Document:

<PAGE>   1
                                                                   EXHIBIT 10.22

                        SETTLEMENT AGREEMENT AND RELEASE

     This Settlement Agreement and Release ("Agreement") is made by and between
8 X 8, INC., a Delaware corporation (the "Company"), and KEITH BARRACLOUGH
("Employee").

     WHEREAS, Employee was employed by the Company as President and Chief
Operating Officer;

     WHEREAS, the Company and Employee (collectively referred to as "the
Parties") have entered into an Employment, Confidential Information and
Invention Assignment Agreement (the "Confidentiality Agreement");

     WHEREAS, Employee has been granted stock options pursuant to certain Stock
Option Agreements between the Company and Employee dated January 27, 1995
(15,000 shares), December 11, 1995 (20,000 shares), June 24, 1996 (20,000
shares), September 21, 1998 (170,000 shares), September 21, 1998 (30,000
shares), September 21, 1998 (50,000 shares), September 21, 1998 (25,000 shares),
October 19, 1998 (25,000 shares), April 9, 1999 (15,000 shares), July 20, 1999
(20,000 shares), and May 16, 2000 (200,000 shares) (together the "Stock Option
Agreements"); and

     WHEREAS, the Company, on the one hand, and Employee, on the other hand,
have mutually agreed to terminate the employment relationship;

     NOW THEREFORE, in consideration of the mutual promises made herein, the
Company, on the one hand, and Employee on the other hand hereby agree as
follows:

     1.   Resignation. Upon acceptance of this Agreement by the Parties,
Employee resigns from Employee's employment at the Company effective as of June
19, 2000 (the "Resignation Date"). Further, Employee shall also be deemed to
have resigned from the Company's Board of Directors effective June 19, 2000.

     2.   Consideration.

          (a)  Severance. Immediately following the date on which the parties
               execute this Agreement, (the "Effective Date"), the Company
               agrees to pay Employee, as severance, a lump sum of Ninety Five
               Thousand Dollars ($95,000), representing his current rate of pay
               for six months of work. Six months after the Effective Date, the
               Company agrees to pay Employee, as additional severance, an
               additional lump sum of Ninety-Five Thousand Dollars ($95,000),
               minus withholding, as long as Employee has not accepted
               employment with a company listed on the attached Exhibit A,
               whether as an employee, independent contractor, consultant, or
               otherwise ("Payment Period"). Said second $95,000 payment is
               expressly conditioned on the Employee's agreement not to accept
               employment with any company listed on Exhibit A for a period
               expiring one year following the date of Employee's resignation.
               Employee agrees that if he accepts employment, as described
               above, with an Exhibit A company after the receipt of his second
               $95,000

<PAGE>   2

      payment, but before the completion of the one year period following the
      Resignation Date, he shall be obligated to repay the Company on a pro
      rata basis for each month he is so employed, provided that only the
      second $95,000 payment shall be subject to repayment (at a rate of 16.6%
      per month worked less withholding). Employee agrees to notify Company
      immediately upon his earning wages from a subsequent employer and his
      failure to do so will constitute a breach of this Agreement. Employee
      understands that the Company shall issue a Form W-2 to Employee for said
      payments.

(b)   Vesting of Stock. On the Effective Date, the Parties agree that for
      purposes of determining the number of shares of the Company's common
      stock which Employee is entitled to purchase from the Company pursuant to
      the exercise of outstanding options, the Employee shall, as of the
      Resignation Date, be vested as to that number of option shares as to
      which Employee would have been vested under the Stock Option Agreements
      had Employee remained employed with the Company through and until January
      31, 2001 (the "Vested Option Shares"). Said vesting shall include vesting
      under the May 16, 2000 Stock Option Agreement, notwithstanding any
      vesting requirements or cliff provisions to the contrary. The Parties
      agree that the total number of shares that shall be vested as of the
      Effective Date, pursuant to the terms set forth above, is Three Hundred
      Forty-Five Thousand, Eight Hundred Ninety Two (345,892) shares (see
      attached Exhibit B). To the extent option shares are not vested
      (including any accelerated vesting pursuant to the preceding sentence) on
      the Resignation Date, they shall be immediately forfeited back to the
      Company's Stock Option Plan upon the Resignation Date. The Vested Option
      Shares shall accelerate and become immediately exercisable. The exercise
      of any Vested Option Shares shall continue to be subject to the terms and
      conditions of the Company's Stock Option Plan and the Stock Option
      Agreements. Except as otherwise provided herein, the terms of the Stock
      Option Agreements remain in full force and effect. The Company agrees
      that the Company's "blackout period" shall not apply to Employee, and
      Employee acknowledges that he must comply with all applicable securities
      laws and regulations. Further, to the extent permitted by applicable law,
      Employee's ISOs shall vest prior to his NSOs.

