Document:

Exhibit 10.21

                         TELESOURCE INTERNATIONAL, INC.
                  2000 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN

     1.  Purpose.  The  purpose  of this Plan is to  advance  the  interests  of
Telesource  International,  Inc.  (hereinafter  the "Company"),  by enabling the
Company to attract,  retain and motivate  qualified  individuals to serve on the
Company's  Board of  Directors,  and to align the  financial  interests  of such
individuals  with  those  of the  Company's  shareholders  by  providing  for or
increasing  their ownership  interest in the Company.  Options granted under the
Plan are not qualified  under Section 422 of the Internal  Revenue Code of 1986,
as amended (the "Code").

     2. Definitions. As used herein, the following definitions shall apply:

          (a) "Administrator" means the Board of Directors of the Company and/or
     Committee appointed by the Board pursuant to Section 4 of the Plan.

          (b) "Affiliate" means a parent or subsidiary corporation as defined in
     the applicable provisions (currently Section 424(e) and (f),  respectively)
     of the Code.

          (c) "Agreement" means the written agreement between the Company and an
     Optionee  evidencing the grant of an Option and setting forth the terms and
     conditions thereof.

          (d)  "Applicable   Laws"  means  the  requirements   relating  to  the
     administration  of stock option plans under U.S. state corporate laws, U.S.
     federal  and state  securities  laws,  the  Code,  any  stock  exchange  or
     quotation  system on which  the  Common  Stock is listed or quoted  and the
     applicable  laws of any other  country or  jurisdiction  where  Options are
     granted under the Plan.

          (e) "Board" means the Board of Directors of the Company.

          (f) "Cause" means (i) the  Participant's  negligent or willful failure
     to perform  duties as a member of the Board which is not  corrected  within
     fifteen (15) days after written  notice of such failure and an  opportunity
     to cure;  (ii)  indictment  or  conviction  of a felony or any other  crime
     involving moral turpitude or dishonesty; (iii) failure or refusal to comply
     with Board  policies,  standards or regulations  governing its members that
     have been communicated to the Participant and which is not corrected within
     fifteen  (15) days after notice of the  deficiency  and an  opportunity  to
     cure; (iv) conduct by the Participant that demonstrates  gross unfitness to
     serve  as a  member  of the  Board,  including,  but not  limited  to,  the
     following: fraud, misrepresentation; and theft or embezzlement of corporate
     assets;  (v) material  violation  of any  agreement  with the Company,  its
     Board, or any other Board member,  or of any statutory duty to the Company,
     its Board,  or any other Board member;  or (vi) the  Participant's  willful
     dishonesty, fraud, or misconduct with respect to the business or affairs of
     the Company or its Board.

          (g) "Code" means the Internal Revenue Code of 1986, as amended.

          (h) "Committee" means a committee appointed by the Board to administer
     the Plan in accordance with Section 4 hereof,  and to perform the functions
     set forth herein.

          (i) "Common Stock" means the Common Stock of the Company.

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          (j)  "Company"  means  Telesource  International,   Inc.,  a  Delaware
     corporation.

          (k) "Consultant" means any person who is engaged by the Company or any
     Affiliate to render  consulting or advisory services and is compensated for
     such services.

          (l) "Director" means a member of the Board of Directors of the Company
     or any of its  Affiliates.  Neither  service as a Director nor payment of a
     director's   fee  by  the  Company   shall  be   sufficient  to  constitute
     "employment" by the Company.

          (m)  "Disability"  means total and permanent  disability as defined in
     the Company's long term disability insurance plan.

          (n)  "Exchange  Act" means the  Securities  Exchange  Act of 1934,  as
     amended.

          (o) "Fair Market  Value"  means,  as of any date,  the value of Common
     Stock determined as follows:

               (i) if the  Common  Stock  is  listed  on any  established  stock
          exchange or a national market system, including without limitation the
          National  Market or SmallCap  Market of The Nasdaq Stock  Market,  its
          Fair Market Value shall be the closing  sales price for such stock (or
          the closing bid, if no sales were reported) as quoted on such exchange
          or  system  for the  last  market  trading  day  prior  to the time of
          determination,  as reported  in The Wall Street  Journal or such other
          source as the Administrator deems reliable;

               (ii) if the  Common  Stock is  regularly  quoted by a  recognized
          securities dealer but selling prices are not reported, its Fair Market
          Value shall be the mean  between the high bid and low asked prices for
          the Common  Stock on the last  market  trading day prior to the day of
          determination; or

               (iii) in the  absence  of an  established  market  for the Common
          Stock, the Fair Market Value thereof shall be determined in good faith
          by the Administrator.

          (p) "Incentive  Stock Option" or "ISO" means an Option  satisfying the
     requirements of Section 422 of the Code and designated by the Administrator
     as an Incentive Stock Option.

          (q) "Non-Employee  Director" means a member of the Board who is not at
     the time also an employee of the Company or any Affiliate.

          (r)  "Nonqualified  Stock Option" or "NQO" means an Option that is not
     an Incentive Stock Option.

          (s) "Officer"  means a person who is an officer of the Company  within
     the meaning of Section 16 of the Exchange Act and the rules and regulations
     promulgated thereunder.

          (t) "Option" means a stock option granted pursuant to the Plan.

          (u) "Option  Agreement" means an agreement  between the Company and an
     Optionee evidencing the terms and conditions of an individual Option grant.
     The Option Agreement is subject to the terms and conditions of the Plan.

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          (v) "Optioned Stock" means the Common Stock subject to an Option.

          (w) "Optionee" means a person to whom an Option has been granted under
     the Plan.

          (x)  "Parent"  means a "parent  corporation"  within  the  meaning  of
     Section 424(e) of the Code, whether now or hereafter existing.

          (y) "Plan" means the Telesource International,  Inc. 2000 Non-Employee
     Director Stock Option Plan.

          (z) "Plan Year" shall be a calendar year.

          (aa) "Section 16(b)" means Section 16(b) of the Exchange Act.

          (bb)  "Share"  means a share  of the  Common  Stock,  as  adjusted  in
     accordance with Section 11 of the Plan.

          (cc) "Subsidiary" means a "subsidiary  corporation" within the meaning
     of Section 424(f) of the Code, whether now or hereafter existing.

     3.  Stock  Subject to the Plan.  Subject  to  Section  11 of the Plan,  the
maximum  aggregate  number of Shares  which may be subject  to options  and sold
under the Plan is Two Hundred Eighty Five Thousand (285,000) Shares.

     If an Option  expires,  is  canceled,  surrendered  (without  exercise)  or
     otherwise become  unexercisable for any reason, the Shares allocable to the
     canceled,  surrendered  or  otherwise  terminated  Option  may again be the
     subject of Options  granted  hereunder  (unless  the Plan has  terminated).
     However,  Shares  that have  actually  been  issued  under  the Plan,  upon
     exercise  of an  Option,  shall not be  returned  to the Plan and shall not
     become available for future  distribution  under the Plan.  Shares that are
     retained by the Company upon  exercise of an Option in order to satisfy the
     exercise price for such Option or any withholding taxes due with respect to
     such  exercise  shall be treated as not  issued  and shall  continue  to be
     available under the Plan.

     4. Administration.

          (a) Administrator.  The Plan shall be administered by the Board and/or
     by a duly  appointed  Committee of the Board having such powers as shall be
     specified by the Board.  The Board shall fill vacancies on and from time to
     time and may remove or add members of the Committee. The Board or Committee
     shall act pursuant to a majority vote or unanimous written consent.

