Exhibit 10.1
SEPARATION AGREEMENT

This Separation Agreement (“Agreement”) is entered into by and between Vincent
Rossi (“Employee”) and St. Bernard Software, Inc. and any and all predecessor or
successor entities thereof and its and their affiliates, any and all holding,
parent or subsidiary entities and any predecessor or successor entities thereof,
any other merged entities, and all present, former and future directors,
officers, representatives, agents, principals, administrators, agents, partners
and employees, stockholders, predecessors and successors and/or assigns,
insurers, attorneys, and any fiduciaries of any employee benefits plan (all
collectively referred to as “Employer”). Employee and Employer are hereinafter
collectively referred to as “the Parties”.

1.           Resignation of Employment.  The Parties agree that effective
January 1, 2009 (the “Termination Date”) Employee’s employment with Employer
will end, and Employee will no longer hold any position with Employer or be
employed in any capacity.

2.           Claims and Settlement.  Employee has or may have claims related to
his employment, the termination of his employment, his resignation, (claims
related to his stock options and/or the vesting of such options, breach of his
employment contract, discrimination, retaliation, claims for wages or other
consideration, other breach of contract,) or other claims which have or could be
asserted (“Claims.”)  In consideration of and in return for the covenants and
promises contained in this Agreement, and as full and final settlement to
Employee:

A.    Employee shall receive from Employer, on the next regular payroll date
after Employer receives an affirmation of this release of all claims by Employee
on or after the Termination Date as provided on the last page of this Agreement
or the effective date as defined in Paragraph 20B and 20C, whichever is later,
six (6) months severance based on Employee’s base salary and bonus, totaling
$225,000 (the “Cash Severance”), as well as deferred bonus compensation through
November 30, 2008 in the amount of $137,500 (estimated to be payable in the
second payroll period of January 2009), with appropriate deductions and
withholdings.  The Cash Severance will be payable in accordance with Employer’s
regular payroll practices for a period of six (6) months in the amount of
$18,750 per payroll period (i.e. twice a month) not to exceed in the aggregate
the Cash Severance, with appropriate deductions and withholdings.  In addition,
Employer shall pay Employee and Employee’s dependents’ COBRA health insurance
premiums for six (6) months after the effective date and upon receipt of an
affirmation of this release of all claims by Employee on or after the
Termination Date as provided on the last page of this Agreement. After the
Termination Date, Employee shall have the right to pay for health insurance at
his own expense pursuant to COBRA. Notwithstanding anything herein to the
contrary, the payment of the COBRA health insurance premiums shall immediately
cease when Employee becomes eligible for coverage under another plan. This
severance is separate and apart from, and in addition to, Employee’s final
paycheck and all accrued and unused vacation.

B.    Employee will retain 127,416 stock options at a strike price of $1.90 per
share and 320,000 stock options at a strike price of $1.95 per share. These
stock options exist and are already vested as of the Termination Date.  Employee
shall retain the ability to exercise same for a period of [90] days after the
Termination Date; and
 

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C.    Employee acknowledges that the agreements described under this Paragraph 2
constitute full payment of any and all claims of every nature and kind arising
out of or relating in any way to Employee’s employment by Employer or the
termination thereof, benefits owed, or any other Claims; and

3.           Employee’s Release of All Claims against Employer.

A.    In consideration of the covenants and other benefits described herein,
Employee does hereby unconditionally, irrevocably, and absolutely release and
discharge Employer, and any and all predecessor or successor entities thereof
and its and their affiliates, any and all holding, parent or subsidiary entities
and any predecessor or successor entities thereof, any other merged entities,
and all present, former and future directors, officers, representatives, agents,
principals, administrators, agents, partners and employees, stockholders,
predecessors and successors and/or assigns, insurers, attorneys, and any
fiduciaries of any employee benefits plan from any and all loss, liability,
claims, demands, causes of action or suits of any type, whether in law or in
equity, related directly or indirectly, or in any way connected with any
transaction, affairs, or occurrences between them, including, without
limitation, Employee’s employment with Employer and/or the resignation and/or
termination of said employment (whether known or unknown to Employee and
including any continuing effects of any acts or practices before the date of
execution of this Agreement).  This Agreement specifically applies, without
limitation, to a release of any and all contract or tort claims (including any
claims for breach of employment contract, claims related to stock options and/or
the vesting of such options), breach of the implied covenant of good faith and
fair dealing, claims for wrongful termination, retaliation, employment
discrimination, emotional distress, fraud, misrepresentation, defamation,
interference with prospective economic advantage, failure to pay wages due or
other monies owed, including, without limitation, severance, overtime
compensation, accrued and unused vacation, stock options, any claims under any
stock option agreement to which Employee is a party, and claims arising under
Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act,
the Equal Pay Act, the Fair Labor Standards Act, the Family and Medical Leave
Act, the California Family Rights Act, The Older Workers’ Benefit Protection Act
of 1990, the Age Discrimination in Employment Act, the California Fair
Employment and Housing Act, the Occupational Safety and Health Act, any
applicable California Industrial Wage Orders, all as amended, and any other
local, state or federal law, rule, or regulation relating to or affecting
Employee’s employment by Employer and/or the termination of said
employment.  Nothing in this release is intended to affect Employer’ obligation
to defend and/or indemnify Employee in the event he is sued in his capacity as
an (officer or) employee of Employer for work performed in the course and scope
of his employment.  Nothing in this release is intended to affect Employee’s
right to coverage under the California worker’s compensation laws (although
Employee represents he is not currently aware of any such claim.)
 

