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                                                                    EXHIBIT 10.1



                        SEPARATION AGREEMENT AND RELEASE

        THIS SEPARATION AGREEMENT AND RELEASE (the "Agreement") is entered into
by Jiri Nechleba (hereinafter referred to as "Employee") and INTERLINQ Software
Corporation, its officers, directors, and managers (hereinafter referred to as
"INTERLINQ").

                                    RECITALS

        A. Employee has been employed by INTERLINQ, and Employee's employment at
INTERLINQ will terminate on March 31, 2001, or earlier if requested by
INTERLINQ's Board of Directors (the "Termination Date").

        B. INTERLINQ wishes to offer Employee a separation package in exchange
for Employee's agreement clarifying and resolving any disputes that may exist
between Employee and INTERLINQ arising out of the employment relationship and
the ending of that relationship, and any continuing obligations of the parties
to one another following the end of the employment relationship.

        C. Each of the undersigned parties to this Agreement has had ample
opportunity to review the facts and law relevant to this issue, has consulted
fully and freely with competent counsel of its choice if desired, and has
entered this Agreement knowingly and intelligently without duress or coercion
from any source. Employee has had a reasonable time in which to consider whether
he/she wished to sign this Agreement.

                                   AGREEMENTS

        NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises contained below, it is agreed as follows:

        1.     EMPLOYMENT:  ENDING DATE AND RESPONSIBILITIES

        Employee's employment with INTERLINQ will end on March 31, 2001. From
the present time until the termination date, Employee agrees to serve as
President and CEO of INTERLINQ, reporting to Bob Gallagher as Chairman of the
Board. Employee agrees to resign as president and CEO prior to the Employment
Termination Date, if requested to do so by the INTERLINQ Board. After that date,
Employee will have no further employment duties to INTERLINQ; except Employee
will continue to serve on the INTERLINQ Board of Directors through his currently
elected term which expires when his successor is elected and qualified at
INTERLINQ'S 2001 Annual Meeting of Shareholders in November 2001 (the "Director
Termination Date"). Subject to Section 4 of this agreement, Employee agrees to
resign earlier than the Director Termination Date if requested to do so by the
INTERLINQ Board.

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        2.     PAYMENTS BY EMPLOYER

        In exchange for the promises contained in paragraph one above and six
below, INTERLINQ will pay Employee one years severance. The severance will be
paid bi-weekly following Termination Date. If Employee begins full-time
employment at any time during the severance year, the remaining severance
payments will be terminated. During the severance year, Employee will continue
to receive medical benefits consistent with the company's plan. The severance
payment will begin within seven days following the Employee Termination Date and
will be subject to customary tax and other withholdings. This provision shall
not apply to either consulting work performed by Employee (unless such
consulting work is on a full time basis for the benefit of one employer) or if
Employee starts his own business.

        3.     VALID CONSIDERATION

        Employee and INTERLINQ agree that the offer of compensation by INTERLINQ
to Employee described in the preceding paragraph is not required by any statute,
regulation or ordinance, and is offered by INTERLINQ solely as consideration for
this Agreement. If Employee fails to abide by the terms of this Agreement,
INTERLINQ may elect, at its option and without waiver of other rights or
remedies it may have, not to pay or provide any unpaid severance payments or
benefits, and to seek to recover previously paid severance pay, incentive or
non-qualified stock options granted and benefits paid.

