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                                                                    Exhibit 10.1

                         SEVERANCE AND RELEASE AGREEMENT


        THIS SEVERANCE AND RELEASE AGREEMENT ("Agreement") is between Elizabeth
Hall ("Employee") and N2H2, INC. ("Employer") and is in consideration of their
mutual undertakings as set forth in this Agreement.

        Because the parties to this Agreement wish to set forth clearly the
terms and conditions of Employee's departure from his/her employment, they agree
as follows:

1.      This Agreement shall not be construed as an admission by Employee of any
        misconduct or impropriety. Additionally, this Agreement shall not be
        construed as an admission by Employer that it acted wrongfully with
        respect to Employee.

2.      Employee's last day of employment will be April 17, 2002.

3.      Employer will pay Employee as follows:

        3.1    Employer will pay Employee for all wages earned through the
               effective date identified in paragraph 2.

        3.2    Employer will pay Employee for all Employee's earned but unused
               vacation on Employee's final paycheck on April 30, 2002.

        3.3    If Employee is generally compensated in all or in part by
               commissions, Employer will pay Employee his/her quarterly
               commissions through March 31, 2002, if any due, consistent with
               the Sales Compensation plan dated November 1, 2001.

        3.4    If Employee has vested stock option rights, the exercise of those
               rights shall be governed by the terms of any applicable Stock
               Option Agreement or granting documents and shall not be affected
               by this Severance and Release Agreement.

        Employee expressly agrees that he/she is not otherwise entitled to any
        other compensation in the way of base salary, bonus, incentive
        compensation, separation pay, stock options or otherwise.

4.      Employer will pay Employee six weeks' severance pay (based on base pay +
        non-recoverable draw) in the amount of Fifteen Thousand Nine Hundred
        Twenty Three Dollars and Eight Cents ($15,923.08), less all lawful or
        required deductions, upon expiration of seven days following the
        execution of this Agreement.

5.      Until April 30, 2002, Employer will continue its contributions towards
        Employee's group medical and dental insurance. After April 30, 2002,
        Employee may elect COBRA medical and dental plan continuation coverage
        for himself/herself and/or his/her covered dependents for the time
        period and under such conditions as are provided by COBRA. If Employee
        elects COBRA effective May 1, 2002, then Employer will pay the COBRA
        premium for Employee and Employee's eligible dependents for up to two
        months. After July 1, 2002, Employee must self-pay to continue his/her
        COBRA coverage and coverage for any dependants.


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6.      If Employee files for unemployment compensation benefits, Employer will
        confirm to the Washington State Employment Security Department that
        Employee and Employer agreed to a mutual resignation and Employer will
        not contest Employee's eligibility for unemployment compensation.

7.      Employee will direct all requests for references to Employer's Human
        Resources Department, which will confirm the dates of Employee's
        employment and his/her job title.

8.      Employer and Employee may acknowledge to persons within and outside the
        company that their parting was on mutually satisfactory terms. The
        parties will use their best efforts, however, to keep the terms of this
        Agreement confidential. Employee may disclose the terms of this
        Agreement to his/her immediate family. Employer may disclose the terms
        of this Agreement to its officers, directors, trustees, or managers who
        have a need to know. Either party may disclose the terms of this
        Agreement to their respective attorneys, accountants, financial
        advisers, auditors, or similar advisors, or in response to legal process
        or government requests. Third persons who are authorized to be informed
        of the terms of this Agreement shall in turn be advised of this
        confidentiality provision and requested to maintain it.

        8.1.   Employee also agrees that though he/she is no longer employed by
               Employer he/she will continue to respect the confidences of
               Employer, its officers, directors, or employees and its clients,
               in accordance with the "N2H2 Mutual Non-Disclosure Agreement and
               Employee Intellectual Property Agreement" which he/she signed on
               November 5, 2001.

