2000 and an additional 16-2/3% of
the Shares shall vest on each October 1st, and April 1st thereafter until the
Shares are fully vested; until vested, the Shares are subject to repurchase by
the Company at my original purchase price; and such other terms and provisions
as the Company's Board of Directors deem necessary or desirable. The Restricted
Stock Agreement shall include the following terms (i) upon the Company's merger
into, or acquisition by, another company, or similar change of control event, as
provided in the Restricted Stock Agreement, all of the stock granted hereunder
shall immediately vest and (ii) any vested shares shall not be subject to a
right of the Company, or any other person to repurchase such vested portion of
the Shares.

          (d)   Standard Benefits. During my employment, I shall be entitled to
participate in all employee benefit plans and programs, including but not
limited to, savings or profit-sharing plans, deferred compensation plans, stock
option, incentive or other bonus plans, life disability, health, accident and
other insurance programs, paid vacations, and similar plans and programs, to the
same extent generally available to other similarly situated Company executives,
in accordance with the terms of those plans and programs. The Company shall have
the right to terminate or change any such plan or program at any time.

          (e)   Supplemental Benefits. In addition to the foregoing, I shall be
granted the following benefits during the entire term of my employment:

          (i)   SIGNING BONUS.  The Company shall pay me $600,000 upon my
                --------------
employment with the company. I shall forfeit this bonus and repay it to the
Company if I am discharged for cause or resign without good reason (as defined
in sections 5 (c) and 5 (f) below) prior to April 1, 2001 and I shall forfeit
50% of this bonus and shall repay 50% of this bonus to the Company if I am
discharged for cause or resign without good reason prior to April 1, 2002. I
shall repay the forfeited bonus amount to the Company in full within ten days of
the date of the foregoing discharge or resignation.

          (ii)  Apartment Rental.  For the first year of my employment, the
                -----------------
Company shall provide me with the use of a furnished apartment, of such kind and
quality as is customary for a person in my position, within reasonable proximity
to the Company's principal place of business, all as determined by the Company.
I understand that the Company will allow me reasonable input on the selection of
the apartment.

          (iii) Car Allowance.  The Company shall provide me with the use of a
                --------------
car, the type and model at my discretion, provided that the monthly lease
payments paid by the Company, calculated on a 36 month lease, shall not exceed
$600.00.

                                      -2-
<PAGE>

          (iv)  Performance Bonus.  In addition to the bonus described in
                ------------------
Subsection (b), above, on January 15, 2001, I shall be entitled to receive a
bonus of $250,000 and a loan of $250,000 if the Company has completed prior to
December 31, 2000 the installation of all infrastructure necessary to provide
the Company's service to 35,000 dwelling units. This installation condition may
be reduced by the Compensation Committee of the Board of Directors if there is a
"force majeure" event or events which, in the sole discretion of that committee,
precluded the satisfaction of the condition on or prior to December 31, 2000.
The loan shall accrue interest at the rate of 9.0% per annum, payable quarterly
and the principal balance, together with all accrued and unpaid interest shall
be due and payable on January 15, 2003. Up to $150,000 of the principal balance
of such loan and accrued interest thereon shall be forgiven as follows: (a)
$75,000 of the principal amount of the loan, plus accrued interest thereon,
shall be forgiven effective January 1, 2002 if, prior to such date, the Company
has completed the installation of all infrastructure necessary to provide the
Company's services to 50,000 dwelling units, subject to the right of the
Compensation Committee of the Board of Directors to modify the installation
condition in the event of a force majeure of the type described above and (b)
effective January 1, 2003, an additional $75,000 of the principal amount of the
loan, plus accrued interest thereon, shall be forgiven if, prior to such date,
the Company has completed the installation of all infrastructure necessary to
provide the Company's services to 75,000 dwelling units, subject to the right of
the Compensation Committee of the Board of Directors to modify the installation
condition in the event of a force majeure of the type described above.

          (f)   Indemnification. The Company shall extend to me the same
indemnification arrangements as are generally provided to other similarly
situated Company executives, including after termination of my employment.

          (g)   Expenses. I shall be entitled to receive prompt reimbursement
for all reasonable and customary travel and business expenses I incur in
connection with my employment, but I must incur and account for those expenses
in accordance with the policies and procedures established by the Company.

          5.    Termination.
                ------------

          (a)   Rights and Duties. If my employment is terminated, I shall be
entitled to the amounts or benefits shown in the applicable row in the following
table, subject to Sections 5(b) through 5(i). The Company and I shall have no
further obligations to each other, except the Company's ongoing indemnification
obligation under Section 4, my confidentiality, etc. obligations under Section
6, and our mutual arbitration obligations under Section 8, or as set forth in
any agreement I subsequently enter into with the Company.