        4.     STOCK OPTIONS

        For purposes of Section 5.8 "Termination of Relationship" of
INTERLINQ's 1993 Stock Option Plan, Employee's relationship with INTERLINQ will
be deemed to terminate on the Director Termination Date. Accordingly, in
addition to any options that vest prior to and including the Employment
Termination Date, Employee's options will continue to vest between the
Employment Termination Date and the Director Termination Date. The termination
of Employee's employment with INTERLINQ will not be deemed to have been a
"termination for cause" as such term is defined in Section 5.8 of the 1993
Stock Option Plan. Following the Director Termination Date, Employee's
outstanding options will be treated in accordance with the terms of INTERLINQ's
1993 Stock Option Plan. Employee acknowledges and agrees that under the terms
of the stock options granted to Employee to purchase shares of INTERLINQ's
Common Stock under INTERLINQ's 1993 Stock Option Plan, no options will vest
after the Director Termination Date. Except as so stated, nothing in this
Agreement affects shares already vested pursuant to INTERLINQ's Stock Option
Plan. If the Board requests Employee to resign from the INTERLINQ Board prior
to the Director Termination Date, Employee will do so with the understanding
that Employee's stock options granted under INTERLINQ's 1993 Stock Option Plan
will continue to be treated according to the provisions of INTERLINQ's 1993
Stock Option Plan as if Employee had remained on the Board until the Director
Termination Date.


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        5.     REAFFIRMATION OF CONFIDENTIALITY AND INVENTIONS AGREEMENT

        Employee expressly reaffirms and incorporates herein as part of this
Agreement the Confidentiality and Inventions Agreement, which Employee signed as
part of his/her employment with INTERLINQ and which shall remain in full effect.

        6.     GENERAL RELEASE OF CLAIMS

        Employee expressly waives any claims against INTERLINQ (including, for
purposes of this paragraph 6, all officers, directors, stockholders, managers,
employees, agents, investors, and representatives) and releases INTERLINQ
(including its officers, directors, stockholders, managers, employees, agents,
investors, and representatives) from any claims, whether known or unknown, which
existed or may have existed at any time up to the date of this Agreement,
including claims related in any way to Employee's employment with INTERLINQ or
the ending of that relationship. This release includes, but is not limited to,
any claims for wages, bonuses, employment benefits, stock options, or damages of
any kind whatsoever, arising out of any common law torts, arising out of any
contracts, express or implied, any covenant of good faith and fair dealing,
express or implied, any theory of wrongful discharge, any theory of negligence,
any theory of retaliation, any theory of discrimination or harassment in any
form, any legal restriction on INTERLINQ's right to terminate employees, or any
federal, state, or other governmental statute, executive order, or ordinance,
including, without limitation, Title VII of the Civil Rights Act of 1964 as
amended, the Civil Rights Act of 1991, the Civil Rights Act of 1866, 42 U.S.C.
Section 1981, the Americans with Disabilities Act, the Age Discrimination in
Employment Act, the Older Workers Benefit Protection Act, the Family and Medical
Leave Act, the Employee Retirement Income Security Act, the Washington Law
Against Discrimination, or any other legal limitation on or regulation of the
employment relationship. Employee agrees to indemnify and hold INTERLINQ
harmless from and against any and all loss, costs, damages, or expenses,
including, without limitation, reasonable attorneys' fees incurred by INTERLINQ
or arising out of any breach of this Agreement by Employee or resulting from any
representation made herein by Employee was false when made. This waiver and
release shall not preclude either party from filing a lawsuit for the exclusive
purpose of enforcing its rights under this Agreement.

        Employee represents that Employee has not filed any complaints, charges
or lawsuits against INTERLINQ with any governmental agency or any court, and
agrees that Employee will not initiate, assist or encourage any such actions,
except as required by law. Employee further agrees that if a commission, agency,
or court



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assumes jurisdiction of such claim, complaint or charge against INTERLINQ on
behalf of Employee, Employee will request the commission, agency or court to
withdraw from the matter.

        Employee represents and warrants that he/she is the sole owner of the
actual or alleged claims, rights, causes of action, and other matters which are
released herein, that the same have not been assigned, transferred, or disposed
of in fact, by operation of law, or in any manner, and that he/she has the full
right and power to grant, execute and deliver the releases, undertakings, and
agreements contained herein.

        7.     NO ADMISSION OF WRONGDOING

        This Agreement shall not be construed as an admission by Employer of any
wrongful act, unlawful discrimination, or breach of contract, and Employer
specifically disclaims any liability to or discrimination against Employee or
any other person.