(c)   Loan. The Company agrees to extend to Employee a loan not to exceed the
      amount of Eight Hundred Seventy-Three Thousand, Four Hundred Eighty-Seven
      Dollars ($873,487.00). The purpose of said loan is to enable Employee to
      exercise his vested employee stock options. The terms of the loan are
      reflected in Exhibit C attached.

(d)   COBRA/Benefits. Employee and each eligible dependent who constitutes a
      qualified beneficiary, as defined in Section 4980B(g)(1) of the Internal
      Revenue Code of 1986, as amended, will be eligible to continue applicable
      benefits coverage under the Consolidated Omnibus Budget Reconciliation
      Act of 1985, as amended ("COBRA"), within the time period prescribed

                                      -2-
<PAGE>   3
               pursuant to COBRA, Company agrees to reimburse Employee for any
               COBRA premiums for such benefits through and including June 20,
               2001. The Company further agrees to reimburse Employee for
               premiums for life insurance, through and including June 20, 2001,
               to the extent Employee converts his group policy to an individual
               policy.

          (e)  Voicemail and E-mail. The Company agrees, for a period of (3)
               months following the Effective Date, to provide an autoresponse
               on Employee's e-mail address advising the sender of any message
               that Employee is no longer employed with the Company and
               providing any new e-mail address for the Employee. The
               autoresponse shall not state any reason for the termination of
               the employment relationship between the parties. In turn,
               Employee agrees to notify the Company about any calls or messages
               he has received relating to Company business, if any.

          (f)  Health Club Membership. The Company agrees to pay its portion of
               Employee's Decathalon Club membership dues from the Effective
               Date through June 20, 2001.

          (g)  Expense Reimbursement. The Company agrees to reimburse Employee
               for all reasonable unreimbursed business expenses within two (2)
               weeks after he submits documentation of the expenses. Employee
               agrees to provide any such business expense documentation not
               later than thirty (30) days from the Effective Date.

          (h)  Sabbatical. The Company agrees to pay Employee his accrued
               sabbatical.

     3.   Confidential Information. Employee understands that the
Confidentiality Agreement remains in full force and effect, and agrees to
continue to comply with its terms and conditions. Employee shall return to the
Company all Company property and confidential and proprietary information in
Employee's possession not later than the Effective Date of this Agreement.

     4.   Payment of Salary. Employee acknowledges and represents that the
Company has paid all salary, wages, bonuses, accrued vacation, commissions,
stock options and any and all other benefits due to Employee, except as
otherwise provided for in this Agreement.

     5.   No Reinstatement or Reemployment. Employee agrees that, as further
consideration and inducement for the consideration Employee is receiving herein,
Employee will not, at any time in the future, apply for, or in any other matter
seek, reinstatement or reemployment by the Company, and that the Company may
refuse to employ or reemploy Employee, and that doing so shall not give rise to
any claim or cause of action of any nature whatsoever, nor may any suit be
brought by Employee against Company or its agents arising out of any such
refusal to reemploy.

     6.   Release of Claims. The Parties agree that the foregoing consideration
represents settlement in full of all outstanding obligations owed to each other.
The Parties, on their own

                                      -3-

<PAGE>   4
behalf, and on behalf of their respective heirs, family members, executors,
officers, directors, employees, investors, shareholders, administrators,
affiliates, divisions, subsidiaries, predecessor and successor corporations and
assigns, hereby fully and forever release each other and their respective
heirs, family members, executors, officers, directors, employees, investors,
shareholders, administrators, affiliates, divisions, subsidiaries, predecessor
and successor corporations and assigns, from, and agree not to sue each other
concerning, any claim, duty, obligation or cause of action relating to any
matters of any kind, whether presently known or unknown, suspected or
unsuspected, that either party may possess arising from any omissions, acts or
facts that have occurred up, until and including the Effective Date of this
Agreement including, without limitation,

          (a) any and all claims relating to or arising from Employee's
employment relationship with the Company and the termination of that
relationship;

          (b) any and all claims relating to, or arising from, Employee's right
to purchase, or actual purchase of shares of stock of the Company, including,
without limitation, any claims for fraud, misrepresentation, breach of
fiduciary duty, breach of duty under applicable state corporate law, and
securities fraud under any state or federal law;

          (c) any and all claims for wrongful termination of employment;
termination in violation of public policy; discrimination; breach of contract,
both express and implied; breach of a covenant of good faith and fair dealing,
both express and implied; promissory estoppel; negligent or intentional
infliction of emotional distress; negligent or intentional misrepresentation;
negligent or intentional interference with contract or prospective economic
advantage; unfair business practices; defamation; libel; slander; negligence;
personal injury; assault; battery; invasion of privacy; false imprisonment; and
conversion;