<TABLE>
<CAPTION>
      Method of Termination                          Benefits/Entitlements
------------------------------------------------------------------------------------------
<S>                                  <C>
DISCHARGE FOR CAUSE                  Prompt payment of (1) any unpaid base salary,
                                     expense reimbursements, or vacation days accrued
                                     prior to termination of employment, and (2) other
                                     unpaid vested amounts then due me under Company
                                     compensation, incentive, and benefit plans.
------------------------------------------------------------------------------------------
</TABLE>

                                      -3-
<PAGE>

<TABLE>
<CAPTION>
      Method of Termination                          Benefits/Entitlements
------------------------------------------------------------------------------------------
<S>                                  <C>
DISABILITY                           Same as for "Discharge for Cause" EXCEPT that my
                                     base salary and bonus eligibility shall continue
                                     until the earliest of (1) the Agreement's Expiration
                                     Date, (2) the first anniversary of the start of my
                                     Disability absence, or (3) my death, and in each
                                     case shall be reduced by other Company-provided
                                     disability benefits available to me.
------------------------------------------------------------------------------------------
DISCHARGE OTHER THAN  FOR CAUSE      Same as for "Discharge for Cause" EXCEPT that my
 OR DISABILITY                       base salary and the bonus entitlement provided
                                     below, but not my employment, shall continue through
                                     the Agreement's Expiration Date, or for one year,
                                     whichever comes first.  If I am discharged during
                                     the first year of the Term, I shall be entitled to a
                                     bonus of 50% of my annual base salary.  If I am
                                     discharged during the second year of the Term, I
                                     shall be entitled to a bonus equal to the actual
                                     bonus I received for my employment during the first
                                     year of the Term pursuant to Subsection 4(b).  If I
                                     am terminated during the third year of the Term, I
                                     shall be entitled to a bonus equal to the average of
                                     the actual bonus I received for my employment during
                                     the first and second year of the Term pursuant to
                                     Subsection 4(b).
------------------------------------------------------------------------------------------
RESIGNATION WITHOUT GOOD REASON      Same as for "Discharge for Cause."
------------------------------------------------------------------------------------------
RESIGNATION WITH GOOD REASON         Same as for "Discharge Other Than for Cause or
                                     Disability."
------------------------------------------------------------------------------------------
EXPIRATION OF AGREEMENT              Same as for "Discharge for Cause."
------------------------------------------------------------------------------------------
DEATH                                Same as for "Discharge for Cause" EXCEPT that
                                     payments shall be made to the person or entity
                                     prescribed by Company policies, and any death
                                     benefits under Company employee benefit plans or
                                     programs payable due to my death shall also be paid.
------------------------------------------------------------------------------------------
</TABLE>

          (b)   General Release. I understand and acknowledge that I will only
receive the severance payments and/or benefits provided for in Section 5(a)
above if I sign a general release form furnished to me by the Company, which
shall be substantially in the form attached as Schedule 1 to this Agreement,
within 60 days after my employment ends (or within 60 days after an arbitrator
determines that I am entitled to such payments if I sign the general release)
and I do not thereafter properly revoke the release. If I do not sign the
release for any reason, or if

                                      -4-
<PAGE>

after signing, I revoke the release, I shall only be entitled to the
benefits/entitlements applicable to a discharge for cause.

          (c)   Discharge for Cause. The Company may terminate my employment at
any time if it believes in good faith that it has Cause to terminate me. "Cause"
shall include, but not be limited to:

          (i)   my refusal to follow written, lawful directions or my material
failure to perform my duties (other than by reason of physical or mental
illness, injury, or condition), in either case, after I have been given notice
of my default and a reasonable opportunity to cure it;

          (ii)  my material failure to comply with Company policies; or

          (iii) my engaging in conduct that is or may be unlawful or
disreputable, to the possible detriment of the Company and its subsidiaries and
affiliates, and their predecessors and successors, or my own reputation.

If I am discharged for Cause, I will only receive the benefits to which I am
entitled under Section 5(a).

          (d)   Termination for Disability. The Company may terminate my
employment on account of Disability, or may transfer me to inactive employment
status, which shall have the same effect under this Agreement as a termination
for Disability. "Disability" means a physical or mental illness, injury, or
condition that prevents me from performing substantially all of my duties under
this Agreement for at least 90 consecutive calendar days or for at least 120
calendar days, whether or not consecutive, in any 365 calendar day period, or is
likely to do so, as certified by a physician selected by the Company's Board of
Directors.

          (e)   Discharge Other Than for Cause or Disability. The Company may
terminate my employment at any time for any reason, and without advance notice.
Except as provided in Section 5(b), if I am terminated by the Company other than
for Cause under Section 5(c) or for Disability under Section 5(d), I will only
receive the special benefits to which I am entitled to under Section 5(a).

          (f)   Resignation. I promise not to resign my employment before the
Expiration Date unless I have been given Good Reason to do so, and, in any
event, not without giving the Company at least thirty (30) days' advance written
notice. Except as provided in Section 5(b), if I resign, I will receive the
benefits to which I am entitled under Section 5(a). "Good Reason" means the
occurrence of any of the following without my express written consent:

          (i)   Demotion.  My duties or responsibilities are substantially and
                --------
adversely altered from those in effect at the time of my initial employment
other than merely as a result of a change in my title, or my transfer to a
subsidiary or affiliate of the Company.

          (ii)  Pay Cut.  My annual base salary is reduced.
                -------

                                      -5-
<PAGE>

          (iii) Relocation.  My principal office is transferred to another
                ----------
location, which increases my one-way commute to work by more than 60 minutes,
based on my residence when the transfer is announced or, if I consent to the
transfer, the Company fails to pay (or reimburse me) for all reasonable moving
expenses I incur in changing my principal residence in connection with the
relocation.