9.      Employee shall immediately review all personal items and return to
        Employer all company-owned property in his/her possession or under
        his/her control, including, but not limited to, all keys or card keys to
        company buildings or property, all company-owned equipment, all company
        software, documents and papers (such as reports, blueprints, business
        plans and files), credit cards, cell phones, and all other Employer
        property. Employee shall return both originals and copies of such
        property and shall not use or transfer such property to others.

10.     In exchange for the severance pay and other benefits contained in this
        Agreement, which are in addition to the benefits Employee is otherwise
        entitled to receive, Employee and his/her successors and assigns forever
        release and discharge Employer, any of Employer's parent, subsidiary or
        related companies, any Employer-sponsored employee benefit plans in
        which Employee participates, and all of their respective officers,
        directors, trustees, agents, stockholders, employees, employees'
        spouses, and all of their successors and assigns (collectively
        "Releasees") from any and all employment-related claims, actions, causes
        of action, rights, or damages, including costs and attorneys' fees
        (collectively "Claims") which Employee may have on behalf of
        himself/herself, known, unknown, or later discovered which arose prior
        to the date Employee signs this Agreement.

        10.1.  This release includes but is not limited to, any Claims under any
               local, state, or federal laws prohibiting discrimination in
               employment, including without limitation the Civil Rights Acts,
               the Americans with Disabilities Act, the Age Discrimination in
               Employment Act or the Washington State Law Against
               Discrimination, or Claims under the Employee Retirement Income
               Security Act, any claims under


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               the Family Medical Leave Act, or Claims alleging any legal
               restriction on Employer's right to terminate its employees, or
               personal injury Claims, including without limitation wrongful
               discharge, breach of contract, defamation, tortious interference
               with business expectancy, or infliction of emotional distress.

        10.2.  Employee represents that he/she has not filed any Claim against
               Employer or its Releasees, and that he/she will not do so at any
               time in the future concerning Claims released in this Agreement;
               provided, however, that this will not limit Employee from filing
               a Claim to enforce the terms of this Agreement.

11.     The parties pledge that they will take no action from this date forward
        that might interfere with the other's activities or damage the other's
        reputation. Prohibited actions would include, but not be limited to,
        private or public comments, statements, or writings critical,
        disparaging, or derogatory of the other party or the Releasees, or
        complaints filed against the other party or the Releasees with any
        regulatory agency.

12.     Employee understands and acknowledges the significance and consequences
        of this Agreement, admits that it is voluntary and that it has not been
        given as a result of any coercion, and expressly confirms that it is to
        be given full force and effect according to all of its terms, including
        those relating to unknown Claims. Employee was hereby advised of his/her
        right to seek the advice of an attorney prior to signing this Agreement.
        Employee acknowledges that he/she has signed this Agreement only after
        full reflection and analysis.

13.     Employee has a period of at least 7 days in which to consider this
        Agreement, but may sign it in less than 7 days at his/her option.

14.     Employer will pay the severance payment as promised in paragraph 4 to
        the Employee on the eighth (8th) day after Employee's execution of this
        Agreement.

15.     If any of the provisions of this Agreement are held to be invalid or
        unenforceable, the remaining provisions will nevertheless continue to be
        valid and enforceable.

16.     This Agreement and its attachments represents and contains the entire
        understanding between the parties in connection with its subject matter.
        All prior written or oral agreements or understandings are merged into
        and superseded by this Agreement. Employee acknowledges that in signing
        this Agreement, he/she has not relied upon any representation or
        statement not set forth in this Agreement made by Employer or any of its
        representatives.

17.     This Agreement is made and shall be construed and performed under the
        laws of the State of Washington.


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PLEASE READ THIS AGREEMENT CAREFULLY. THIS SEVERANCE AND RELEASE AGREEMENT
INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.




Dated:      4/15/02                            Dated:  4/17/02
      --------------------------                     ---------------------------



N2H2, INC.:                                    Elizabeth Hall:



By    /s/ Howard P. Welt                       /s/ Elizabeth Hall
      --------------------------               ---------------------------------

Its    CEO & President
      --------------------------


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