          (b) Powers of the Administrator. Subject to the provisions of the Plan
     and, in the case of a Committee, the specific duties delegated by the Board
     to such Committee, and subject to the approval of any relevant authorities,
     the Administrator shall have the authority in its discretion:

               (i) to determine the Fair Market Value;

               (ii) to select  Non-Employee  Directors  to whom Options may from
          time to time be granted hereunder;

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               (iii) to determine the terms and conditions of any Option granted
          hereunder. Such terms and conditions include, without limitation,  the
          exercise  price,  the time when Options may be exercised,  any vesting
          acceleration or waiver of forfeiture restrictions, and any restriction
          or  limitation  regarding  any  Option or the  Common  Stock  relating
          thereto,  based in each case on such factors as the Administrator,  in
          its sole discretion, shall determine;

               (iv) to  determine  the  number of  shares of Common  Stock to be
          covered by each such Option granted hereunder;

               (v) to approve forms of agreement for use under the Plan;

               (vi) to determine the terms and conditions, not inconsistent with
          the terms of the Plan, of any Option granted hereunder;

               (vii) to determine whether and under what circumstances an Option
          may be settled in cash under Section 9(e) instead of Common Stock;

               (viii) to retain attorneys, consultants and accountants to assist
          in making such decisions,  determinations and interpretations that are
          required to be made under terms of the Plan;

               (ix) to allow Optionees to satisfy withholding tax obligations as
          contemplated by Section 10 hereof;

               (x) to construe  and  interpret  the terms of the Plan and awards
          granted pursuant to the Plan and to establish,  amend and revoke rules
          and regulations for the  administration  of the Plan,  including,  but
          without  limitation,  correcting any defect or supplying any omission,
          or reconciling any  inconsistency in the Plan or in any Agreement,  in
          the manner and to the extent it shall deem  necessary  or advisable to
          make the Plan fully effective;

               (xi) to determine the duration and purposes for leaves of absence
          which may be granted to an Optionee  on an  individual  basis  without
          constituting a termination of service for purposes of the Plan;

               (xii) to exercise its  discretion  with respect to the powers and
          rights granted to it as set forth in the Plan; and

               (xiii)  generally,  to exercise  such powers and to perform  such
          acts  as are  deemed  necessary  or  advisable  to  promote  the  best
          interests of the Company with respect to the Plan.

          (d) Effect of Administrator's Decision. All decisions,  determinations
     and  interpretations  of the  Administrator  shall be  final,  binding  and
     conclusive upon the Company and its Affiliates, the Optionees and all other
     persons having any interest therein.

          (e)  Indemnification.  The  Administrator  shall not be liable for any
     action,  failure to act, determination or interpretation made in good faith
     with  respect  to  this  Plan  or any  transaction  hereunder,  except  for
     liability arising from his or her own willful misfeasance, gross negligence
     or reckless  disregard of his or her duties.  The Company  hereby agrees to
     indemnity the

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     Administrator  for all costs and expenses  and, to the extent  permitted by
     applicable  law,  any  liability  incurred  in  connection  with  defending
     against,  responding  to,  negotiation  for the  settlement of or otherwise
     dealing  with any claim,  cause of action or dispute of any kind arising in
     connection with any actions in administering this Plan or in authorizing or
     denying authorization to any transaction hereunder.

     5. Eligibility.

          (a) Each  Option  shall be  designated  in the Option  Agreement  as a
     Nonqualified  Stock  Option.  The Fair Market  Value of the Shares shall be
     determined  as of the  time the  Option  with  respect  to such  Shares  is
     granted.

          (b) The  aggregate  number  of  Options  that  may be  granted  to any
     Optionee  under  the Plan  shall  not  exceed  fifty  percent  (50%) of the
     aggregate number of Shares referred to in Section 3 hereof.

          (c) Neither the Plan nor any Option shall not confer upon any Optionee
     any right with  respect to  continuing  the  Optionee's  relationship  as a
     Director of the Company,  nor shall it interfere in any way with his or her
     right or the Board's right to terminate such relationship at any time, with
     or without cause.

     6. Term of Plan.  The Plan shall become  effective upon its adoption by the
Board.  It shall  continue in effect for a term of ten (10) years unless  sooner
terminated under Section 14 of the Plan.

     7. Term of Option.  The term of each Option shall be the term stated in the
Option  Agreement;  provided,  however,  that the term shall be no more than ten
(10)  years  from  the  date  it is  granted  , or  such  shorter  term  as  the
Administrator may, subsequent to the granting of any Option, provide.

     8. Option Exercise Price and Consideration.

          (a) Exercise Price.  The per share exercise price for the Shares to be
     issued  under this Plan  pursuant to  exercise  of an Option  shall be such
     price  as is  determined  by  the  Administrator  on  the  date  of  grant.
     Notwithstanding  the  foregoing,  Options  may be granted  with a per Share
     exercise  price other than as required  above pursuant to a merger or other
     corporate transaction.

          (b)  Payment  of Option  Price.  Subject to this  provision,  the full
     exercise  price for Shares  purchased upon the exercise of any Option shall
     be  paid at the  time of such  exercise  (except  that,  in the  case of an
     exercise  arrangement  described in (iv) below, payment may be made as soon
     as practicable  after the exercise).  The  consideration to be paid for the
     Shares to be issued  upon  exercise of an Option,  including  the method of
     payment,  shall be determined by the Administrator.  Such consideration may
     consist of: (i) cash, by check, or cash  equivalent,  (ii) promissory note,
     (iii) by tender to the Company of other Shares owned by the Optionee  which
     (A) in the case of Shares  acquired  upon  exercise  of an Option have been
     owned by the  Optionee  for more than six months on the date of  surrender,
     and (B) have a Fair Market Value, as determined by the  Administrator  (but
     without regard to any  restrictions on  transferability  applicable to such
     stock by reason of federal or state  securities  laws or agreements with an
     underwriter  for the  Company),  of not less than the  option  price of the
     Shares as to which such Option shall be exercised  (provided such tender of
     stock  would not  constitute  a  violation  of the  provisions  of any law,
     regulation  and/or  agreement  restricting  the  redemption  of the  Common
     Stock), but only if

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     such  will  not  result  in an  accounting  charge  to  the  Company,  (iv)
     consideration received by the Company under a cashless exercise program (if
     the Company's stock is publicly traded),  (v) authorization for the Company
     to  retain  from the total  number  of  Shares  as to which  the  Option is
     exercised  that number of Shares  having a Fair Market Value on the date of
     exercise  equal to the exercise  price for the total number of Shares as to
     which the  Option  is  exercised,  but only if such  will not  result in an
     accounting  charge to the  Company,  or (vi) such other  consideration  and
     method of payment for the  issuance of Shares that may be  permitted  under
     Applicable Laws.

     The  Administrator  shall  have the  authority  to  permit or  require  the
Optionee  to secure any  promissory  note used to  exercise  an Option  with the
Shares  acquired  on  exercise  of  the  Option  and/or  with  other  collateral
acceptable  to the  Company.  In  making  its  determination  as to the  type of
consideration to accept, the Administrator  shall consider if acceptance of such
consideration   may  be  reasonably   expected  to  benefit  the  Company.   The
Administrator  may at any time or from time to time grant  Options  which do not
permit all of the foregoing forms of  consideration to be used in payment of the
option price and/or which otherwise restrict one or more forms of consideration.