          (iv)  Breach of Promise.  A material breach of this Agreement by the
                -----------------
Company, including the Company's failure to pay me any present or deferred
compensation within 7 days after such payment is due to me.

          (v)   Discontinuance of Compensation Plan Participation.  The Company
                -------------------------------------------------
fails to continue, or continue my participation in, any compensation plan in
which I participated that is material to my total compensation, unless an
equitable substitute arrangement has been adopted or made available on a basis
not materially less favorable to me, both as to the benefits I receive and my
level of participation relative to other participants.

          (vi)  Discontinuance of Benefits.  The Company stops providing me
                --------------------------
with benefits that, in the aggregate, are substantially as valuable to me as
those I enjoyed under the Company's pension, savings, deferred compensation,
life insurance, medical, health, disability, accident, vacation, or fringe
benefit plans, programs, and arrangements.

          (vii) Constructive Discharge.  I am constructively discharged, as
                ----------------------
determined under California statutes and case law as in effect at the time I
executed this contract, including any requirement under such law that I give the
Company notice and an opportunity to cure the grounds that I believe resulted in
my constructive discharge.

          (viii) Notice of Prospective Action.  I am officially notified (or it
                 ----------------------------
is officially announced) that the Company will take any of the actions listed
above during the term of this Agreement.

However, an event that is or would constitute Good Reason shall cease to be Good
Reason if:  (1) I do not terminate employment within thirty (30) days after the
event occurs; (2) the Company reverses the action or cures the default that
constitutes Good Reason within fourteen (14) days after I notify it in writing
that Good Reason exists before I terminate employment; or (3) I was a primary
instigator of the Good Reason event and the circumstances make it inappropriate
for me to receive Good Reason resignation benefits under this Agreement (e.g., I
agree temporarily to relinquish my position on the occurrence of a merger
transaction I negotiate).  If I have Good Reason to terminate employment, I may
do so even if I am on a leave of absence due to physical or mental illness or
any other reason, but I must do so before my actual or constructive Disability
termination.

          (g)   Death. If I die while employed under this Agreement, the
payments required by Section 5(a) in the event of my death shall be made.

          (h)   Disputes Under This Section. All disputes relating to this
Agreement, including disputes relating to this section, shall be resolved by
final and binding arbitration under Section 8. For example, if I and the Company
disagree as to whether the Company had Cause to

                                      -6-
<PAGE>

terminate my employment, we will resolve the dispute through arbitration; the
arbitrator will decide whether the Company had Cause to terminate me.

          (i)   Offset. Any amounts payable to me under this Section shall first
be offset against any amounts I owe the Company at the time of termination.

          6.    Confidentiality.  I acknowledge that I currently possess or
                ---------------
will acquire secret, confidential, or proprietary information or trade secrets
concerning the operations, future plans, or business methods of the Company. I
agree that the Company would be irreparably harmed if I used or disclosed this
information. To prevent this harm, I am making the promises set forth in this
Section 6. I expressly agree that the Company shall be entitled, in addition to
damages and any other remedies provided by law, to an injunction or other
equitable remedy respecting such violation or continued violation by me of these
promises.

          (a)   Promise Not To Disclose. I promise never to use or disclose any
such confidential information before it has become generally known within the
relevant industry through no fault of my own. I agree that this promise shall
never expire.

          (b)   Promise Not To Interfere. I further agree that, while this
Agreement is in effect and for 12 months after its termination, I will not, in
any material manner, interfere with, damage or disrupt any aspect of the
Company's business, including the Company's relationship with its customers or
employees. I understand that the foregoing obligation requires, among other
things, that: (1) as to any customer or supplier of the Company with whom I had
dealings or about whom I acquired proprietary information during my employment,
I will not solicit or attempt to solicit any such customer or supplier to do
business with any person or entity other than the Company; and (2) I will not
solicit for employment any person who is, or within the preceding 6 months was,
an officer, manager, employee, or consultant of the Company.

          (c)   Promise Not To Engage In Certain Employment. I agree that, while
this Agreement is in effect and for 18 months after its termination, I will not
accept any employment or engage in any activity, without the written consent of
the Chairman of the Board if the loyal and complete fulfillment of my duties
would inevitably require me to reveal or utilize trade secrets or other
confidential information that I have promised not to disclose, as reasonably
determined by Chairman of the Board.

          (d)   Return of Confidential Information. When my employment with the
Company ends, I will promptly deliver to the Company or, at its written
instruction, destroy all documents, data, drawings, manuals, letters, notes,
reports, electronic mail, recordings, and copies thereof, in my possession or
control.

          (e)   Promise To Discuss Proposed Actions In Advance. To prevent the
inevitable use or disclosure of trade secrets or confidential information, I
promise that, before I disclose or use information and before I commence
employment, solicitations, or any other activity that could possibly violate the
promises I have just made, I will discuss my proposed actions with Chairman of
the Board, who will advise me whether my proposed actions would violate these
promises.