          (d) any and all claims for violation of any federal, state or
municipal statute, including, but not limited to, Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment
Act of 1967, the Americans with Disabilities Act of 1990, the Fair Labor
Standards Act, the Employee Retirement Income Security Act of 1974, The Worker
Adjustment and Retraining Notification Act, Older Workers Benefit Protection
Act; the California Fair Employment and Housing Act, and Labor Code section
201, et seq. and section 970, et seq.;

          (e) any and all claims for violation of the federal, or any state,
constitution;

          (f) any and all claims arising out of any other laws and regulations
relating to employment or employment discrimination; and

          (g) any and all claims for attorneys' fees and costs.

The Parties agree that the release set forth in this section shall be and
remain in effect in all respects as a complete general release as to the
matters released. This release does not extend to any obligations incurred
under this Agreement. Similarly, this release does not apply to any claims
Employee may have for indemnification by the Company under any applicable
agreement, insurance policy (including that providing coverage for the actions
of Company directors and officers), Company by-laws, or under any applicable
statute. Further, the Company agrees to

                                      -4-

<PAGE>   5

indemnify Employee in the same manner as its other officers and directors.
Finally, nothing stated herein shall adversely affect any rights Employee may
have under the Company's 401(k) plan.

      7.    Civil Code Section 1542. The Parties represent that they are not
aware of any claims against each other except for those claims that are
released by this Agreement. Moreover, the Parties agree and represent that it
is within their contemplation that they may have claims against each other of
which, at the time of the execution of this Agreement, they have no knowledge
or suspicion, but that this Agreement extends to claims in any way based upon,
connected with or related to the matters described in paragraph 6, whether or
not known, claimed or suspected by the Parties. The Parties acknowledge that
they are familiar with the provisions of California Civil Code Section 1542,
which provides as follows:

            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.

      The Parties, being aware of said code section, and any other similar
state or federal statute, agree to expressly waive any rights they may have
thereunder, as well as under any other statute or common law principles of
similar effect.

      8.    Confidentiality. The Parties agree to use their best efforts to
maintain in confidence the existence of this Agreement, the contents and terms
of this Agreement, and the consideration for this Agreement (hereinafter
collectively referred to as "Settlement Information"). The Parties agree to
take every reasonable precaution to prevent disclosure of any Settlement
Information to third parties, and agrees that there will be no publicity,
directly or indirectly, concerning any Settlement Information. The Parties
further agree to take every precaution to disclose Settlement Information only
to those attorneys, accountants, governmental entities (including the
Securities Exchange Commission) and family members who have a reasonable need
to know of such Settlement Information.

      9.    No Cooperation. Employee agrees that Employee will not counsel or
assist any attorneys or their clients in the presentation or prosecution of any
disputes, differences, grievances, claims, charges, or complaints by any third
party against the Company and/or any officer, director, employee, agent,
representative, stockholder or attorney of the Company, unless under a subpoena
or other court order to do so.

      10.   Non-Disparagement. Employee agrees to refrain from any defamation,
libel or slander of the Company and its officers, directors, employees,
investors, stockholders, administrators, affiliates, divisions, subsidiaries,
predecessor and successor corporations, and assigns, or tortious interference
with the contracts and relationships of the Company and its officers,
directors, employees, investors, stockholders, administrators, affiliates,
divisions, subsidiaries, predecessor and successor corporations, and assigns.
The Company agrees that it will advise its executive management team to refrain
from any defamation, libel or slander of the Employee or from tortiously
interfering with the contracts and business relationships of the Employee.

                                      -5-
<PAGE>   6

     11. No Admission of Liability. The Parties understand and acknowledge that
this Agreement constitutes a compromise and settlement of disputed claims, and
is made to buy peace and for no other reason. No action taken by the Parties
hereto, or either of them, either previously or in connection with this
Agreement shall be deemed or construed to be (a) an admission of the truth or
falsity of any claims heretofore made or (b) an acknowledgement or admission by
either party of any fault or liability whatsoever to the other party or to any
third party.

     12. Costs. The Parties shall each bear their own costs, expert fees,
attorneys' fees and other fees incurred in connection with this Agreement.

     13. Arbitration. The Parties agree that any and all disputes arising out
of the terms of this Agreement, their interpretation, and any of the matters
herein released, shall be subject to binding arbitration in Santa Clara County
before the American Arbitration Association under its National Rules for the
Resolution of Employment Disputes, or by a judge to be mutually agreed upon.
The Parties agree that the prevailing party in any arbitration shall be
entitled to injunctive relief in any court of competent jurisdiction to enforce
the arbitration award. The parties shall each pay one-half of the costs and
expenses of such arbitration, and each Party shall separately pay its counsel
fees and expenses. The Parties may apply to any court of competent jurisdiction
for a temporary restraining order, preliminary injunction, or other interim or
conservatory relief, as necessary, without breach of this arbitration agreement
and without abridgment of the powers of the arbitrator.

