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                                                                    Exhibit 10.7
                                                                    ------------

                              SEPARATION AGREEMENT

         This Separation Agreement ("Agreement"), dated this 16th day of October
2001, is entered into by and between David I. Perl ("Perl") and
ProsoftTraining.com ("Company").

WHEREAS: Perl has an employment agreement with the Company with an effective
date of February 1, 2000.

WHEREAS: The Company and Perl wish to terminate that employment agreement in
order to allow the Company to reduce expenses effective October 31, 2001. The
reason for the separation is not for "cause" as defined in the employment
agreement.

WHEREAS: As part of the employment agreement Perl has he is entitled to thirty
days notice of termination and a cash settlement.

WHEREAS: Perl is entitled upon termination of his status of employment to
immediate vesting of all unvested options to purchase common stock of the
Company.

WHEREAS: Perl is entitled to other remedies under the employment contract.

WHEREAS: The parties wish to enter into an agreement to alter and modify the
remedies and compensation due to Perl on termination of the employment agreement
and to create new rights and remedies including a Consultant Agreement

WHEREAS: The parties wish to memorialize the agreed terms and obligations on
Separation.

         NOW THEREFORE, in consideration of the payments set forth below and the
mutual promises contained herein, the parties agree as follows:

         1.   Payment of Salary and Vacation. The Company agrees to pay to Perl
              ------------------------------
              all wages due through the last day of employment, including
              accrued and unused vacation time.


         2.   Payment of Settlement. In addition, and in consideration for this
              ---------------------
              Agreement, the Company agrees to pay Perl separation benefits
              consisting of cash compensation of $173,500, payable 50% on
              January 2, 2002, 35% on February 1, 2002, and 15% on May 1, 2001.
              The Company will also pay additional compensation consisting of
              Common Stock of ProsoftTraining.com (NASDAQ, POSO) equaling
              $100,000 worth of stock issued on the date this agreement is
              executed. The Company agrees to pay all taxes resulting from the
              issuance of the securities. The issuance of the Stock is subject
              to a resolution from the Board of Directors of the Company
              authorizing the issuance of shares of stock as part of this
              settlement.

         3.   Registration of Stock Securities. The Company shall prepare and
              --------------------------------
              file a registration statement covering the Stock Securities issued
              to Perl as set forth in section 2 above, and shall use its best
              efforts to cause each such registration statement to become and
              remain effective prior to January 11, 2002, and in any event the
              Company agrees to register such shares in the next registration
              statement issued by the Company.

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         4.   Lock up of stock, and terms under which Stock Options may be
              ------------------------------------------------------------
              exercised. Perl agrees that he shall limit his sale of any of the
              ---------
              common stock issued as set forth in section 2 above so as to sell
              no more than 20% of the total amount of stock granted in any one
              calendar month. Perl shall have an affirmative obligation to
              notify the Company within ten (10) days of having sold any stock.
              Perl agrees that he shall not exercise and sell more than 10% of
              the total vested options as set forth in section 7 below in any
              one calendar month during the first twelve months following the
              effective date of this Agreement, and no more than 20% of the
              total vested options in any one calendar month during the
              thirteenth through eighteenth months following the effective date
              of this Agreement. This provision shall be of no further effect
              after the eighteenth month following the effective date of this
              Agreement or if there has been a change of control of the Company
              as defined in the Consultant Agreement. In addition if the Company
              terminates the Consultant Agreement referenced herein this
              provision shall be of no further effect, nothing herein however
              shall be construed to release Perl from these restrictions on the
              sale of stock and the exercise of options if he terminates the
              Consultant Agreement. Vested options which expire during the term
              of this Agreement shall be exempt from the provisions of the
              lock-up in this section 4 beginning thirty (30) days prior to
              scheduled expiration of said options.

         5.   Unpaid Expenses. The Company agrees to pay Perl all business
              ---------------
              expenses incurred by Perl during his employment for which he is
              entitled.


         6.   Consultant Agreement. As further consideration, the Company agrees
              --------------------
              to enter into a consulting agreement with Perl for two years,
              commencing November 1, 2001, in a form substantially similar to
              the draft agreement attached hereto as Exhibit "A".


         7.   Vesting of Rights to Purchase Common Stock of the Company. The
              ---------------------------------------------------------
              Company agrees that Perl has either previously vested, or vested
              as a consequence of the termination of the employment agreement
              the following options: 110,000 options (which is the net of the
              original grants less options exercised) granted on October 23,
              1998 at a strike price of $1.15, 75,000 options granted on July 2,
              1999 at a strike price of $2.25, and 200,000 options granted on
              June 15, 2001 at a strike price of $1.25. Perl as part of this
              settlement agrees to waive and disclaim any interest whatsoever to
              the following options, which are also vested: 36,000 options
              granted on April 17, 2000 at a strike price of $11.00 and 164,000
              options granted on November 28, 2000 at a strike price of $8.81.
              Perl further disclaims and releases any rights he may have to any
              additional options awarded to him by the Compensation Committee on
              June 15, 2001. The Company agrees that it will treat the vested
              options, which Perl has with the most favorable treatment it gives
              to current employees or Directors, provided however this shall
              only apply if such treatment shall have a non-material impact on
              the Profit and Loss for the Company.