          7.    Notice.
                ------

                                      -7-
<PAGE>

          (a)   To the Company. I will send all communications to the Company in
writing, addressed as follows (or in any other manner the Company notifies me to
use):

                VelocityHSI, Inc.
                Attention:  LeRoy E. Carlson
                44 Montgomery Street, 36th Floor
                San Francisco, CA 94104
                Fax:  (415) 445-6505
                Tel.: (415) 445-6500

          (b)   To Me. All communications from the Company to me relating to
this Agreement must be sent to me in writing at my Company office or in any
other manner I notify the Company to use.

          (c)   Time Notice Deemed Given. Notice shall be deemed to have been
given when delivered or, if earlier (1) when mailed by United States certified
or registered mail, return receipt requested, postage prepaid, or (2) faxed with
confirmation of delivery, in either case, addressed as required in this section.

          8.    Arbitration of Disputes.  All disputes between me and the
                -----------------------
Company are to be resolved by final and binding arbitration in accordance with
the Arbitration Procedures attached as Schedule 2 to this Agreement (except, if
either I or the Company so elects, any dispute relating to trade secrets,
confidentiality, proprietary information, or competition). I also agree to
resolve through arbitration in accordance with such procedures any claim between
me and any Company member, employee, officer, director, or other related person
or entity that offers or agrees to arbitrate the claim in such manner. This
arbitration agreement applies to, among other things, disputes about the
validity, interpretation, or effect of this Agreement or alleged violations of
it, claims of discrimination under federal or state law, or other statutory
violation claims. Arbitration in this manner shall be the exclusive remedy for
any claim that must be arbitrated pursuant to this section. Should I or the
Company attempt to resolve such a claim by any method other than arbitration
pursuant to this section, the responding party will be entitled to recover from
the initiating party all damages, expenses, and attorneys' fees incurred as a
result of that breach. This section shall remain in effect after the termination
of this Agreement.

          9.    Golden Parachute Limitation.  I agree that my payments and
                ---------------------------
benefits under this Agreement and all other contracts, arrangements, or programs
shall not, in the aggregate, exceed the maximum amount that may be paid to me
without triggering golden parachute penalties under Section 280G and related
provisions of the Internal Revenue Code, as determined in good faith by the
Company's independent auditors. If any benefits must be cut back to avoid
triggering such penalties, my benefits shall be cut back in the priority order
designated by the Company. If an amount in excess of the limit set forth in this
section is paid to me, I will repay the excess amount to the Company upon
demand, with interest at the rate provided for in Internal Revenue Code Section
1274(b)(2)(B). The Company and I agree to cooperate with each other in
connection with any administrative or judicial proceedings concerning the
existence or amount of golden parachute penalties with respect to payments or
benefits I receive.

                                      -8-
<PAGE>

          10.   Amendment.  No provisions of this Agreement may be modified,
                ---------
waived, or discharged except by a written document signed by me and a duly
authorized Company officer. Thus, for example, promotions, commendations, and/or
bonuses shall not, by themselves, modify, amend, or extend this Agreement. A
waiver of any conditions or provisions of this Agreement in a given instance
shall not be deemed a waiver of such conditions or provisions at any other time.

          11.   Interpretation.  The validity, interpretation, construction, and
                --------------
performance of this Agreement shall be governed by the laws of the State of
California (excluding any that mandate the use of another jurisdiction's laws).

          12.   Successors.  This Agreement shall be binding upon, and shall
                ----------
inure to the benefit of, me and my estate, but I may not assign or pledge this
Agreement or any rights arising under it, except to the extent permitted under
the terms of the benefit plans in which I participate. This Agreement shall be
binding on any successor to the Company, or portion thereof, that agrees in
writing to be bound by this Agreement, after the effective date of which the
Company shall cease to have any further primary, secondary or other
responsibilities or liabilities under this Agreement of any kind.

          13.   Validity.  The invalidity or unenforceability of any provision
                --------
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.

          14.   Counterparts.  This Agreement may be executed in one or more
                ------------
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute the same instrument.

          15.   Entire Agreement.  All oral or written agreements or
                ----------------
representations, express or implied, with respect to the subject matter of this
Agreement are set forth in this Agreement. However, this Agreement does not
override other written agreements I have executed relating to specific aspects
of my employment including, but not limited to, the Settlement Agreement and
General Release and any confidentiality agreements.

          16.  Former Employers.  I am not subject to any employment,
               ----------------
confidentiality, or other agreement or restriction that would prevent me from
fully satisfying my duties under this Agreement or that would be violated if I
did so. I agree not to disclose proprietary information belonging to a former
employer or other entity without its written permission. I will indemnify and
hold the Company harmless from any liabilities, including defense costs, it may
incur because I am alleged to have improperly revealed or used such proprietary
information or to have threatened to do so, or if a former employer challenges
my entering into this Agreement or rendering services pursuant to it.

                                      ***

                                      -9-
<PAGE>

I ACKNOWLEDGE THAT ALL UNDERSTANDINGS AND AGREEMENTS BETWEEN THE COMPANY AND ME
RELATING TO THE SUBJECTS COVERED IN THIS AGREEMENT ARE CONTAINED IN IT AND THAT
I HAVE ENTERED INTO THIS AGREEMENT VOLUNTARILY AND NOT IN RELIANCE ON ANY
PROMISES OR REPRESENTATIONS BY THE COMPANY OTHER THAN THOSE CONTAINED IN THIS
AGREEMENT.