     14. Authority. The Company represents and warrants that the undersigned
has the authority to act on behalf of the Company and to bind the Company and
all that may claim through it to the terms and conditions of this Agreement.
Employee represents and warrants that Employee has the capacity to act on
Employee's own behalf and on behalf of all whom might claim through Employee to
bind them to the terms and conditions of this Agreement. Each Party warrants
and represents that there are no liens or claims of lien or assignments in law
or equity or otherwise of or against any of the claims or causes of action
released herein.

     15. No Representations. The Parties represent that they have had the
opportunity to consult with an attorney, and have carefully read and understand
the scope and effect of the provisions of this Agreement. Neither party has
relied upon any representations or statements made by the other party hereto
which are not specifically set forth in this Agreement. The Parties understand
that after signing this Agreement, they cannot proceed against any person
mentioned in it with respect to or on account of the matters referred to in it.
The Parties further covenant not to sue each other, or to participate or aid in
any suit or proceeding (or to execute, seek to impose, collect or recover upon,
or otherwise enforce or accept any judgment, decision, award, warrant or
attachment) upon any claim released by the Parties under paragraphs 6 and 7.

     16. Severability. In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision.

                                      -6-
<PAGE>   7
     17.  Entire Agreement. This Agreement, taken together with the Stock
Option Agreements and the Confidentiality Agreement, represents the entire
agreement and understanding between the Company, on the one hand, and Employee
on the other, the complete, final and exclusive embodiment of their agreements
concerning Employee's separation from, and compensation by, the Company and
supersedes and replaces any and all prior and contemporaneous agreements,
representations and understandings regarding said subjects. This Agreement is
executed without reliance on any promise, warranty or representations by any
party or any representative of any party other than those expressly contained
in this Agreement. Notwithstanding the provisions of California Evidence Code
Section 1152, this Agreement is admissible for purposes of enforcement.

     18.  No Oral Modification. This Agreement may not be altered, amended,
modified or otherwise changed in any respect or particular except by a writing
signed by Employee and the Chief Executive Officer of the Company. Any such
writing must be ratified by the Board of Directors of the Company.

     19.  Governing Law. This Agreement shall be governed by the laws of the
State of California.

     20.  Effective Date. This Agreement is effective on the date that it has
been signed by both Parties (the "Effective Date").

     21.  Counterparts. This Agreement may be executed in counterparts, and
each counterpart shall have the same force and effect as an original and shall
constitute an effective, binding agreement on the part of each of the
undersigned. The Agreement may be transmitted by facsimile or otherwise.

     22.  Voluntary Execution of Agreement. This Agreement is executed
voluntarily and without any duress or undue influence on the part or behalf of
the Parties hereto, with the full intent of releasing all claims. The Parties
acknowledge that:

          (a)  They have read this Agreement;

          (b)  They have been represented in the preparation, negotiation, and
execution of the Agreement by legal counsel of their own choice or that they
have voluntarily declined to seek such counsel;

          (c)  They know and understand the terms and consequences of this
Agreement and of the releases it contains; and

          (d)  They are fully aware of the legal and binding effect of this
Agreement.

     IN WITNESS WHEREOF, the Parties have executed this Agreement on the
respective dates set forth below.

                                      -7-
<PAGE>   8
                                       8 x 8, INC.

Dated: July 10,2000                    By:  /s/ DAVID STOLL
                                          -----------------------------
                                            David Stoll
                                            Chief Financial Officer

                                       KEITH BARRACLOUGH, an individual

Dated: July 10, 2000                   By:  /s/ KEITH BARRACLOUGH
                                           ----------------------------
                                            Keith Barraclough

                                      -8-
<PAGE>   9
                                   EXHIBIT A

Analog Devices
Audiocodes
Broadcom
Broadsoft
Clarent
IPVerse
Komodo
Lucent Microelectronics
Mediatrix
Mitel
PingTel
Radvision
Sylantro
Syndeo
TI/Telogy
Trillium
Tundo
Vocaldata
VocalTec
<PAGE>   10