        8.     RETURN OF PROPERTY

        Employee confirms that Employee has or will immediately, upon the
Termination Date, return to Employer all files, memoranda, records, credit
cards, pagers, computers, computer files, passwords and pass keys, card keys, or
related physical or electronic access devices, and any and all other property
received from Employer or any of its current or former employees or generated by
Employee in the course of employment.

        9.     BREACH OR DEFAULT

        In the event of any breach or default under this Agreement by Employee,
INTERLINQ may suffer irreparable damages and have no adequate remedy at law. In
the event of any threatened or actual breach or default, INTERLINQ shall be
entitled to injunctive relief, specific performance and other equitable relief.
The rights and remedies of INTERLINQ under this paragraph are in addition to,
and not in lieu of, any other right or remedy afforded to INTERLINQ under any
other provision of this Agreement, by law, or otherwise. Any party's failure to
enforce this Agreement in the



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event of one or more events that violate this Agreement shall not constitute a
waiver of any right to enforce this Agreement against subsequent violations.

        10.    SEVERABILITY

        The provisions of this Agreement are severable, and if any part of it is
found to be unlawful or unenforceable, the other provisions of this Agreement
shall remain fully valid and enforceable to the maximum extent consistent with
applicable law.

        11.    ENTIRE AGREEMENT

        This Agreement sets forth the entire understanding between Employee and
INTERLINQ and supersedes any prior agreements or understandings, express or
implied, pertaining to the terms of Employee's employment with INTERLINQ and the
employment relationship. Employee acknowledges that in executing this Agreement,
Employee does not rely upon any representation or statement by any
representative of INTERLINQ concerning the subject matter of this Agreement,
except as expressly set forth in the text of the Agreement. No modification or
waiver of this Agreement will be effective unless evidenced in a writing signed
by both parties.

        12.    GOVERNING LAW

        This Agreement will be governed by and construed exclusively in
accordance with the laws of the State of Washington without reference to its
choice of law principles. Any disputes arising under this Agreement shall be
brought in a court of competent jurisdiction in the State of Washington.

        13.    KNOWING AND VOLUNTARY AGREEMENT

        EMPLOYEE AGREES THAT EMPLOYEE HAS CAREFULLY READ AND FULLY UNDERSTANDS
ALL ASPECTS OF THIS AGREEMENT INCLUDING THE FACT THAT THIS AGREEMENT RELEASES
ANY CLAIMS THAT EMPLOYEE MIGHT HAVE AGAINST EMPLOYER. EMPLOYEE AGREES THAT
EMPLOYEE HAS NOT RELIED UPON ANY REPRESENTATIONS OR STATEMENTS NOT SET FORTH
HEREIN OR MADE BY EMPLOYER'S AGENTS OR REPRESENTATIVES. FINALLY, EMPLOYEE AGREES
THAT EMPLOYEE HAS BEEN ADVISED TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING
THE AGREEMENT, AND THAT EMPLOYEE HAS EITHER DONE SO OR KNOWINGLY WAIVED THE
RIGHT TO DO SO, AND NOW ENTERS INTO THIS AGREEMENT WITHOUT DURESS OR COERCION
FROM ANY SOURCE. EMPLOYEE AGREES THAT HE HAS BEEN PROVIDED THE OPPORTUNITY TO
CONSIDER FOR TWENTY-ONE (21) DAYS WHETHER TO ENTER INTO THIS AGREEMENT, AND HAS
VOLUNTARILY CHOSEN TO ENTER INTO IT ON THIS DATE. EMPLOYEE MAY REVOKE THIS
AGREEMENT FOR A PERIOD OF SEVEN (7) DAYS FOLLOWING THE EXECUTION



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OF THIS AGREEMENT; THIS AGREEMENT SHALL BECOME EFFECTIVE FOLLOWING EXPIRATION OF
THIS SEVEN (7) DAY PERIOD.

        IN WITNESS WHEREOF, the parties have executed this Agreement as of the
dates indicated below.



INTERLINQ SOFTWARE CORPORATION               EMPLOYEE


By: /s/ Robert Gallagher                      /s/ Jiri Nechleba
Its: Chairman

Dated:  2/7/01                               Dated:     1/30/01

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