I FURTHER ACKNOWLEDGE THAT I HAVE CAREFULLY READ THIS AGREEMENT, THAT I
UNDERSTAND ALL OF IT, AND THAT I HAVE BEEN GIVEN THE OPPORTUNITY TO DISCUSS THIS
AGREEMENT WITH MY PRIVATE LEGAL COUNSEL AND TAX ADVISOR AND HAVE AVAILED MYSELF
OF THAT OPPORTUNITY TO THE EXTENT I WISHED TO DO SO. I UNDERSTAND THAT BY
SIGNING THIS AGREEMENT I AM GIVING UP MY RIGHT TO A JURY TRIAL.

                              VELOCITYHSI, INC.



Date:  July 31, 2000          By:  /s/ Charles P. Wingard
      ______________           ___________________________
                                  Name: Charles P. Wingard
                                  Title: Senior Vice President and
                                         Chief Financial Officer


Date:  July 31, 2000               /s/ Stephen E. Carlson
      ______________          ___________________________
                                       Stephen E. Carlson

                                     -10-
<PAGE>

                                  SCHEDULE 1
                                  ----------

                   SETTLEMENT AGREEMENT AND GENERAL RELEASE

          VelocityHSI, Inc. and I agree as follows:

          Section 1 --  Benefits

          (a)  In General: The Company promises that, within 10 days after I
sign this Release, I will receive the amount or benefits set forth in Section
1(b) that are conditioned on my execution of this Release. I may revoke this
Release within 7 days after I sign it, in which case I will not receive amounts
or benefits that are conditioned on my execution of this Release. I acknowledge
that the Company is not otherwise required to pay or provide me such amounts or
benefits.

          (b)  Benefits: [describe the benefits to be paid, including any
amounts due under company benefit plans, option agreements, etc.]

          Section 2 --  Complete Release

          (a)  In General: I irrevocably and unconditionally release all the
Claims described in Section 2(b) that I may now have against the Released
Parties listed in Section 2(d), except that I am not releasing any Claim that
relates to: (1) my right to enforce this Release; (2) any rights I may have to
indemnification from personal liability unrelated to Claims I am releasing; or
(3) my right, if any, to government-provided unemployment benefits.

          (b)  Claims Released:  Subject only to the exceptions just noted, I
am releasing all known and unknown claims, promises, causes of action, or
similar rights of any type that I may have (Claims) with respect to any Released
Party listed in Section 2(d). I understand that the Claims I am releasing might
arise under many different laws (including statutes, regulations, other
administrative guidance, and common law doctrines), such as the following:

          Anti-discrimination statutes, such as the Age Discrimination in
          ----------------------------
Employment Act and Executive Order 11,141, which prohibit age discrimination in
employment; Title VII of the Civil Rights Act of 1964, Sections 1981 and 1983 of
the Civil Rights Act of 1866, and Executive Order 11,246, which prohibit
discrimination based on race, color, national origin, religion, or sex; the
Equal Pay Act, which prohibits paying men and women unequal pay for equal work;
the Americans With Disabilities Act and Sections 503 and 504 of the
Rehabilitation Act of 1973, which prohibit discrimination based on disability;
and any other federal, state, or local laws prohibiting employment
discrimination, such as the California Fair Employment and Housing Act, which
prohibits discrimination in employment based on race, color, national origin,
ancestry, physical or mental disability, medical condition, marital status, sex,
or age.

          Federal employment statutes, such as the WARN Act, which requires that
          ---------------------------
advance notice be given of certain work force reductions; the Employee
Retirement Income Security Act of 1974, which, among other things, protects
employee benefits; the Fair Labor Standards Act of 1938, which regulates wage
and hour matters; the Family and Medical Leave
<PAGE>

Act of 1993, which requires employers to provide leaves of absence under certain
circumstances; and any other federal laws relating to employment, such as
veterans' reemployment rights laws.

          Other laws, such as any federal, state, or local laws providing
          ----------
workers' compensation benefits, restricting an employer's right to terminate
employees, or otherwise regulating employment; any federal, state, or local law
enforcing express or implied employment contracts or requiring an employer to
deal with employees fairly or in good faith; any other federal, state, or local
laws providing recourse for alleged wrongful discharge, tort, physical or
personal injury, emotional distress, fraud, negligent misrepresentation,
defamation, and similar or related claims, such as California Labor Code Section
200 et seq., relating to salary, commission, compensation, benefits, and other
matters; the California Workers' Compensation Act; or any applicable California
Industrial Welfare Commission order.

          Examples of released Claims include, but are not limited to:  (i)
          ---------------------------
Claims that in any way relate to my employment with the Company, or the
termination of that employment, such as Claims for compensation, bonuses,
commissions, lost wages, or unused accrued vacation or sick pay; (ii) Claims
that in any way relate to the design or administration of any employee benefit
program; (iii) Claims that I have irrevocable or vested rights to severance or
similar benefits or to post-employment health or group insurance benefits; or
(iv) any Claims to attorneys' fees or other indemnities with respect to Claims I
am releasing.

          (c)  Unknown Claims:  I understand that I am releasing Claims that I
may not know about. That is my knowing and voluntary intent, even though I
recognize that someday I might learn that some or all of the facts I currently
believe to be true are untrue and even though I might then regret having signed
this Release. Nevertheless, I am assuming that risk and I agree that this
Release shall remain effective in all respects in any such case. I expressly
waive all rights I might have under any law that is intended to protect me from
waiving unknown claims. I understand the significance of doing so.