KEITH BARRACLOUGH
OPTIONS EXERCISABLE AS OF JANUARY 31, 2001

<TABLE>
<CAPTION>
GRANT           OPTIONS        OPTIONS          GRANT          EXERCISE           EXTENDED
DATE          OUTSTANDING    EXERCISABLE        TYPE            PRICE          EXERCISE PRICE
-----         -----------    -----------        -----          --------        --------------
<S>           <C>            <C>            <C>                <C>             <C>
 1/27/1995       6,000          6,000       Incentive          $ 0.500         $   3,000.00
12/11/1995      10,000         10,000       Incentive          $ 0.500             5,000.00
 6/24/1996      20,000         20,000       Incentive          $ 0.500            10,000.00
 9/21/1998     122,509        122,509       Non-qualified      $ 3.000           367,527.00
 9/21/1998      17,491         17,491       Incentive          $ 3.000            52,473.00
 9/21/1998      26,249         26,249       Non-qualified      $ 3.000            78,747.00
 9/21/1998       3,751            625       Incentive          $ 3.000             1,875.00
 9/21/1998      25,000         25,000       Non-qualified      $ 3.000            75,000.00
 9/21/1998      31,549         31,549       Incentive          $ 3.130            98,748.37
 9/21/1998      18,451         18,451       Non-qualified      $ 3.130            57,751.63
10/19/1998      17,709          6,771       Incentive          $ 2.440            16,521.24
10/19/1998       7,291          7,291       Non-qualified      $ 2.440            17,790.04
  4/9/1999       7,500          7,500       Non-qualified      $ 4.500            33,750.00
  4/9/1999       7,500          5,624       Incentive          $ 4.500            25,308.00
 7/20/1999      15,000          2,499       Incentive          $ 4.000             9,996.00
 7/20/1999       5,000          5,000       Non-qualified      $ 4.000            20,000.00
 5/16/2000     200,000         33,333       Non-qualified      $12.563           418,762.48
             ------------------------                                         -------------
               541,000        345,892                                         $1,292,249.76
             ========================                                         =============
</TABLE>
(1) Assumes vesting of 1/48th/month beginning as of the date of grant.<PAGE>   1
                                                                   EXHIBIT 10.23

                     SEVERANCE AGREEMENT AND MUTUAL RELEASE

        This Severance Agreement and Mutual Release ("Agreement") is made by and
between Netergy Networks, Inc. (the "Company"), Netergy Networks Canada
Corporation ("Netergy Canada") and Dominique Pitteloud ("Employee").

        WHEREAS, Employee was employed by the Company as its Vice-President of
Marketing;

        WHEREAS, the Company and Employee have entered into a Non-Competition
Agreement (the "Non-Competition Agreement");

        WHEREAS, the Company and Employee have entered into an Employment and
Stock Restriction Agreement for the purchase of the Company's common stock (the
"Stock Restriction Agreement");

        WHEREAS, the Company and Employee have entered into Stock Option
Agreement(s) for the purchase of the Company's common stock (the "Option
Agreements(s)");

        WHEREAS the Company and Employee have entered into a Relocation Program
Agreement (the "Relocation Program") wherein Employee was assigned to work for
Netergy Canada;

        WHEREAS, the Company and Employee have mutually agreed to terminate the
employment relationship and the assignment to Netergy Canada and to release each
other from any claims arising from or related to the employment relationship
and/or the assignment to Netergy Canada;

        NOW THEREFORE, in consideration of the mutual promises made herein, the
Company, Netergy Canada and Employee (collectively referred to as "the Parties")
hereby agree as follows:

        1. Resignation. Employee resigned from his employment with the Company
and assignment to Netergy Canada effective October 13, 2000 (the "Resignation
Date").

        2. Consideration.

               (a) Severance. The Company agrees to pay Employee six (6) month's
severance for the time period October 14, 2000 through April 14, 2001 (the
"payment period") at the rate of thirteen thousand seven hundred and fifty U.S.
Dollars ($13,750.00) per month, less applicable withholding, in accordance with
the Company's payroll practices. If Employee is still unemployed and residing in
Montreal, Canada as of April 14, 2001, Company will continue to pay Employee at
the rate of thirteen thousand seven hundred and fifty U.S. Dollars ($13,750.00)
per month, so long as Employee remains unemployed and residing in Montreal,
Canada, up to and including June 30, 2001. As of the Resignation Date, Employee
will not be entitled to any further accrual of any employee benefits, including,
but not limited to, vacation benefits, commissions or bonuses.

        For purposes of this Section, Employee shall be required to notify the
Company in the event that he commences new employment and/or moves out of
Montreal, Canada at any time prior to
<PAGE>   2

June 30, 2001. To ensure continued severance payments from April 14, 2001 to
June 30, 2001, if applicable, Employee shall be required to notify the Company
of his employment and residential status each month on the first day of the
month preceding the scheduled severance payment. Required notifications shall be
directed to Anne Grenier at Netergy Canada, 1001 De Maisonneuve Ouest, Montreal,
Quebec, Canada, H3A 3C8.