         8.   Insurance Benefits. The Company agrees to continue to provide to
              ------------------
              Perl the same PPO (Health) and DMO (Dental) insurance, which is
              provided to current employees for a period not to exceed two
              years. Perl will pay the then current standard employee
              contribution for said insurance. The Company shall not be
              obligated to provide insurance once Perl has accepted full time
              employment and is eligible for coverage under a policy that is
              substantially similar under that employer's policy.


         9.   Computer Equipment. Company is to transfer title to the Laptop
              ------------------
              Computer and associated equipment and software, which Perl is
              currently using as an employee of the Company.


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         10.  Outplacement Assistance. Company agrees to pay Outplacement
              -----------------------
              Assistance, which Perl may request in an amount not to exceed
              $2,000.00. Such fee(s) shall be paid directly to the provider(s).


         11.  General Release. In consideration of the above payments by Company
              ---------------
              and other valuable consideration, Perl for himself and his heirs,
              assigns, and personal representatives agree upon payment of all
              consideration required herein to forever waive and release any and
              all claims, demands, rights, causes of action, or grievances of
              any kind or character which he may have accrued pursuant to common
              law, federal law, state laws including without limitation any and
              all anti-discrimination statutes, laws and ordinances, and local
              laws and regulations. Perl realizes there are many laws and
              regulations prohibiting employment discrimination pursuant to
              which he may have rights or claims. These include Title VII of the
              Civil Rights Act of 1964, as amended; the Age Discrimination in
              Employment Act of 1967, as amended; The Americans with
              Disabilities Act, as amended; the National Labor Relations Act, as
              amended; 42 U.S. C. 1981; and the state human rights laws. Perl
              also understands that there are other statutes and laws of
              contract and tort otherwise related to his employment. Perl
              intends to waive and release any rights he may have under these
              other laws. Said release shall run to and be in favor of, and
              shall forever protect Company, and its parent and subsidiaries, as
              well as all officers, directors, and agents of Company and its
              parent and subsidiaries. Said release shall be a general full and
              complete waiver and shall be applicable to any and all such
              claims, demands, rights, wages, benefits, employment, causes of
              action, or grievances, whether claims for psychic injuries or any
              other injuries, which may be brought before an administrative
              agency, a court, a tribunal, an arbitrator, or otherwise, whether
              in law or equity, contract, or tort, and which are related,
              directly or indirectly, to Perl's employment or the termination of
              employment with Company. In turn, Company hereby releases Perl, as
              well as his heirs, assigns, and personal representatives, from any
              and all claims, which are related, directly or indirectly, to
              Perl's employment. A copy of the Mutual General Release is
              attached hereto as Exhibit "B". The Release shall not be deemed to
              be effective against Perl if the Company fails to make the
              payments due hereunder.


         12.  Disparagement. Each party agrees not to defame or in any way
              -------------
              disparage the other. Perl agrees not to engage in any activities
              which may be detrimental, directly or indirectly, to the interests
              of Company, whether such interests be property, reputation, or
              otherwise.


         13.  Confidential Information. Perl acknowledges that during the term
              ------------------------
              of his employment with Company, Company disclosed confidential
              information to Perl, which Company deems to be valuable and
              proprietary. "Confidential information" as used herein shall mean
              any information of or about Company (or Company's clients or
              customers, or the customers' or any vendors), which has been
              disclosed to Perl or made available to him, which is not publicly
              available and which is maintained by Company in confidence.
              Confidential Information shall include information of or about
              Company in both oral and written form, which is maintained by
              Company in confidence including, but not limited to, information
              about Company's finances, personnel, products, clients, or
              strategic plans. Perl agrees not to make public or disclose any
              Confidential Information, except as expressly permitted in writing
              by Company. Perl agrees that in the event of any violation or
              threatened violation of this Agreement, monetary damages would
              provide an inadequate remedy so that Perl agrees, in addition to
              all other rights provided by law, that Company shall have the
              right to seek an injunction or equivalent remedy issued against
              the Perl to prevent violations or further violations of this
              provision. This provision shall not be binding on Perl in the
              event the Company publicly discloses, or this information becomes
              public other than by disclosure by Perl.


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         14.  Non-Competition Covenant Not to Compete. In consideration for the
              ---------------------------------------
              payments to be made under this Agreement, and for the
              consideration contained in the Consultant Agreement, Perl shall,
              for the lesser of (a) two years from the effective date of this
              Agreement, or (b) for 60 days after the termination of the
              Consultant Agreement by the Company without cause, either alone or
              in conjunction with any other person, refrain from directly or
              indirectly through its present or future affiliates:

                                    (i)   Employing, engaging or seeking to
                  employ or engage any person who within the prior twenty-four
                  (24) months had been an officer or employee of the Company,
                  unless said employee was involuntarily separated from the
                  Company.