          (d)  Released Parties:  The Released Parties are the Company, all
current and former parents, subsidiaries, related companies, partnerships, or
joint ventures, and, with respect to each of them, their predecessors and
successors; and, with respect to each such entity, all of its past, present, and
future employees, officers, directors, stockholders, owners, representatives,
assigns, attorneys, agents, insurers, employee benefit programs (and the
trustees, administrators, fiduciaries, and insurers of such programs), and any
other persons acting by, through, under or in concert with any of the persons or
entities listed in this subsection, and their successors.

          Section 3 --  Promises

          (a)  Employment Termination:  I agree that my employment with the
Company will end forever on [date], and I promise never to seek employment with
the Company in the future.

          (b)  Pursuit of Released Claims: Except as specifically identified
below, I have not filed or caused to be filed any lawsuit, complaint, or charge
with respect to any Claim this Release purports to waive, and I promise never to
file or prosecute a lawsuit, complaint, or charge based on such Claims. I
promise never to seek any damages, remedies, or other relief for
<PAGE>

myself personally (any right to which I hereby waive) by filing or prosecuting a
charge with any administrative agency with respect to any such Claim. I promise
to request any administrative agency or other body assuming jurisdiction of any
such lawsuit, complaint, or charge to withdraw from the matter or dismiss the
matter with prejudice. [if applicable: I agree to cause the withdrawal or
dismissal with prejudice of [describe the lawsuit, etc., precisely (including
the docket number)] within 5 days after this Release becomes irrevocable, and
until such withdrawal or dismissal is accepted or ordered, no amounts otherwise
due me under this Release shall become payable.]

          (c)  Company Property: By my last day of work, I will return to the
Company all files, memoranda, documents, records, copies of the foregoing,
credit cards, keys, and any other property of the Company in my possession.

          (d)  Taxes: I am responsible for paying any taxes on amounts I receive
because I signed this Release. I agree that the Company is to withhold all taxes
it determines it is legally required to withhold, except as expressly otherwise
provided in Section 1. I agree to indemnify the Company for all expenses,
penalties, or interest charges it incurs as a result of not paying payroll taxes
on, or withholding taxes from, amounts paid under this Release. I further agree
not to make any claim against the Company or any other person based on how the
Company reports amounts paid under this Release to tax authorities or if an
adverse determination is made as to the tax treatment of any amounts payable
under this Release. In addition, I understand and agree that the Company has no
duty to try to prevent such an adverse determination.

          (e)  Ownership of Claims: I have not assigned or transferred any Claim
I am purporting to release, nor have I attempted to do so.

          (f)  Nonadmission of Liability: I agree not to assert that this
Release is an admission of guilt or wrongdoing and I acknowledge that the
Released Parties do not believe or admit that any of them has done anything
wrong.

          (g)  No Disparagement or Harm: I agree not to criticize, denigrate, or
disparage any Released Party. I agree not to incur any expenses, obligations, or
liabilities on behalf of the Company.

          (h)  Nondisclosure: I agree to remain bound by all proprietary
information, trade secrets, innovation, and nonsolicitation agreements or
covenants to which I am currently a party.

          (i)  Implementation: I and the Company agree to sign any documents and
do anything else that is necessary in the future to implement this Release.

          (j)  Other Representations: In addition to any other representations
in this Release, I have made the following representations to the Company, on
which I acknowledge it has relied in entering into this Release with me: I have
not suffered any discrimination on account of my age, sex, race, national
origin, marital status, sexual orientation, or any other protected status, and
none of these ever has been an adverse factor used against me by any Released
Party. I have not suffered any job-related wrongs or injuries for which I might
still be
<PAGE>

entitled to compensation or relief, such as an injury for which I might receive
a workers' compensation award in the future.

          (k)  False Claims Representations and Promises: I have disclosed to
the Company any information I have concerning any conduct involving the Company
that I have any reason to believe may be unlawful or that involves any false
claims to the United States. I promise to cooperate fully in any investigation
the Company undertakes into matters occurring during my employment with the
Company. I understand that nothing in this Release prevents me from cooperating
with any U.S. government investigation.

          (l)  Cooperation Required: I agree that, as requested by the Company,
I will fully cooperate with the Company in effecting a smooth transition of my
responsibilities to others. I agree to spend up to a maximum of [number] hours
per month, through [date]. To the extent I incur out-of-pocket expenses (such as
postage costs or telephone charges) in assisting the Company at its request, the
Company will mail me a reimbursement check for those expenses within 15 days
after it receives my request for payment with satisfactory written
substantiation of the claimed expenses.

          (m)  This Agreement to be Kept Confidential: I agree not to disclose
the underlying facts that led up to this Release or the terms, amount, or
existence of this Release to anyone other than a member of my immediate family,
attorney, or other professional advisor and, even as to such a person, only if
the person agrees to honor this confidentiality requirement. Such a person's
violation of this confidentiality requirement will be treated as a violation of
this Release by me. This subsection does not prohibit my disclosure of the
terms, amount, or existence of this Release to the extent necessary legally to
enforce this Release, nor does it prohibit disclosures to the extent otherwise
legally required (but only if I notify the Company of a disclosure obligation or
request within 1 day after I learn of it and permit the Company to take all
steps it deems to be appropriate to prevent or limit the required disclosure). I
acknowledge that the Company would be irreparably harmed if this subsection is
violated.