               (b) Stock Restriction Agreement. As of the Termination Date, the
Company agrees to waive its Repurchase Option, as defined in the Stock
Restriction Agreement, as to any unvested shares of the Company's common stock
subject to the Stock Restriction Agreement. For sake of clarity, all previously
unvested shares hereby become vested shares as of the Termination Date. The
Company hereby agrees that upon receipt of share certificates representing such
vested shares, it will instruct its transfer agent to reissue new certificates
that will include the following restrictive legend:

"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OF DISTRIBUTION THEREOF.
NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO NETERGY
NETWORKS, INC. THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITY ACT OF
1933, AS AMENDED."

To the extent this Agreement conflicts with the terms of the Stock Restriction
Agreement, this Agreement supersedes and replaces such terms.

               (c) Rights of Stock Option Agreement. Employee shall be entitled
to exercise his right to purchase his vested shares within 270 calendar days of
the Resignation Date granted pursuant to the terms of the Option Agreement(s)
and the Company's Stock Option Plan. An additional 6250 shares shall be deemed
immediately vested and exercisable at an exercise price of 12.5630 U.S. $ per
share, so long as such right is exercised within 270 calendar days of the
Resignation Date. Employee shall not have the right to exercise any of the
remaining shares granted pursuant to the Option Agreements(s) and such shares
shall be forfeited. To the extent Employee fails to exercise the option as to
the accelerated shares within 270 calendar days of the Resignation Date, the
option shall terminate and shall not thereafter be exercisable by Employee.

        To the extent this Agreement conflicts with the terms of the Stock
Option Agreement(s), this Agreement supersedes and replaces such terms.

               (d) Living Expenses/Relocation Expenses. The Company agrees to
continue payment of Employee's rent through the payment period (not to exceed
$4,000.00 CDN Dollars per month). The Company shall also pay the expenses of
Employee's relocation to California, including moving expenses (furniture and
normal household goods of primary residence), standard moving insurance,
relocation of one car, and airfare (coach airfare) for Employee and Employee's
immediate family members (total moving expenses not to exceed $17,000 U.S.
Dollars). Prior to relocation, the Company will pay the airfare costs (coach
airfare) of one (1) round trip from Montreal, Canada to California, U.S.A. and
back for Employee and Employee's immediate family members (not to exceed $3,000
U.S. Dollars) as per the relocation program dated July 25, 2000.

                                      -2-
<PAGE>   3

               (e) Benefits. Employee's health insurance benefits shall cease at
the end of the month of Employee's Resignation Date. Should Employee so elect,
the Company will maintain Employee's health care coverage for Employee and his
dependents during the payment period. As of the Resignation Date, Employee's
right to contribute to the Company's 401(k) Plan shall cease, as well as the
Company's contributions. Employee shall have the right to elect the manner in
which his vested 401(k) benefits will be converted.

               (f) Tax Equalization. The Company shall pay the tax equalization
amount for the Employee's 2000 and 2001 Fiscal Year to the extent said amounts
are in fact due and, should the Employee continues to reside in Montreal,
Canada.

               (g) Miscellaneous. The Company shall reimburse Employee's costs
        associated with Employee's utilization of KPMG for financial services
        and/or the preparation of Employee's tax returns for Fiscal Year 2000
        and 2001.

        3. Confidential Information. Employee shall continue to maintain the
confidentiality of all confidential and proprietary information of the Company.
Employee shall return all the Company property and confidential and proprietary
information in his possession to the Company on the Effective Date, except for
cellular phone and note book as agreed by the Company.

        4. Payment of Salary. With the exception of the payments in Section 2 of
this Agreement, Employee acknowledges and represents Employee has received all
sums which are, were, or may in the future be owing by the Company by way of
notice of termination of employment, compensatory indemnity in lieu of notice of
termination of employment, severance pay, contractual or extra-contractual
damages, salary, commissions, bonus, allowances, vacation pay, holiday pay,
benefits or any other claim of any nature whatsoever pursuant to any
law(including specifically the Civil Code of Quebec, An Act respecting Labour
Standards and the Quebec Charter of Human Rights and Freedoms),
contract(including specifically the Stock Restriction Agreement and the
Relocation Program), policy, plan, regulation, decree, or practice whatsoever.

