SEPARATION AND RELEASE AGREEMENT


The parties to this  Separation and Release  Agreement  (Agreement)  are SoftNet
Systems,  Inc., a Delaware  corporation  ("Company")  and Lawrence B. Brilliant,
(Employee) RECITALS

A.   Employee was employed as Chief Executive Officer for SoftNet Systems, Inc.

B.   Employee resigned as Chief Executive Officer effective December 4, 2000,

C.   Employee  resigned as Director and  Chairman of the Board of Directors  for
     SoftNet Systems, Inc., effective December17, 2000.

D.   Employee has an Employment  Agreement with Company dated April 7, 1998, and
     amended on October 29, 1999 and November 20, 2000 (Attachments 1, 2, and 3)
     and an Indemnification Agreement dated April 14, 1999 (Attachment 4) all of
     which are incorporated herein by reference

Therefore,  in consideration of the mutual promises set forth below, the parties
agree as follows:

1. The Company agrees to provide to Employee upon the legally  enforceable  date
of this Agreement  (seven (7) days following the execution of the Agreement) the
sum of $975,000  minus items listed on  Attachment  5).  Employer  will withhold
taxes on the amount paid in  accordance  with all  applicable  local,  state and
federal  laws.  Employee  will also  receive  payment for all  vacation  accrued
through December 4, 2000.

2. Employee will (a) receive installment  payments of $10,000 annually,  paid in
accordance  with the  Company's  normal  payroll  cycles,  and (b)  will  remain
eligible  for  medial,  dental,  vision and life  insurance  coverage  under the
Company's  insurance  plans  until  December  31,  2002.  If at any  time,  from
execution of this agreement  until December 31, 2002,  Employee is ineligible to
receive  Company health  benefits,  the Company will reimburse  Employee for his
COBRA premium payments for health insurance coverage for Employee and his family
until December 31, 2002 (or, if Employee are  ineligible for COBRA,  payment for
any  other  reasonable  health  insurance  plan  providing  comparable  coverage
Employee may acquire). Employee may, in his sole discretion, terminate provision
(a) of this  paragraph 2 and shall then be paid  $20,000,  less amounts  already
paid pursuant to paragraph (a).

3. All stock  options  granted to Employee  will cease to vest as of December 4,
2000,  however Employee will be eligible to exercise such vested options through
March 5, 2001.

4. Such  agreements and commitments by the Company as specified in paragraphs 1,
2 and 3 are in full payment of any and all claims  arising from,  related to, or
in connection with Employee's  employment with the Company,  including,  but not
limited  to,  all  claims for breach of  contract,  fraud,  wrongful  discharge,
misrepresentation, defamation, violation of public policy, breach of the implied
covenant of good faith and fair dealing,  personal injury,  emotional  distress,
sexual harassment,  and age, race, sex or other prohibited  discrimination;  all
liabilities for the payment of any sums for accrued earnings, bonuses, severance
pay, sick leave or holiday  plans,  and any employee  benefits;  and  attorneys'
fees.

4.  Employee  represents  and  warrants the Employee has returned to Company all
Company's  property,  books,  lists,  records,  other  documents and  equipment.
Employee  covenants that should such items be later discovered in his possession
or any  additional  items of  Company's  property,  Employee  agrees to promptly
return such property to the Company.  Employee acknowledges that he has received
any personal property belonging to him that was on Company's premises.