     The  award  of  any  Option  may,  but  need  not,  be  conditioned  on the
Non-Employee  Director electing to forego his or her right to all or any part of
his or her cash retainer or other fees.

     9. Exercise of Option.

          (a)  Procedure  for  Exercise;  Rights as a  Shareholder.  Any  Option
     granted  hereunder  shall be  exercisable  at such  times  and  under  such
     conditions  as  determined  by  the  Administrator,  including  performance
     criteria  established by the Board,  and as shall be permissible  under the
     terms of the Plan.  An Option  may not be  exercised  for a  fraction  of a
     Share. An Option shall be deemed to be exercised when the Company receives:
     (i) written or electronic notice of exercise (in accordance with the Option
     Agreement)  from the person  entitled to exercise  the Option and (ii) full
     payment for the Shares with respect to which the Option is exercised.  Full
     payment  may,  as   authorized  by  the   Administrator,   consist  of  any
     consideration  and method of payment  authorized by the  Administrator  and
     permitted by the Option Agreement and the Plan. Shares issued upon exercise
     of an Option  shall be issued in the name of the  Optionee or, if requested
     by the Optionee,  in the name of the Optionee and his or her spouse.  Until
     the Shares are issued (as evidenced by the  appropriate  entry on the books
     of the Company or of a duly authorized  transfer agent of the Company),  no
     right to vote or receive  dividends  or any other  rights as a  shareholder
     shall  exist  with  respect  to the  Optioned  Stock,  notwithstanding  the
     exercise  of the Option.  The  Company  shall issue (or cause to be issued)
     such stock certificate  promptly upon exercise of the Option. No adjustment
     will be made for a dividend  or other  right for which the  record  date is
     prior to the date the stock  certificate  is issued,  except as provided in
     Section 11 of the Plan.

          Exercise of an Option in any manner  shall result in a decrease in the
     number of Shares  thereafter  available,  both for purposes of the Plan and
     for sale under the  Option,  by the number of Shares as to which the Option
     is exercised.

          (b)  Termination  of  Relationship.  If  an  Optionee  ceases  to be a
     Non-Employee Director,  such Optionee may exercise his or her Option within
     such period of time as is specified  in the Option  Agreement to the extent
     that the Option is vested on the date of termination (but in no event later
     than the  expiration  of the term of the  Option as set forth in the Option
     Agreement). In the absence of a specified time in the Option Agreement, the
     Option shall remain exercisable

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     for three (3) months following the Optionee's termination.  If, on the date
     of termination,  the Optionee is not vested as to his or her entire Option,
     the Shares  covered by the  unvested  portion of the Option shall revert to
     the Plan. If, after termination,  the Optionee does not exercise his or her
     Option  within the time  specified by the  Administrator,  the Option shall
     terminate, and the Shares covered by such Option shall revert to the Plan.

          Notwithstanding  any  provision  to  the  contrary,  if an  Optionee's
     service  with the Board as a Director  terminates  for  Cause,  all of such
     Optionee's  unexercised Options shall immediately  terminate on the date of
     such termination of employment or service, and Optionee shall have no right
     to exercise any unexercised Option on or after such date.

          (c) Disability of Optionee. If an Optionee ceases to be a Non-Employee
     Director as a result of Optionee's Disability,  the Optionee may within six
     (6) months  from the date of such  termination  (but in no event later than
     the  expiration  date of the term of such Option as set forth in the Option
     Agreement), exercise an Option to the extent otherwise entitled to exercise
     it at the date of such  termination.  To the extent  that  Optionee  is not
     entitled to exercise the Option on the date of termination,  or if Optionee
     does not  exercise  such Option to the extent so  entitled  within the time
     specified  herein,  the Option shall  terminate,  and the Shares covered by
     such Option shall revert to the Plan.

          (d)  Death of  Optionee.  If an  Optionee  dies  while a  Non-Employee
     Director,  the Option may be  exercised  at any time within  eighteen  (18)
     months  following  the  date of  death  (but in no  event  later  than  the
     expiration  date of the term of such  Option  as set  forth  in the  Option
     Agreement), to the extent the Optionee was vested on the date of death. If,
     at the time of death,  Optionee is not vested as to the entire Option,  the
     Shares  covered by the  unvested  portion of the Option shall revert to the
     Plan. If the Option is not so exercised  within the time specified  herein,
     the Option  shall  terminate,  and the Shares  covered by such Option shall
     revert  to the  Plan.  The  Option  may be  exercised  by the  executor  or
     administrator  of the  Optionee's  estate  or,  if none,  by the  person(s)
     entitled to exercise the Option under the Optionee's will or under the laws
     of descent and distribution.

          (e) Buyout Provisions.  The Administrator may at any time offer to buy
     out for a payment in cash or Shares, an Option previously granted, based on
     such  terms  and  conditions  as  the  Administrator  shall  establish  and
     communicate to the Optionee at the time that such offer is made.

     10. Withholding to Satisfy Tax Obligations.

          (a) Permitted  Methods.  At the discretion of the  Administrator,  ___
     Optionees may satisfy  withholding  obligations as provided in this Section
     10. When an Optionee  incurs tax  liability in  connection  with an Option,
     which tax  liability is subject to tax  withholding  under  applicable  tax
     laws,  and the Optionee is obligated to pay the Company an amount  required
     to be withheld  under  applicable  tax laws,  the  Optionee may satisfy the
     withholding  tax  obligation  by one or some  combination  of the following
     methods: (i) by cash payment;  (ii) out of Optionee's current compensation;
     (iii) if permitted by the Administrator, in its discretion, by surrendering
     to the Company  Shares that (A) in the case of Shares  previously  acquired
     from the Company,  have been owned by the Optionee for more than six months
     on the date of  surrender,  and (B) have a Fair Market Value on the date of
     surrender  equal to or less than  Optionee's  marginal  tax rate  times the
     ordinary income  recognized,  provided such method of withholding  will not
     result in an accounting charge to the Company;  or (iv) by electing to have
     the Company withhold from the Shares to be

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     issued upon exercise of the Option,  if any, that number of Shares having a
     Fair Market Value equal to the amount of  withholding  due,  provided  such
     method  of  withholding  will not  result  in an  accounting  charge to the
     Company.  The Fair  Market  Value of the  Shares  to be  withheld  shall be
     determined  on the date  that the  amount  of tax to be  withheld  is to be
     determined.

          (b) Procedures for Stock Withholding.  All elections by an Optionee to
     have Shares withheld to satisfy tax withholding  obligations  shall be made
     in writing in a form acceptable to the  Administrator  and shall be subject
     to the following restrictions: (i) the election must be made on or prior to
     the applicable tax withholding  date; (ii) once made, the election shall be
     irrevocable  as to the  particular  Shares  of the  Option  as to which the
     election is made;  (iii) all  elections  shall be subject to the consent or
     disapproval of the Administrator; (iv) if the Optionee is a Director within
     the meaning of Rule 16a-2 under the Exchange Act ("Reporting Person"),  the
     election must comply with the applicable provisions of Rule 16b-3 and shall
     be subject to such additional conditions or restrictions as may be required
     thereunder  to qualify for the  maximum  exemption  from  Section 16 of the
     Exchange Act with respect to Plan transactions.