        5. Release of Claims. Employee agrees that the foregoing consideration
represents settlement in full of all outstanding obligations owed to Employee by
the Company and/or Netergy Canada. Employee, the Company and/or Netergy Canada,
on behalf of themselves, and their respective heirs, family members, executors,
officers, directors, employees, investors, shareholders, administrators,
affiliates, divisions, subsidiaries, predecessor and successor corporations, and
assigns, hereby fully and forever release each other and their respective heirs,
family members, executors, officers, directors, employees, investors,
shareholders, administrators, affiliates, divisions, subsidiaries, predecessor
and successor corporations, and assigns, from, and agree not to sue concerning,
any claim, duty, obligation or cause of action relating to any matters of any
kind, whether presently known or unknown, suspected or unsuspected, that any of
them may possess arising from any omissions, acts or facts that have occurred up
until and including the Effective Date of this Agreement including, without
limitation,

               (a) any and all claims relating to or arising from Employee's
employment relationship with the Company and the termination of that
relationship;

                                      -3-
<PAGE>   4

               (b) any and all claims relating to or arising from Employee's
assignment to Netergy Canada in accordance with the Relocation Program;

               (c) any and all claims relating to, or arising from, Employee's
right to purchase, or actual purchase of shares of stock of the Company,
including, without limitation, any claims for breach of contract, fraud, or
misrepresentation;

               (d) any and all claims for wrongful discharge of employment;
termination in violation of public policy; discrimination; breach of contract,
both express and implied; breach of a covenant of good faith and fair dealing,
both express and implied; promissory estoppel; negligent or intentional
infliction of emotional distress; negligent or intentional misrepresentation;
negligent or intentional interference with contract or prospective economic
advantage; unfair business practices; defamation; libel; slander; negligence;
personal injury; assault; battery; invasion of privacy; false imprisonment; and
conversion;

               (e) any and all claims for violation of any federal, state or
municipal statute, including, but not limited to, Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment
Act of 1967, the Americans with Disabilities Act of 1990, the Fair Labor
Standards Act, the Employee Retirement Income Security Act of 1974, The Worker
Adjustment and Retraining Notification Act, Older Workers Benefit Protection
Act; the California Fair Employment and Housing Act, and Labor Code section 201,
et seq. and section 970, et seq.;

               (f) any and all claims for violation of the federal, or any state
constitution;

               (g) any and all claims arising out of any other laws and
regulations relating to employment or employment discrimination; and

               (h) any and all claims for notice of termination of employment,
compensatory indemnity in lieu of notice of termination of employment, severance
pay, contractual or extra-contractual damages, salary, bonus, allowances,
vacation pay, holiday pay or any other claim of any nature whatsoever pursuant
to any Canadian or Quebec law (including specifically the Civil Code of Quebec,
An Act respecting Labour Standards and the Quebec Charter of Human Rights and
Freedoms), contract (including specifically the Stock Restriction Agreement and
the Relocation Program), policy, plan, regulation, decree, or practice
whatsoever.

               (i) any and all claims for attorneys' fees and costs.

The Company, Netergy Canada and Employee agree that the release set forth in
this section shall be and remain in effect in all respects as a complete general
release as to the matters released. This release shall expressly exclude all:
(1) obligations incurred under this Agreement; and (2) claims, complaints,
charges, duties, obligations or causes of action relating to Employee's
ownership of shares in the Company arising under federal or state securities
laws.

        6. Civil Code Section 1542. The Parties represent that they are not
aware of any claim by either of them other than the claims that are released by
this Agreement. Employee, the Company and Netergy Canada acknowledge that they
have been advised by legal counsel and are familiar with

                                      -4-
<PAGE>   5

the provisions of California Civil Code Section 1542, or any similar state or
federal statute, which provides as follows:

               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.

        Employee, the Company and Netergy Canada, being aware of said code
section, agree to expressly waive any rights they may have thereunder, as well
as under any other statute or common law principles of similar effect.

        7. No Pending or Future Lawsuits. Employee represents that he has no
lawsuits, claims, or actions pending in his name, or on behalf of any other
person or entity, against the Company or any other person or entity referred to
herein. Employee also represents that he does not intend to bring any claims on
his own behalf or on behalf of any other person or entity against the Company or
any other person or entity referred to herein.

        Company represents that it has no lawsuits, claims, or actions pending
in its name, or on behalf of any other person or entity, against Employee or any
other person or entity referred to herein. Company also represents that it does
not intend to bring any claims on its own behalf or on behalf of any other
person or entity against Employee or any other person or entity referred to
herein.

        8. Confidentiality. The Parties hereto each agree to use their best
efforts to maintain in confidence the existence of this Agreement, the contents
and terms of this Agreement, and the consideration for this Agreement
(hereinafter collectively referred to as "Severance Information"). Each Party
hereto agrees to take every reasonable precaution to prevent disclosure of any
Severance Information to third parties, and each agrees that there will be no
publicity, directly or indirectly, concerning any Severance Information. The
Parties hereto agree to take every precaution to disclose Severance Information
only to those employees, officers, directors, attorneys, accountants,
governmental entities, and family members who have a reasonable need to know of
such Severance Information.