          Section 4 --  Consequences of Violating my Promises

          (a)  General Consequences: In addition to any other remedies or relief
that may be available, I agree to pay the reasonable attorneys' fees and any
damages Released Parties may incur as a result of my breaching a promise I made
in this Release (such as by suing a Released Party over a released Claim) or if
any representation I made in this Release was false when made. I further agree
that the Company would be irreparably harmed by any actual or threatened
violation of Section 3 that involves disclosure of the existence, terms, or
amount payable under this Release, or disclosure or use of confidential
information or trade secrets or solicitation of employees, customers, or
suppliers, and that the Company will be entitled to an injunction prohibiting me
from committing any such violation.

          (b)  Challenges to Validity: Should I attempt to challenge the
enforceability of this Release, I agree first (1) to deliver a certified check
to the Company for all amounts I have received because I signed this Release,
plus 10 percent interest per annum, (2) to direct in writing that all future
benefits or payments I am to receive because I signed this Release be suspended,
and (3) to invite the Company to cancel this Release. If the Company accepts my
offer, this
<PAGE>

Release will be canceled. If it rejects my offer, the Company will notify me and
deposit the amount I repaid, plus all suspended future benefits and payments, in
an interest-bearing account pending a determination of the enforceability of
this Release. If the Release is determined to be enforceable, the Company is to
pay me the amount in the account, less any amounts I owe the Company. If the
Release is determined to be unenforceable, the amount credited to the account
shall be paid to the entities that paid the consideration for this Release in
proportion to their payments, and the suspension of future benefits or payments
shall become permanent.

          Section 5 --  Consideration of Release

          I acknowledge that, before signing this Release, I was given a period
of at least 21 days in which to consider this Release.  I waive any right I
might have to additional time beyond this consideration period within which to
consider this Release.  I further acknowledge that:  (1) I took advantage of
this period to consider this Release before signing it; (2) I carefully read
this Release; (3) I fully understand it; (4) I am entering into it voluntarily;
(5) I am receiving valuable consideration in exchange for my execution of this
Release that I would not otherwise be entitled to receive; and (6) the Company,
in writing, encouraged me to discuss this Release with my attorney (at my own
expense) before signing it, and I did so to the extent I deemed appropriate.

          Section 6 --  Miscellaneous

          (a)  Entire Agreement: This is the entire agreement between me and the
Company. This agreement may not be modified or canceled in any manner except by
a writing signed by both me and an authorized Company official. I acknowledge
that the Company has made no representations or promises to me (such as that my
former position will remain vacant), other than those in or referred to by this
Release. If any provision in this Release is found to be unenforceable, all
other provisions will remain fully enforceable.

          (b)  Successors: This Release binds my heirs, administrators,
representatives, executors, successors, and assigns, and will inure to the
benefit of all Released Parties and their respective heirs, administrators,
representatives, executors, successors, and assigns.

          (c)  Interpretation: This Release shall be construed as a whole
according to its fair meaning. It shall not be construed strictly for or against
me or any Released Party. Unless the context indicates otherwise, the term "or"
shall be deemed to include the term "and" and the singular or plural number
shall be deemed to include the other. Captions are intended solely for
convenience of reference and shall not be used in the interpretation of this
Release. Except to the extent governed by federal law, this Release shall be
governed by the statutes and common law of the State of California (excluding
any that mandate the use of another jurisdiction's laws).

          (d)  References: If it is necessary for me to give a prospective
employer a reference to someone in the Company, I agree only to use [name of
position] as a reference. [Name of position] or his or her delegate will not
disclose any information other than the dates of my employment with the Company
and a list of the positions I held with it.

          Section 7 --  Arbitration of Disputes
<PAGE>

          I acknowledge that the arbitration provisions of my written employment
agreement with the Company, which are hereby incorporated by reference, shall
remain in effect.

TAKE THIS RELEASE HOME, READ IT, AND CAREFULLY CONSIDER ALL OF ITS PROVISIONS
BEFORE SIGNING IT:  IT INCLUDES A RELEASE OF KNOWN AND UNKNOWN CLAIMS.  IF YOU
WISH, YOU SHOULD TAKE ADVANTAGE OF THE FULL CONSIDERATION PERIOD AFFORDED BY
SECTION 5 AND YOU SHOULD CONSULT YOUR ATTORNEY.

Executed on this      day of     , 200



                       --------------------------
                       Stephen E. Carlson



                       VELOCITYHSI, INC.

                       By:
                           ----------------------------------------------------
                       Name:
                             --------------------------------------------------
                       Title:
                              -------------------------------------------------

<PAGE>

                                  SCHEDULE 2
                                  ----------

                            ARBITRATION PROCEDURES

          (a)  Request for Arbitration

          A person or entity asserting a claim to be arbitrated under these
arbitration procedures (Plaintiff) must submit a request for arbitration to the
person or entity against whom the claim is being asserted (Defendant).  The
Plaintiff or Defendant may bring an action in any court of appropriate
jurisdiction to compel arbitration in accordance with these procedures.