     11.  Adjustments  upon Changes in  Capitalization,  Merger or Certain Other
Transactions.

          (a) Changes in  Capitalization.  Subject to any required action by the
     shareholders of the Company, the number and class of shares of Common Stock
     with respect to which Options may be granted under the Plan, the number and
     class of Shares of Common  Stock which are subject to  outstanding  Options
     granted under the Plan,  and the purchase price per Share of Common Stock ,
     if  applicable,  shall be  proportionately  adjusted  for any  increase  or
     decrease in the number of issued  Shares of Common Stock  resulting  from a
     stock  split,   reverse  stock  split,   stock  dividend,   combination  or
     reclassification  of the Common Stock, or any other increase or decrease in
     the number of issued  Shares of Common Stock  effected  without  receipt of
     consideration by the Company. The conversion of any convertible  securities
     of the Company shall not be deemed to have been "effected  without  receipt
     of consideration."  Adjustments shall be made by the  Administrator,  whose
     determination in that respect shall be final,  binding and conclusive.  If,
     by reason of a change in  Capitalization,  an Optionee shall be entitled to
     exercise an Option with respect to new,  additional or different  shares of
     stock, such new,  additional or different shares shall thereupon be subject
     to all of the conditions which were applicable to the Shares subject to the
     Option, as the case may be, prior to such Change in Capitalization.

          No right to purchase or receive  fractional  shares  shall result from
     any adjustment in any Option pursuant to this Section 11(a). In case of any
     such  adjustment,  the shares  subject to the Option shall be rounded up to
     the nearest whole share of Common Stock.

          (b)  Dissolution  or  Liquidation.   In  the  event  of  the  proposed
     dissolution or liquidation of the Company,  the Administrator  shall notify
     each Optionee as soon as  practicable  prior to the effective  date of such
     proposed  action.  The  Administrator  in its discretion may provide for an
     Optionee to have the right to exercise his or her Option until fifteen (15)
     days prior to such  transaction  as to all of the  Optioned  Stock  covered
     thereby,  including  Shares as to which the Option  would not  otherwise be
     exercisable.  To the extent it has not been previously exercised, an Option
     will  terminate  immediately  prior to the  consummation  of such  proposed
     action.

          (c) Merger or Sale of  Assets.  If the  Company is to be  consolidated
     with or acquired by another entity in a merger or other  reorganization  in
     which  the  holders  of  the  outstanding   voting  stock  of  the  Company
     immediately  preceding the consummation of such event,  shall,  immediately
     following such event,  hold, as a group, less than a majority of the voting
     securities of the surviving

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     or successor  entity, or in the event of a sale of all or substantially all
     of the Company's  assets or otherwise (each, a  "Change-of-Control"),  then
     each  outstanding   Option  shall  be  assumed  or  an  equivalent   option
     substituted  by the successor  corporation or a Parent or Subsidiary of the
     successor corporation.  In the event that the successor corporation refuses
     to assume or substitute  for the Option,  the Optionee  shall fully vest in
     and have the right to exercise the Option as to all of the Optioned  Stock,
     including  Shares  as  to  which  it  would  not  otherwise  be  vested  or
     exercisable.  If an Option becomes fully vested and  exercisable in lieu of
     assumption or substitution in the event of a merger or sale of assets,  the
     Administrator shall notify the Optionee in writing that the Option shall be
     fully  exercisable  for a period of fifteen (15) days from the date of such
     notice,  and the Option shall terminate upon the expiration of such period.
     For purposes of this paragraph,  the Option shall be considered assumed if,
     following  the merger or sale of assets,  the option  confers  the right to
     purchase for each Share of Optioned Stock subject to the Option immediately
     prior to the merger or sale of assets,  the  consideration  (whether stock,
     cash, or other  securities  or property)  received in the merger or sale of
     assets by holders of Common Stock for each Share held on the effective date
     of the transaction (and if holders were offered a choice of  consideration,
     the type of  consideration  chosen  by the  holders  of a  majority  of the
     outstanding Shares); provided, however, that if such consideration received
     in the merger or sale of assets is not solely common stock of the successor
     corporation or its Parent,  the Administrator  may, with the consent of the
     successor  corporation,  provide for the  consideration to be received upon
     the exercise of the Option, for each Share of Optioned Stock subject to the
     Option,  to be solely  common  stock of the  successor  corporation  or its
     Parent equal in fair market value to the per share  consideration  received
     by holders of Common Stock in the merger or sale of assets.

          (d) Certain  Distributions.  In the event of any  distribution  to the
     Company's  shareholders  of  securities of any other entity or other assets
     (other  than  dividends  payable in cash or stock of the  Company)  without
     receipt of  consideration  by the Company,  the  Administrator  may, in its
     discretion,  appropriately  adjust  the price  per  share of  Common  Stock
     covered  by  each  outstanding   Option  to  reflect  the  effect  of  such
     distribution.

     12.  Non-Transferability  of Options.  Except as otherwise provided in this
Section, Options may not be sold, pledged, assigned, hypothecated,  transferred,
or  disposed  of in any  manner  other than by will or by the laws of descent or
distribution  and may be  exercised  or  purchased  during the  lifetime  of the
Optionee, only by the Optionee. Notwithstanding the foregoing, the Administrator
may, in its discretion,  authorize all or a portion of the Options to be granted
to an Optionee to be transferred by such Optionee to (i) the spouse, children or
grandchildren of such Optionee  ("Immediate  Family  Members"),  (ii) a trust of
trusts for the benefit of an Immediate Family Member,  or (iii) a partnership in
which Immediate Family Members are the only partners,  provided,  that (x) there
is no  consideration  for such  transfer,  (y) the  Option  Agreement  expressly
provides for the transfer of the Options in accordance  with this  Section,  and
(z)  subsequent  transfers  of  such  Options  are  prohibited  except  by or in
accordance with the laws of descent or distribution.

     13. Time of Granting Options. The date of grant of an Option shall, for all
purposes,  be the  date on  which  the  Administrator  makes  the  determination
granting such Option, or such other date as is determined by the  Administrator.
Notice of the determination shall be given to each Employee to whom an Option is
so granted within a reasonable time after the date of such grant.

     14. Amendment and Termination of the Plan.

          (a) Amendment and Termination.  The Board or the  Administrator may at
     any time amend, alter, suspend or terminate the Plan.

                                        9
<PAGE>

          (b)  Shareholder  Approval.  To the extent  necessary and desirable to
     comply with Applicable Laws, the Company shall obtain shareholder  approval
     of any Plan amendment in such a manner and to such a degree as required.

          (c) Effect of  Amendment or  Termination.  No  amendment,  alteration,
     suspension  or  termination  of the Plan  shall  impair  the  rights of any
     Optionee,  unless  mutually agreed  otherwise  between the Optionee and the
     Administrator,  which  agreement  must  be in  writing  and  signed  by the
     Optionee  and the  Company.  Termination  of the Plan  shall not affect the
     Administrator's ability to exercise the powers granted to it hereunder with
     respect  to  Options  granted  under  the  Plan  prior  to the date of such
     termination.

     15. Conditions Upon Issuance of Shares.

          (a) Legal  Compliance.  Shares  shall not be  issued  pursuant  to the
     exercise of an Option  unless the  exercise of such Option and the issuance
     and delivery of such Shares pursuant thereto shall comply with all relevant
     provisions of law,  including,  without  limitation,  the Securities Act of
     1933, as amended,  the Exchange Act, the rules and regulations  promulgated
     thereunder, and the requirements of any Stock Exchange.