        9. Non-Competition/Non-Solicitation. Employee agrees that the terms of
the Non-Competition Agreement, including its non-solicitation provisions, shall
remain in full force and effect for twelve (12) months from the Resignation
Date. To the extent this Agreement conflicts with the terms of the
Non-Competition Agreement, this Agreement supersedes and replaces such terms.

        10. No Cooperation. Employee agrees he will not act in any manner that
might damage the business of the Company or Netergy Canada. Employee agrees that
he will not counsel or assist any attorneys or their clients in the presentation
or prosecution of any disputes, differences, grievances, claims, charges, or
complaints by any third party against the Company and/or Netergy Canada

                                      -5-
<PAGE>   6

and/or any officer, director, employee, agent, representative, shareholder or
attorney of the Company and/or Netergy Canada, unless under a subpoena or other
court order to do so.

        11. Non-Disparagement. Each party agrees to refrain from any defamation,
libel or slander of the other, or tortious interference with the contracts and
relationships of the other. All inquiries by potential future employers of
Employee will be directed to the Company 's Vice President of Human Resources.
Upon inquiry, the Company shall only state the following: Employee 's last
position and dates of employment.

        12. No Admission of Liability. The Parties understand and acknowledge
that this Agreement constitutes a compromise and settlement of disputed claims.
No action taken by the Parties hereto, or either of them, either previously or
in connection with this Agreement shall be deemed or construed to be (a) an
admission of the truth or falsity of any claims heretofore made or (b) an
acknowledgment or admission by either party of any fault or liability whatsoever
to the other party or to any third party.

        13. Costs. The Parties shall each bear their own costs, expert fees,
attorneys' fees and other fees incurred in connection with this Agreement.

        14. Authority. The Company and Netergy Canada represents and warrants
that the undersigned has the authority to act on behalf of the Company and
Netergy Canada and to bind the Company and Netergy Canada and all who may claim
through it to the terms and conditions of this Agreement. Employee represents
and warrants that he has the capacity to act on his own behalf and on behalf of
all who might claim through him to bind them to the terms and conditions of this
Agreement. Each Party warrants and represents that there are no liens or claims
of lien or assignments in law or equity or otherwise of or against any of the
claims or causes of action released herein.

        15. No Representations. Each party represents that it has had the
opportunity to consult with an attorney, and has carefully read and understands
the scope and effect of the provisions of this Agreement. Neither party has
relied upon any representations or statements made by the other party hereto
which are not specifically set forth in this Agreement.

        16. Severability. In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision.

        17. Entire Agreement. This Agreement represents the entire agreement and
understanding between the Company, Netergy Canada and Employee concerning
Employee's separation from the Company and termination of his assignment to
Netergy Canada, and supersedes and replaces any and all prior agreements and
understandings concerning Employee's relationship with the Company and/or
Netergy Canada, his compensation by the Company and assignment to Netergy
Canada.

        18. No Oral Modification. This Agreement may only be amended in writing
signed by Employee and the President of the Company.

                                      -6-
<PAGE>   7

        19. Governing Law. This Agreement shall be governed by the laws of the
State of California.

        20. Effective Date. This Agreement is effective after it has been signed
by both Parties.

        21. Counterparts. This Agreement may be executed in counterparts, and
each counterpart shall have the same force and effect as an original and shall
constitute an effective, binding agreement on the part of each of the
undersigned.

        22. Voluntary Execution of Agreement. This Agreement is executed
voluntarily and without any duress or undue influence on the part or behalf of
the Parties hereto, with the full intent of releasing all claims. The Parties
acknowledge that:

               (a) They have read this Agreement;

               (b) They have been represented in the preparation, negotiation,
and execution of this Agreement by legal counsel of their own choice or that
they have voluntarily declined to seek such counsel;

               (c) They understand the terms and consequences of this Agreement
and of the releases it contains;

               (d) They are fully aware of the legal and binding effect of this
Agreement.

IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective
dates set forth below.

                                          Netergy Networks, Inc.

        Dated: October 13, 2000       By  /s/ Jean-Luc Calonne
                                          --------------------------------------
                                          Jean-Luc Calonne
                                          Sr.Vice-President, Business Operations

                                          Netergy Networks Canada Corporation

                                      -7-
<PAGE>   8

        Dated:  October 13, 2000      By /s/ Jean-Luc Calonne
                                         ---------------------------------------
                                         Jean-Luc Calonne
                                         Sr. Vice-President, Business Operations

                                          Dominique Pitteloud, an
                                          individual

        Dated:  October 13, 2000      By /s/ Dominique Pitteloud
                                         ---------------------------------------
                                         Dominique Pitteloud

                                      -8-

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