5. Employee,  for himself, his successors,  administrators,  heirs, and assigns,
hereby fully releases,  waives and forever  discharges  Company,  any affiliated
companies  or  subsidiaries,   alter  egos,  their   predecessors,   successors,
affiliates,  assigns,  shareholders,  directors, officers, agents, attorneys and
employees, whether past, present or future (the "Released Parties") from any all
actions, suits, debts, demands,  damages, claims judgments or liabilities of any
nature including costs and attorneys' fees, whether known or unknown arising out
of Employee's  employment with or separation  from any of the Released  Parties,
such as (by way of  example  only)  any  claim for  bonus,  severance,  or other
benefits  apart from the benefits  stated herein;  breach of contract;  wrongful
discharge;  impairment of economic opportunity; any claim under common-law or at
equity;  defamation;  intentional infliction of emotional harm; any tort; claims
for   reimbursement,   claims   for   commissions;   or  claim  for   employment
discrimination  under any  state,  federal,  local law,  statute  or  regulation
including  but not limited to, claims under Title VII of the Civil Rights Act of
1964 or under the California Fair Employment and Housing Act. However,  both the
Company and Employee recognize that there are prior indemnification  agreements,
including  but not  limited to that  certain  agreement  between the Company and
Employee  dated April 14,  1999  (Attachment  4) which  remain in full force and
effect.  The Company  acknowledges  that  nothing in this  Agreement  limits the
Employee's rights or remedies under said  indemnification  agreements  including
but not limited to the Employee's rights as indemnitee to sue for breach of said
agreements  or to  otherwise  seek  enforcement  and/or  interpretation  of said
agreements or to be fully  compensated for all expenses incurred in defending an
action  instituted by the Company to enforce or interpret  said  indemnification
agreements.  Employee  acknowledges  and agrees that this  release,  the release
contained  in  paragraph 7, and the covenant not to sue set forth in paragraph 9
are essential and material terms of the Agreement and that, without such release
and covenant  not to sue, no  agreement  would have been reached by the parties.
Employee  understands and acknowledges the significance and consequences of this
release and this Agreement.


6.  Employees  specifically  waives and releases  Company from all claims he may
have as of the date he signs this Agreement  regarding  claims or rights arising
under the Age  Discrimination  in Employment Act of 1967, as amended,  29 U.S.C.
ss. 621 ("ADEA").  This paragraph does not waive rights or claims that may arise
under the ADEA after the date Employee  signs this  Agreement.  Employee  agrees
that this Agreement  provides benefits to which he is not otherwise entitled and
that Company has advised  Employee to consult an attorney  prior to signing this
Agreement.  Employee  has been  provided  twenty-one  (21) days within  which to
consider  whether he should sign this Agreement and waive and release all claims
and rights  arising under the ADEA.  Employee shall have seven days within which
to revoke  this  Agreement  and this  Agreement  shall not become  effective  or
enforceable until that revocation period has expired.

7. It is understood  and agreed that this is a full and final  release  applying
not only to all claims as defined in  paragraphs  6, 7 and 9 that are  presently
known,  anticipated or disclosed to Employee,  but also to all claims as defined
in paragraphs 6, 7 and 9 that are presently known, unknown,  unanticipated,  and
undisclosed to Employee. With the exception of prior indemnification agreements,
including  but not  limited to that  certain  agreement  between the Company and
Employee  dated April 14,  1999  (Attachment  4) which  remain in full force and
effect,  Employee  hereby  waives any and all rights or benefits that he may now
have,  or may in the  future  have,  under the terms 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.

8. To the maximum extent permitted by law,  Employee  covenants not to sue or to
institute or cause to be  instituted  any action in any federal,  state or local
agency or court  against  any of the  Released  Parties,  for any of the  claims
released  in  paragraphs  6 and 7 of this  Agreement  which arise out of actions
prior  to the  signing  of this  release.  Nothing  in this  Agreement  shall be
construed as for closing the Employee from instituting action for causes such as
defamation that occur subsequent to the signing of this Agreement.

9.  Employees and Company agree that neither  Employee nor the Released  Parties
admit liability for, or violation of, any contract,  any federal, state or local
statute or regulation, or any right protected under the common law.

10.  Employee  acknowledges  that he (a) fully  understands his right to discuss
this  Agreement  with his private  attorney,  (b) has  carefully  read and fully
understands  this entire  Agreement,  and (c) is voluntarily  entering into this
Agreement.