          (b) Investment  Representations.  As a condition to the exercise of an
     Option,  the Administrator may require the person exercising such Option to
     represent  and  warrant  to the  Company in writing at the time of any such
     exercise  that the  Shares  are being  purchased  only for  investment  and
     without any present  intention to sell or distribute such Shares,  and will
     not be sold or transferred other than pursuant to an effective registration
     thereof under the Exchange Act or pursuant to an exemption applicable under
     the  Securities  Act of 1933,  as  amended,  or the rules  and  regulations
     promulgated  thereunder.  The certificates evidencing any such Shares shall
     be appropriately legended to reflect their status as restricted securities.

          In the event the Shares  purchasable  pursuant to the exercise of this
     Agreement  have  been  registered  under  the  Securities  Act of 1933,  as
     amended,   at  the  time  this   Option   is   exercised,   the   preceding
     representations shall no longer be required of Optionee.

     16. Governing Law: Forum; Regulations and Other Approvals.

          (a) This Plan and the rights of all persons  claiming  hereunder shall
     be construed and  determined  in  accordance  with the laws of the State of
     Delaware,  excluding any conflicts or choice of law rule or principle  that
     might  otherwise  refer  construction  or  interpretation  of this  Plan or
     Agreement to the substantive law of another jurisdiction.

          (b) The federal and state courts of Illinois, County of Cook, shall be
     the  exclusive  jurisdiction  and venue for any court action in  connection
     with the  resolution of any dispute that may arise or relate to the Plan or
     Agreement.

          (c) The  obligation  of the  Company  to sell or deliver  Shares  with
     respect  to  Options  granted  under  the  Plan  shall  be  subject  to all
     Applicable  Laws, and the obtaining of all such  approvals by  governmental
     agencies as may be deemed necessary or appropriate by the Administrator.

                                       10
<PAGE>

          (d)  The  inability  of the  Company  to  obtain  authority  from  any
     regulatory  body  having  jurisdiction,  which  authority  is deemed by the
     Company's  counsel to be necessary  to the lawful  issuance and sale of any
     Shares hereunder,  shall relieve the Company of any liability in respect of
     the  failure  to issue or sell  such  Shares  as to  which  such  requisite
     authority shall not have been obtained.

          (e) The Plan is intended to comply with Rule 16b-3  promulgated  under
     the Exchange Act and the  Administrator  shall interpret and administer the
     provisions of the Plan or any Agreement in a manner  consistent  therewith.
     Any provisions  inconsistent  with such Rule shall be inoperative and shall
     not affect the validity of the Plan.

          (f) The  Administrator  may make such  changes as may be  necessary or
     appropriate  to comply  with the rules and  regulations  of any  government
     authority.

     17. Reservation of Shares. The Company, during the term of this Plan, shall
at all  times  reserve  and keep  available  such  number  of Shares as shall be
sufficient to satisfy the requirements of the Plan.

     18.  Agreements.  Options shall be evidenced by written  agreements in such
form as the Administrator shall approve from time to time.

     19.  Shareholder  Approval.  The Plan shall be subject to  approval  by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted by a majority of the  disinterested  members of the Board of  Directors.
Such  shareholder  approval shall be obtained in the degree and manner  required
under Applicable Law. All Options issued under the Plan shall become void in the
event such approval is not obtained.

                                       11<PAGE>   1
                                                                   EXHIBIT 10.23

                              ACCRUE SOFTWARE, INC.

                     SEPARATION AGREEMENT AND MUTUAL RELEASE

        This Separation Agreement and Mutual Release ("AGREEMENT") is made by
and between Accrue Software, Inc., a Delaware corporation (the "COMPANY"), and
Richard Kreysar ("MR. KREYSAR" or "EMPLOYEE").

        WHEREAS, Mr. Kreysar was employed by the Company pursuant to the terms
of an offer letter dated June 16, 1998; and

        WHEREAS, the Company and Mr. Kreysar have mutually agreed to terminate
the existing employment relationship and to release each other from any claims
arising from or related to the employment relationship.

        NOW, THEREFORE, in consideration of the mutual promises made herein, the
Company and Mr. Kreysar (collectively referred to as the "PARTIES") hereby agree
as follows:

        1. TERMINATION OF EMPLOYMENT; SERVICE ON BOARD OF DIRECTORS. Mr. Kreysar
and the Company acknowledge and agree that Mr. Kreysar's employment as Chief
Executive Officer of the Company terminated effective at the close of business
on January 15, 2001 (the "TERMINATION DATE"). Following the Termination Date,
Mr. Kreysar shall continue as a member of the Board of Directors (the "BOARD")
at the discretion of the Board. Mr. Kreysar agrees to submit his letter of
voluntary resignation to the Board when requested to do so by the Board. In all
events, Mr. Kreysar's continued service as a member of the Board shall be
subject to his election to such position by the stockholders of the Company.

        2. SEVERANCE BENEFITS. In consideration for the release of claims set
forth below and other obligations under this Agreement, and provided this
Agreement is signed by Mr. Kreysar and not revoked under Section 7 herein, and
further provided that Mr. Kreysar remains in full compliance with his
obligations to the Company under this Agreement, the Company agrees to provide
the following severance benefits to Mr. Kreysar:

                (a) Following the Termination Date, the Company shall continue
to pay as severance to Mr. Kreysar his regular base salary for a six-month
period (the "Severance Period"). Each severance payment shall be reduced by
applicable tax withholding and shall be paid in accordance with the Company's
regular payroll schedule and practices. The first severance payment shall be
made on the first regular payroll date following the Effective Date of this
Agreement (as defined in Section 20 below);

                (b) If Mr. Kreysar accurately and timely elects to continue his
health insurance benefits under COBRA, as described in Section 3(a) below, the
Company agrees to pay the applicable COBRA premiums until the end of the
Severance Period;

                (c) Mr. Kreysar shall be entitled to keep and assume ownership
of the laptop computer provided to him by the Company. Mr. Kreysar shall be
responsible for any and all maintenance and repair costs incurred with respect
to the computer after the Termination Date; and
<PAGE>   2

                (d) Notwithstanding the original vesting terms set forth in the
Purchase Agreement for the First Option Shares (as such terms are defined in
Section 4(a) below), the Company agrees to waive its right to repurchase an
aggregate of 400,710 of the First Option shares not otherwise vested as of the
Termination Date and to waive payment of the principal and interest amount owing
with respect to Mr. Kreysar's purchase of 1,204,261 of the First Option shares,
subject to the terms of Section 4(a) below.

        3. EMPLOYEE BENEFITS.

                (a) Mr. Kreysar shall continue to receive the Company's health
insurance benefits (medical and dental) at Company expense until January 31,
2001, which date shall be the "qualifying event" date under the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"). If Mr. Kreysar
timely and accurately elects to continue his health insurance benefits under
COBRA following such date, the Company shall pay the applicable COBRA premiums
through the end of the Severance Period. Following such date, Mr. Kreysar has
the right to continue the COBRA coverage at his own expense.

                (b) Except as otherwise provided above, Mr. Kreysar shall not be
entitled to participate in any of the Company's benefit plans or programs
offered to employees of the Company after the Termination Date.