                                    (ii)  Causing or attempting to cause (A) any
                  client, customer or supplier of the Company to terminate or
                  materially reduce its business with the Company, or (B) any
                  officer, employee or consultant of the Company to resign or
                  sever a relationship with the Company;

                                    (iii) Disclosing (unless compelled by
                  judicial or administrative process) or using any confidential
                  or secret information relating to the Company or any of their
                  respective clients, customers or suppliers;

                                    (iv)  Participating or engaging in (other
                  than through the ownership of five percent (5%) or less of any
                  class of securities registered under the Securities Exchange
                  Act of 1934, as amended), or otherwise lending assistance
                  (financial or otherwise) to any person participating or
                  engaged in, any of the lines of business in which the Company
                  is participating or engaged on the date of termination in any
                  jurisdiction in which the Company participates or engages in
                  such line of business on the date of termination.

              The parties hereto recognize that the laws and public policies of
              the various states of the United States may differ as to the
              validity and enforceability of covenants similar to those set
              forth in this Section. It is the intention of the parties that the
              provisions of this Section be enforced to the fullest extent
              permissible under the laws and policies of each jurisdiction in
              which enforcement may be sought, and that the unenforceability (or
              the modification to conform to such laws or policies) of any
              provisions of this Section shall not render unenforceable, or
              impair, the remainder of the provisions of this Section.
              Accordingly, if any provision of this Section shall be determined
              to be invalid or unenforceable, such invalidity or
              unenforceability shall be deemed to apply only with respect to the
              operation of such provision in the particular jurisdiction in
              which such determination is made and not with respect to any other
              provision or jurisdiction.

              The parties hereto acknowledge and agree that any remedy at law
              for any breach of the provisions of this Section would be
              inadequate, and Employee hereby consents to the granting by any
              court of an injunction or other equitable relief, without the
              necessity of actual monetary loss being proved, in order that the
              breach or threatened breach of such provisions may be effectively
              restrained.

              The Company and the Employee acknowledge that the foregoing
              restrictive covenants in this Section 14 are essential elements of
              this Agreement and that, but for the agreement of the Employee to
              comply with those covenants, the Company would not have agreed to
              enter into this Agreement. The covenants by the Employee shall be
              construed as agreements independent of any other provision in this
              Agreement.

         15.  Confidentiality. Perl represents and agrees that he will keep the
              ---------------
              terms, amount and facts of this Agreement completely confidential,
              and that he will not hereinafter disclose any information relating
              to this Separation Agreement to anyone, including but not limited
              to, any past, present or prospective

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              employee of the Company, the media, or anyone else, unless such
              information has previously been made public by the Company.

         16.  Agreement to Provide Litigation Assistance. Perl agrees that he
              ------------------------------------------
              shall on reasonable notice provide information and assistance
              necessary regarding any litigation the Company may be or is
              potentially involved with; this obligation shall survive both the
              term of this agreement and the Consultant Agreement.

         17.  Miscellaneous.
              -------------

                a.  Perl is advised to consult with an attorney prior to
                    executing this Agreement, and Perl acknowledges that he has
                    had an opportunity to do so.

                b.  Perl may revoke this Agreement at any time within seven (7)
                    days following his execution of this Agreement. This
                    Agreement shall not become effective or enforceable until
                    that revocation period has expired; In order to cancel or
                    revoke this Agreement, Perl must deliver to the Director of
                    Human Resources at ProsoftTraining.com a signed letter or
                    other written notice stating that he/she is canceling or
                    revoking this Agreement.

                c.  This Agreement constitutes the sole agreement between the
                    parties and supersedes any and all understandings and
                    agreements made prior hereto. There are no other
                    understandings, representations or agreements between the
                    parties other than those as contained or referenced herein.

                d.  It is understood and agreed that the execution of this
                    Agreement is not to be construed as an admission of any
                    liability on the part of Company; the Company specifically
                    disclaims any wrongdoing of any part or any nature with
                    respect to Perl.

                e.  This Agreement and each of its provisions are binding upon,
                    and inure to the benefit of the parties as well as their
                    respective heirs, executors, administrators, successors
                    and/or assigns.

                f.  All agreements and covenants contained herein are severable.
                    In the event that any of them are held to be invalid by any
                    competent court, this Agreement shall be interpreted as if
                    such invalid agreement or covenants were not contained
                    herein.

                g.  In the event that any action is filed in relation to this
                    Agreement or to the employment relationship between the
                    parties, the prevailing party is entitled to recover all
                    costs and expenses, including reasonable attorneys' fees and
                    expert witness fees, from the other party.

                h.  This Agreement shall be construed under and governed by the
                    state law in which Perl resides, Texas.

         IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.

                David I. Perl

                                        5

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                  __________________________________________________


                  Date:  ___________________________________________



                  "Company"
                  ProsoftTraining.com


                  By:    ___________________________________________

                  Printed or Typed Name:____________________________

                  Date:  ___________________________________________


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