11. It is intended that the  provisions of this  Agreement  shall be enforced to
the fullest extent  permissible  under the laws and public  policies  applied in
each  jurisdiction  in which  enforcement  is  sought.  The  provisions  of this
Agreement  shall be construed in accordance  with the internal laws of the State
of  California.  In the event that any paragraph,  subparagraph  or provision of
this Agreement shall be determined to be partially  contrary to governing law or
otherwise  unenforceable,  the  paragraph,  subparagraph,  or provision and this
Agreement  shall be enforced to the maximum extent  permitted by law, and if any
paragraph, subparagraph or provision of this Agreement shall be determined to be
totally  contrary to  governing  law or  otherwise  totally  unenforceable,  the
paragraph,  subparagraph,  or provision shall be severed and disregarded and the
remainder of this Agreement shall be enforced to the maximum extent permitted by
law.

12.  The  parties  agree  that  (except  in  connection   with  required  public
disclosure,  in connection  with tax reporting,  or pursuant to legal process in
any legal action to enforce the terms of this Agreement) they, their agents, and
their family members, directors, officers, employees, and other Released Parties
shall keep  confidential  the terms of this Agreement.  Employee and the Company
further  agree not to disparage in the future  either the Employee or any of the
Released Parties.

13. For one year following Employee's signing of this Agreement,  Employee shall
not and shall not cause or facilitate  any other person to solicit or enter into
an  agreement  for  employment  or  consulting,  joint  venture  or  partnership
relationship  or agreement  with anyone who is an employee or  consultant of the
Company.  This shall not limit  Employee from (a) continuing  existing  business
relationships  or agreements or (b) having such a relationship or agreement with
anyone who is or has been an employee or  consultant of the Company which is not
inconsistent  with  on-going  performance  of  the  employee's  or  consultant's
responsibilities and obligations to the Company.

14.  Employee  understands  and agrees that in the course of his employment with
Company, he has acquired  confidential  information and trade secrets concerning
the  operations  of  Company,  Company's  owners,  subsidiaries  and  affiliates
(collectively  the  "Companies"),  including,  but not limited  to,  information
relating to the  organization,  employment  policies,  compensation  and benefit
plans,  and  personnel  and  any  data,  formulae,  specifications,  proprietary
knowledge or  information,  customer  list,  marketing  strategies,  pricing and
credit policies,  trade secrets,  inventions or processes,  owned,  developed or
used  in  the  course  of   Company's   business   (collectively   "Confidential
Information").  Employee  covenants  and agrees  that he will not  disclose  any
Confidential Information which is not available to the general public.

15.  Employee agrees that this Agreement  constitutes  the entire  understanding
between the parties with  reference to the subject  matter of this Agreement and
all prior negotiations and understandings,  verbal or written,  between Employee
and Company, relating to the items and things referred to in this Agreement have
been merged herein.

16. Any and all  disputes  arising  out of or in any way  related to  Employee's
employment with, or separation from, Company, as well as any and all disputes or
claims  arising  out of or in any  way  related  to this  Agreement,  including,
without limitations,  fraud in the inducement of this Agreement,  or relating to
the general validity or enforceability of this Agreement,  shall be submitted to
final and binding  arbitration before an arbitrator of the American  Arbitration
Association,  San Francisco,  California,  in accordance  with the rules of that
body governing  commercial  disputes,  and prevailing party shall be entitled to
reasonable  costs and  attorneys'  fees.  Judgment on the award  rendered by the
arbitrator may be entered in any court having jurisdiction thereof.

17. The parties hereto agree that if any covenant, paragraph or clause contained
in this Agreement, other than paragraphs 6, 7 and 9 is declared illegal, null or
void,  or against  public  policy,  for any  reason,  the  remaining  covenants,
paragraphs or clauses contained in this Agreement shall not be affected thereby.

18. Each  reference to the Company  herein shall  include all  subsidiaries  and
affiliates of the Company.

19.  The  Company  and  Employee  agree not to  disparage  each other in any way
whatsoever



Executed at San Francisco, California, this the ______ day of January, 2001.



SoftNet Systems, Inc.


Garrett J. Girvan
Chairman and CEO




Accepted and Agreed to:




Lawrence B. Brilliant, M.D.