        4. STOCK INTERESTS.

                (a) RESTRICTED STOCK. Under the terms of the Notice of Stock
Option Grant and the Stock Option Agreement granted to Mr. Kreysar on August 18,
1998 (the "FIRST OPTION"), and the Early Exercise Notice and Restricted Stock
Purchase Agreement for the First Option executed on October 1, 1998 by Mr.
Kreysar and the Company (the "PURCHASE AGREEMENT"), Mr. Kreysar purchased
1,605,683 shares of the Company's Common Stock (the "SHARES") with a per Share
purchase price of $0.12, for a total purchase price of $192,681.96. Mr. Kreysar
paid the purchase price for the Shares by delivering a promissory note to the
Company (the "NOTE") dated October 1, 1998 in the original aggregate principal
amount of $192,681.96, bearing 5.06% interest per annum on the unpaid balance of
such principal sum, copies of which are attached hereto as Exhibit A. Mr.
Kreysar purchased the Shares subject to a right of repurchase by the Company at
Mr. Kreysar's original cost of $0.12 per Share on the termination of Mr.
Kreysar's relationship with the Company as an employee or consultant pursuant to
the terms of the Purchase Agreement. Such repurchase right was to lapse at a
rate of 25% of the Shares on the twelve month anniversary of the Vesting
Commencement Date (as defined in the Purchase Agreement) and thereafter at the
rate of 1/48th of the total number of Shares on the 22nd day of each month
following the Vesting Commencement Date. As of the Termination Date, the Parties
acknowledge and agree that (1) the outstanding balance under the Note, not
including accrued interest, remains $192,681.96, and that such balance, together
with accrued interest, was due and payable on the Termination Date, (2) the
Company's repurchase right under the Purchase Agreement had lapsed as to
1,003,551 of the Shares and (3) the Company has the right to repurchase 602,132
unvested Shares.

                        (i) ACCELERATION OF VESTING. Notwithstanding the above,
in consideration for the release of claims set forth below and other obligations
under this

<PAGE>   3

Agreement, and notwithstanding the terms of the Purchase Agreement, the Company
shall, immediately prior to the Effective Date, release an additional 400,710 of
the Shares from the Company's right of repurchase. Accordingly, the Company
shall exercise its right to repurchase 201,422 unvested Shares held by Mr.
Kreysar, and pursuant to the terms of the Purchase Agreement, the Company shall
pay the total repurchase price for the unvested Shares by canceling $24,170.64
of the principal amount of Mr. Kreysar's indebtedness to the Company due under
the Note for such unvested shares. Upon such cancellation, Mr. Kreysar owes to
the Company the remaining principal balance of $168,511.32 for the vested Shares
and the accrued interest on the entire original principal amount, with such
principal balance, together with accrued interest, being immediately due and
payable.

                        (ii) FORGIVENESS OF PORTION OF PROMISSORY NOTE;
EXECUTION OF NEW PROMISSORY NOTE. In further consideration for the release of
claims set forth below and other obligations under this Agreement, the Company
shall forgive the aggregate amount of $167,921.78 on the Note, which represents
the principal amount of $144,511.32 (the purchase price for 1,204,261 of the
Shares) plus the accrued interest on the entire original principal amount of the
Note. In accordance with applicable tax law, that amount shall be reported as
taxable income to Mr. Kreysar on his Form W-2 for 2001. Concurrent with his
execution of this Agreement, Mr. Kreysar shall enter into a new nonrecourse
promissory note in favor of the Company in the amount of $24,000 (the "NEW
Note"), in the form attached hereto as Exhibit E. Upon execution of the New
Note, the Note shall be cancelled by the Company.

                  (c) STOCK OPTION. The terms of the Stock Option granted to Mr.
Kreysar on April 17, 2000 under the terms of the Company's 1996 Stock Plan (the
"SECOND OPTION"), a copy of which is attached as Exhibit B, for the grant of
50,000 shares of the Company's Common Stock (the "SECOND OPTION SHARES")
provides that the Second Option Shares vest at the rate of 25% of the Second
Option Shares on the twelve month anniversary date of the Vesting Commencement
Date (as defined in the Second Option Agreement), and 1/48 of the total number
of Second Option Shares vest each month thereafter. The Parties acknowledge and
agree that, pursuant to such vesting schedule, zero of the Second Option Shares
had vested as of the Termination Date. Accordingly, the Second Option expired by
its terms on the Termination Date.

        Except as set forth in this Agreement, the Purchase Agreement and the
agreements issued in connection with the grants of the First and Second Options,
Mr. Kreysar acknowledges that as of the Termination Date, Mr. Kreysar shall have
no right, title or interest in or to any shares of the Company's capital stock
under the Purchase Agreement, the option agreements, or any other agreement
(oral or written) or plan with the Company.

        5. NO OTHER PAYMENTS DUE. Mr. Kreysar and the Company agree that the
Company paid to Mr. Kreysar on or before the Termination Date, his accrued
salary, accrued vacation and other sums as were then due to Mr. Kreysar through
such date. By executing this Agreement, Mr. Kreysar hereby acknowledges receipt
of all such payments and acknowledges that, in light of the payment by the
Company of all wages due to Mr. Kreysar, California Labor Code Section 206.5 is
not applicable to the Parties hereto. That section provides in pertinent part as
follows:
<PAGE>   4

                        No employer shall require the execution of any release
                        of any claim or right on account of wages due, or to
                        become due, or made as an advance on wages to be earned,
                        unless payment of such wages has been made.

        6. RELEASE OF CLAIMS. In consideration for the obligations of both
parties set forth in this Agreement, Mr. Kreysar and the Company, on behalf of
themselves, and their respective heirs, executors, officers, directors,
employees, investors, stockholders, administrators and assigns, hereby fully and
forever release each other and their respective heirs, executors, officers,
directors, employees, investors, stockholders, administrators, predecessor and
successor corporations and assigns, of and from 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 date of
this Agreement including, without limitation:

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

                (b) any and all claims relating to, or arising from, Mr.
Kreysar's right to purchase, or actual purchase of shares of stock of the
Company;

                (c) any and all claims for wrongful discharge of employment;
breach of contract, both express and implied; breach of a covenant of good faith
and fair dealing, both express and implied, negligent or intentional infliction
of emotional distress; negligent or intentional misrepresentation; negligent or
intentional interference with contract or prospective economic advantage;
negligence; and defamation;

                (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, and the California
Fair Employment and Housing Act;

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

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

        The Company and Mr. Kreysar agree that the release set forth in this
Section 6 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 or specified under this Agreement.

        7. ACKNOWLEDGMENT OF WAIVER OF CLAIMS UNDER ADEA. Mr. Kreysar
acknowledges that he is waiving and releasing any rights he may have under the
Age Discrimination in Employment Act of 1967 ("ADEA") and that this waiver and
release is knowing and voluntary. Mr. Kreysar and the Company agree that this
waiver and release does not apply to any rights or claims that may arise under
ADEA after the date of this Agreement. Mr. Kreysar acknowledges that the
consideration given for this waiver and release Agreement is in addition to
anything of value to which Mr. Kreysar was already

<PAGE>   5

entitled. Mr. Kreysar further acknowledges that he has been advised by this
writing that (a) he should consult with an attorney prior to executing this
Agreement; (b) he has at least twenty-one (21) days within which to consider
this Agreement; (c) he has seven (7) days following his execution of this
Agreement to revoke the Agreement (the "REVOCATION PERIOD"). This Agreement
shall not be effective until the Revocation Period has expired.

        8. 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. Mr. Kreysar and the Company acknowledge that they have been
advised by legal counsel and 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.