          (b)  Applicable Arbitration Rules

          The arbitration shall be held under the auspices of either the
American Arbitration Association (AAA) or the Judicial Arbitration and Mediation
Service (JAMS), whichever is chosen by the Defendant.  Except as provided below,
the arbitration shall be in accordance with the AAA or JAMS's then-current
employment dispute resolution rules (depending on which is selected).  The
Arbitrator shall apply the Federal Rules of Evidence and shall have the
authority to entertain a motion to dismiss or a motion for summary judgment by
any party and shall apply the standards governing such motions under the Federal
Rules of Civil Procedure.  The Federal Arbitration Act shall govern all
arbitrations that take place under these procedures (or that are required to
take place under them), and shall govern the interpretation or enforcement of
these procedures or any arbitration award.  To the extent that the Federal
Arbitration Act is inapplicable, California law pertaining to arbitration
agreements shall apply.

          (c)  Arbitrator

          The Arbitrator shall be an attorney familiar with employment matters
who is licensed to practice law in the state in which the arbitration is
convened.  The Arbitrator shall be selected in the following manner from a list
of 11 arbitrators drawn by the sponsoring organization under whose auspices the
arbitration is being conducted and taken from its panel of labor and employment
arbitrators.  Each party shall designate all arbitrators on the list whom they
find acceptable; the parties shall then alternately strike arbitrators from the
list of arbitrators acceptable to both parties, with the Defendant striking
first.  If only one arbitrator is acceptable to both parties, he or she will be
the Arbitrator.  If none of the arbitrators is acceptable to both parties, a new
panel of arbitrators shall be obtained from the sponsoring organization and the
selection process shall be repeated.

          (d)  Location

          The arbitration will take place in or near the city in which the
Plaintiff is or was last employed by VelocityHSI, Inc. (Company) or, if not
employed by the Company, is domiciled, or in such other location as may be
acceptable to both the Plaintiff and the Defendant.

          (e)  Authority of Arbitrator
<PAGE>

          The Arbitrator shall have the authority to resolve any factual or
legal claim, including the interpretation, applicability, or enforceability of
these arbitration procedures and any claim that these procedures are void or
voidable.  The arbitration shall be final and binding on all parties.

          (f)  Experts, Depositions, and Discovery

          Except as otherwise permitted by the Arbitrator, on a showing of
substantial need, either party may: (1) designate one expert witness; (2) take
the deposition of one individual and the other party's expert witness; (3)
propound requests for production of documents; and (4) subpoena witnesses and
documents.

          (g)  Pre-Hearing Procedures

          At least 30 days before the arbitration hearing, the parties must
exchange lists of witnesses, including any expert witnesses, and copies of all
exhibits intended to be used at the hearing.  The Arbitrator shall have
jurisdiction to hear and rule on pre-hearing disputes and is authorized to hold
pre-hearing conferences by telephone or in person, as the Arbitrator deems
necessary.

          (h)  Transcripts

          Either party may arrange for a court reporter to provide a
stenographic record of the proceedings at the party's own cost.

          (i)  Post-Hearing Procedures

          Either party, on request at the close of the hearing, may be given
leave to file a post-hearing brief within the time limits established by the
Arbitrator.

          (j)  Costs and Attorneys' Fees

          The Plaintiff and the Defendant equally shall share the fees and costs
of the Arbitrator, except that in any dispute between an individual and a
business entity (1) the maximum cost to the individual shall not exceed the
greater of $1,000 or 20 percent of the amount at issue, (2) the individual shall
not be required to pay any of the Arbitrator's fees and costs if such a
requirement would make mandatory arbitration under these procedures
unenforceable, and (3) on a showing of material hardship, the business entity,
in its discretion, may advance all or part of the individual's share of the fees
and costs, in which case the latter shall reimburse the former out of the
proceeds of any arbitration award that he or she receives.  Each party shall pay
its own costs and attorneys' fees.  The Arbitrator may, in his or her
discretion, award reasonable attorneys' fees to the prevailing party.

          (k)  Arbitration Award

          The Arbitrator shall render an award and opinion in the form typically
rendered in labor arbitrations.  Within 20 days after issuance of the
Arbitrator's award and opinion, either party may file with the Arbitrator a
motion to reconsider, which shall be accompanied by a
<PAGE>

supporting brief. If such a motion is filed, the other party shall have 20 days
from the date of the motion to respond, after which the Arbitrator shall
reconsider the issues raised by the motion and either promptly confirm or
promptly change his or her decision. The decision shall then be final and
conclusive on the parties. Arbitrator fees and other costs of a motion for
reconsideration shall be borne by the losing party, unless the Arbitrator orders
otherwise. Either party may bring an action in any court of appropriate
jurisdiction to enforce an arbitration award. A party opposing enforcement of an
arbitration award may not do so in an enforcement proceeding, but must bring a
separate action in a court of competent jurisdiction to set aside the award. In
any such action, the standard of review shall be the same as that applied by an
appellate court reviewing the decision of a trial court in a nonjury trial.

          (l)  Severability

          The invalidity or unenforceability of any part of these arbitration
procedures shall not affect the validity of the rest of the procedures.