        Mr. Kreysar and the Company, 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.

        9. EMPLOYEE COVENANTS.

                (a) GENERAL. Mr. Kreysar agrees that for all periods described
in this Agreement, he shall continue to conduct himself in a professional manner
that is supportive of the business of the Company.

                (b) CONFIDENTIAL INFORMATION. Mr. Kreysar understands and agrees
that his obligations to the Company under the Confidential Information and
Inventions Agreement he executed on ______, 1998 (the "CONFIDENTIALITY
AGREEMENT"), a copy of which is attached hereto as Exhibit C, survive the
termination of his relationship with the Company under this Agreement. Mr.
Kreysar agrees that at all times hereafter he shall continue to maintain the
confidentiality of all confidential and proprietary information of the Company
as provided by the Confidentiality Agreement and that he shall not intentionally
divulge, furnish or make available to any party any of the trade secrets,
patents, patent applications, price decisions or determinations, inventions,
customers, proprietary information or other intellectual property of the
Company, until after such time as such information has become publicly known
otherwise than by act of collusion of Mr. Kreysar. Mr. Kreysar further agrees to
execute the Termination Certification attached as Exhibit C to the
Confidentiality Agreement.

                (c) CONFIDENTIALITY OF THIS AGREEMENT. The parties 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 "SEPARATION
INFORMATION"). Each party hereto agrees to take every reasonable precaution to
prevent disclosure of any Separation Information to third parties, except as may
be or has been disclosed in a press release and except for disclosures required
by law or

<PAGE>   6

necessary to effectuate the terms of this Agreement. Mr. Kreysar understands and
acknowledges that Company may be required to file a copy of this Agreement with
the Securities and Exchange Commission and to disclose its terms in Company's
next proxy statement. The parties agree to take every precaution to disclose
Separation Information only to those employees, officers, directors, attorneys,
accountants, governmental entities, and family members who have a reasonable
need to know of such Separation Information.

                (d) SEC REPORTING. Mr. Kreysar will cooperate with the Company
in providing information with respect to all reports required to be filed by the
Company with the Securities and Exchange Commission as they relate to required
information with respect to Mr. Kreysar.

                (e) NONCOMPETITION. During the period from the Termination Date
through the end of the Severance Period, Mr. Kreysar agrees that he shall not
engage in any employment, consulting or business relationship with any company
that is in competition with the Company, including without limitation the
following companies: Andromedia, Inc., net.Genesis Corporation, WebTrends
Corporation, Broadbase Software, Inc. and E.piphany, Inc.

        10. NON-DISPARAGEMENT. Each Party agrees to refrain from any
disparagement, defamation, slander of the other, or tortious interference with
the contracts and relationships of the other.

        11. BREACH OF THIS AGREEMENT. Mr. Kreysar acknowledges that upon
material breach of any provision of this Agreement, the Company would sustain
irreparable harm from such breach, and, therefore, Mr. Kreysar agrees that in
addition to any other remedies which the Company may have for any breach of this
Agreement or otherwise, including termination of the Company's obligations to
provide the salary, benefits, accelerated stock vesting and loan forgiveness to
Mr. Kreysar as described in Sections 2, 3 and 4 of this Agreement, the Company
shall be entitled to obtain equitable relief including specific performance,
injunctions and restraining Mr. Kreysar from committing or continuing any such
violation of this Agreement. Mr. Kreysar further agrees that if the Company
ceases such payments and benefits as a result of Mr. Kreysar's breach of this
Agreement, the waiver and release set forth in this Agreement shall remain in
full force and effect at all times in the future.

        12. 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 who may claim through it to the terms and conditions of this Agreement. Mr.
Kreysar 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.

        13. NO REPRESENTATIONS. Neither Party has relied upon any
representations or statements made by the other Party hereto which are not
specifically set forth in this Agreement.
<PAGE>   7

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

        15. ARBITRATION. The Parties shall attempt to settle all disputes
arising in connection with this Agreement through good faith consultation. In
the event no agreement can be reached on such dispute within fifteen (15) days
after notification in writing by either Party to the other concerning such
dispute, the dispute shall be settled by binding arbitration to be conducted in
Contra Costa County before the American Arbitration Association under its
California Employment Dispute Resolution Rules, or by a judge to be mutually
agreed upon. The arbitration decision shall be final, conclusive and binding on
both Parties and any arbitration award or decision may be entered in any court
having jurisdiction. 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 further agree that
the prevailing Party in any such proceeding shall be awarded reasonable
attorneys' fees and costs. This Section 15 shall not apply to the
Confidentiality Agreement. THE PARTIES HEREBY WAIVE ANY RIGHTS THEY MAY HAVE TO
TRIAL BY JURY IN REGARD TO ARBITRABLE CLAIMS.

        16. INDEMNIFICATION. The Indemnification Agreement entered into by Mr.
Kreysar and the Company on June 22, 1998, a copy of which is attached as Exhibit
D, shall remain in effect following the Termination Date in accordance with the
terms of such agreement.

        17. ENTIRE AGREEMENT. This Agreement, and the exhibits hereto, represent
the entire agreement and understanding between the Company and Mr. Kreysar
concerning Mr. Kreysar's separation from the Company, and supersede and replace
any and all prior agreements and understandings concerning Mr. Kreysar's
relationship with the Company and his compensation by the Company.

        18. NO ORAL MODIFICATION. This Agreement may only be amended in writing
signed by Mr. Kreysar and the Company.

        19. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of California, without regard to its conflicts of law provisions.

        20. EFFECTIVE DATE. This Agreement is effective upon the expiration of
the Revocation Period described in Section 7 and such date is referred to herein
as 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.

        22. ASSIGNMENT. This Agreement may not be assigned by Mr. Kreysar or the
Company without the prior written consent of the other party. Notwithstanding
the foregoing, this Agreement may be assigned by the Company to a corporation
controlling, controlled by or under common control with the Company without the
consent of Mr. Kreysar.
<PAGE>   8

        23. 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; and

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

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

                                             ACCRUE SOFTWARE, INC.

Dated as of March 24, 2001                   By:  /s/ Robert Smelick
                                                --------------------------------
                                             Title: Chairman

                                             RICHARD KREYSAR, an individual

                                             /s/  Richard Kreysar
Dated as of March 24, 2001                   -----------------------------------
                                             Richard Kreysar

<PAGE>   9

                                    EXHIBIT A

                               PURCHASE AGREEMENT

<PAGE>   10

                                    EXHIBIT B

                             SECOND OPTION AGREEMENT

<PAGE>   11

                                    EXHIBIT C

                            CONFIDENTIALITY AGREEMENT

<PAGE>   12
                                    EXHIBIT D

                            INDEMNIFICATION AGREEMENT

<PAGE>   13

                                    EXHIBIT E

                                 PROMISSORY NOTE

$24,000.00                                                   Fremont, California
                                                                  March 24, 2001

        For value received, the undersigned promises to pay Accrue Software,
Inc., a Delaware corporation (the "Company"), at its principal office the
principal sum of $24,000 with interest from the date hereof at a rate of 5.06%
per annum, compounded semiannually, on the unpaid balance of such principal sum.
Such principal and interest shall be due and payable on July 15, 2002; provided,
however, that if the undersigned breaches any material term of the Separation
Agreement and Mutual Release executed by and between the Company and the
undersigned on March 24, 2001, this Note shall be immediately due and payable.

        Principal and interest are payable in lawful money of the United States
of America. AMOUNTS DUE UNDER THIS NOTE MAY BE PREPAID AT ANY TIME WITHOUT
INTEREST OR PENALTY.

        Should suit be commenced to collect any sums due under this Note, such
sum as the Court may deem reasonable shall be added hereto as attorneys' fees.
The makers and endorsers have severally waived presentment for payment, protest,
notice of protest and notice of nonpayment of this Note.

        This nonrecourse Note is secured by a pledge of certain shares of Common
Stock of the Company and is subject to the terms of a Pledge and Security
Agreement between the undersigned and the Company of even date herewith.

                                         /s/ RICHARD KREYSAR
                                         --------------------------------------
                                         Richard Kreysar

<PAGE>   14

                          PLEDGE AND SECURITY AGREEMENT

        This Pledge and Security Agreement (the "Agreement") is entered into
this 24th day of March, 2001 by and between Accrue Software, Inc., a Delaware
corporation (the "Company") and Richard Kreysar ("Purchaser").

                                    RECITALS

        In connection with Purchaser's exercise of an option to purchase certain
shares of the Company's Common Stock (the "Shares") pursuant to an Option
Agreement effective as of August 18, 1998 between Purchaser and the Company,
Purchaser delivered a promissory note (the "Original Note") in full payment of
the exercise price for the Shares. The Company required that the Note be secured
by a pledge of the Shares on the terms set forth in a Pledge and Security
Agreement dated October 1, 1998. In connection with the termination of
Purchaser's employment with the Company on January 15, 2001, the Company is
repurchasing certain of the Shares, is forgiving a portion of the principal and
all of the accrued interest on the Original Note, and is executing a new
promissory note with Purchaser (the "Note") in the amount of $24,000, which
amount represents the purchase price for 200,000 of the Shares (the "Vested
Shares"). The Company requires that the Note be secured by a pledge of the
Vested Shares on the terms set forth below.

                                    AGREEMENT

        In consideration of the Company's acceptance of the Note as full or
partial payment of the exercise price of the Vested Shares, and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
parties hereto agree as follows:

        1. The Note shall become payable in full on July 15, 2002; provided,
however, that if Purchaser breaches any material term of the Separation
Agreement and Mutual Release executed by and between the Company and Purchaser
on March 24, 2001, the Note shall be immediately due and payable.

        2. Purchaser shall deliver to the Secretary of the Company, or his or
her designee (hereinafter referred to as the "Pledge Holder"), all certificates
representing the Vested Shares, together with an Assignment Separate from
Certificate in the form attached to this Agreement as Attachment A executed by
Purchaser and by Purchaser's spouse (if required for transfer), in blank, for
use in transferring all or a portion of the Vested Shares to the Company if, as
and when required pursuant to this Agreement. In addition, if Purchaser is
married, Purchaser's spouse shall execute the signature page attached to this
Agreement.

        3. As security for the payment of the Note and any renewal, extension or
modification of the Note, Purchaser hereby grants to the Company a security
interest in and pledges with and delivers to the Company Purchaser's Vested
Shares (sometimes referred to herein as the "Collateral").

        4. In the event that Purchaser prepays all or a portion of the Note, in
accordance with the provisions thereof, Purchaser intends, unless written notice
to the contrary is delivered to the Pledge Holder, that the Vested Shares
represented by the portion of the Note

<PAGE>   15

so repaid, including annual interest thereon, shall continue to be so held by
the Pledge Holder, to serve as independent collateral for the outstanding
portion of the Note for the purpose of commencing the holding period set forth
in Rule 144(d) promulgated under the Securities Act of 1933, as amended (the
"Securities Act").

        5. In the event of any foreclosure of the security interest created by
this Agreement, the Company may sell the Vested Shares at a private sale or may
repurchase the Vested Shares itself. The parties agree that, prior to the
establishment of a public market for the Vested Shares of the Company, the
securities laws affecting sale of the Vested Shares make a public sale of the
Vested Shares commercially unreasonable. The parties further agree that the
repurchasing of such Vested Shares by the Company, or by any person to whom the
Company may have assigned its rights under this Agreement, is commercially
reasonable if made at a price determined by the Board of Directors in its
discretion, fairly exercised, representing what would be the fair market value
of the Vested Shares reduced by any limitation on transferability, whether due
to the size of the block of shares or the restrictions of applicable securities
laws.

        6. In the event of default in payment when due of any indebtedness under
the Note, the Company may elect then, or at any time thereafter, to exercise all
rights available to a secured party under the California Commercial Code
including the right to sell the Collateral at a private or public sale or
repurchase the Vested Shares as provided above. The proceeds of any sale shall
be applied in the following order:

                (a) To the extent necessary, proceeds shall be used to pay all
reasonable expenses of the Company in enforcing this Agreement and the Note,
including, without limitation, reasonable attorney's fees and legal expenses
incurred by the Company.

                (b) To the extent necessary, proceeds shall be used to satisfy
any remaining indebtedness under Purchaser's Note.

                (c) Any remaining proceeds shall be delivered to Purchaser.

        7. Upon full payment by Purchaser of all amounts due under the Note,
Pledge Holder shall deliver to Purchaser all Vested Shares in Pledge Holder's
possession belonging to Purchaser, and Pledge Holder shall thereupon be
discharged of all further obligations under this Agreement; provided, however,
that Pledge Holder shall nevertheless retain the Vested Shares as escrow agent
if at the time of full payment by Purchaser said Vested Shares are still subject
to a Repurchase Option in favor of the Company.

<PAGE>   16

        The parties have executed this Pledge and Security Agreement as of the
date first set forth above.

                                    COMPANY:

                                    ACCRUE SOFTWARE, INC.

                                    By:  /s/ ROBERT SMELICK
                                    ------------------------------------

                                    Name:  Robert Smelick
                                         ------------------------------------
                                                      (print)

                                    Title:
                                          ------------------------------------

                                    Address:

                                    PURCHASER:

                                    RICHARD KREYSAR

                                    /s/ RICHARD KREYSAR
                                    ------------------------------------
                                    (Signature)

                                    Richard Kreysar
                                    ------------------------------------
                                    (Print Name)

                                    Address: 110 Tuscany Way
                                             Danville, CA 94506

<PAGE>   17

                                  ATTACHMENT A

                      ASSIGNMENT SEPARATE FROM CERTIFICATE

        FOR VALUE RECEIVED and pursuant to that certain Pledge and Security
Agreement between the undersigned ("Purchaser") and Accrue Software, Inc. dated
March 24, 2001 (the "Agreement"), Purchaser hereby sells, assigns and transfers
unto _______________________________ (________) shares of the Common Stock of
Accrue Software, Inc., standing in Purchaser's name on the books of said
corporation represented by Certificate No. ___ herewith and hereby irrevocably
appoints _____________________________ to transfer said stock on the books of
the within-named corporation with full power of substitution in the premises.
THIS ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE AGREEMENT.

Dated: ____________

                                   Signature:

                                   /s/ RICHARD KREYSAR
                                   ------------------------------------
                                   Richard Kreysar

                                   /s/ STACY A. KREYSAR
                                   -----------------------------------------
                                   Spouse of Richard Kreysar (if applicable)

Instruction: Please do not fill in any blanks other than the signature line. The
purpose of this assignment is to perfect the security interest of the Company
pursuant to the Agreement.

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