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B.     Employee irrevocably and absolutely agrees that he will not prosecute nor
allow to be prosecuted on his behalf, in any administrative agency, whether
federal or state, or in any court, whether federal or state, any claim or demand
of any type related to the matters released above, it being the intention of the
Parties that with the execution by Employee of this Agreement, Employer and any
and all predecessor or successor entities thereof and its and their affiliates,
any and all holding, parent or subsidiary entities and any predecessor or
successor entities thereof, any other merged entities, and all present, former
and future directors, officers, representatives, agents, principals,
administrators, agents, partners and employees, stockholders, predecessors and
successors and/or assigns, insurers, attorneys, and any fiduciaries of any
employee benefits plan will be irrevocably, absolutely, unconditionally, and
forever discharged of and from all obligations to or on behalf of Employee
related in any way to the matters discharged herein.  If Employee should bring
any action arising out of the subject matter covered by this Agreement, Employee
understands and agrees that he will, at the option of Employer, be considered in
breach of this Agreement and shall be required to immediately return any and all
funds received pursuant to this Agreement.  Furthermore, if Employer should
prevail concerning any or all of the issues so presented, Employee shall pay to
Employer all of its costs and expenses of defense, including Employer’s
attorneys’ fees.

4.           Left Intentionally Blank.

5.           Unknown Claims.  Employee understands and agrees that this
Agreement extends to all claims of every nature, known or unknown, suspected or
unsuspected, past or present, and that any and all rights granted to Employee
under Section 1542 of the California Civil Code or any analogous federal law or
regulation are hereby expressly waived.  Section 1542 provides:

“A general release does not extend to claims which the creditor does not know of
or suspect to exist in his or her favor at the time of executing the release,
which if known by him or her must have materially affected his or her settlement
with the debtor.”

Employee certifies that he has read all of this Agreement, including the release
provisions contained herein and the quoted Civil Code section, and that he fully
understands all of the same.

7.           Confidentiality.

A.    The Parties agree and promise that the existence, terms, and conditions of
this Agreement (including, but not limited to, the fact and amount of payment),
and all communications relating to the existence, terms, and conditions of this
Agreement (collectively the “Confidential Matters”), shall not be, and have not
been to the best of their knowledge, described or discussed, or caused to be
described or discussed in any manner, either written or oral, directly or
indirectly, with any person, organization, company or entity other than the
Parties’ respective counsel and/or financial advisors.  EMPLOYEE SPECIFICALLY
AGREES NOT TO DISCLOSE THE TERMS OF THIS AGREEMENT TO OTHER CURRENT OR FORMER
EMPLOYEES OF EMPLOYER.  Employer may report this settlement to the extent
necessary to comply with any public reporting requirements.
 

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B.    Except as required by law, or any SEC rules and regulations, the Parties
agree and promise to avoid any and all publicity with respect to this Agreement
and/or any of its terms or conditions and specifically agree and promise not to
describe or discuss the Confidential Matters with any person or entity.  It
shall not be a violation for the Parties to disclose Confidential Matters to
their spouses or their professional legal and tax advisors so long as they
maintain the confidentiality.  In the event any person or entity asks Employee
or Employer about any disputes relating to Employee’s employment with Employer
and/or the termination of said employment, Employee and Employer shall respond
only that “the matter has been resolved,” and refuse to discuss any such matters
further.  If Employer receives requests for employment references regarding
Employee, Employer will only provide dates of employment, salary information,
and title to prospective employers, and neither this Agreement nor the events
and/or allegations leading up to this Agreement shall be mentioned.  Any
requests for employment references shall be directed to Chairman of the Board of
Directors.  Any breach of confidentiality by any of the Parties shall be deemed
to be a material breach of this confidentiality provision.

C.    The Parties agree that the provisions of this section of this Agreement
are to be liberally construed for the purpose of protecting the confidentiality
of the Confidential Matters, and stipulate and agree that any violation of the
provisions of this section of this Agreement shall be deemed to be a material
breach of the Agreement.

D.    Nothing in this confidentiality provision shall be construed as
prohibiting any disclosure of information required by law.

8.           Confidential Information, Trade Secrets and Company
Property.  Employee acknowledges that all confidential materials, records and
documents, including, without limitation, all company property, files, e-mails
and other electronic information concerning Employer that have come into
Employee’s possession during his employment with Employer will be returned to
Employer within seven (7) days of the Termination Date.  Employee specifically
agrees to electronically return all work-related e-mails and not retain hard
copies or electronic copies.  Employee agrees not to disclose to any person or
entity, including any competitor of Employer and any future employer, any of
Employer’s trade secrets or other confidential information. Employee
acknowledges all Employer’s property obtained during the course of his
employment with Employer has been returned to Employer.  Employee further agrees
that he will not, for any reason, disclose to others for the benefit of anyone
other than Employer any trade secret, confidential or proprietary information,
including, without limitation, information relating to Employer’s customers,
employees, consultants, affiliates, products, know-how, techniques, intellectual
property, computer systems, programs, policies and procedures, software
programs, research projects, future developments, costs, profits, pricing and/or
marketing, attorney-client communications, customer business information or
other financial information.  Employee further understands and agrees that the
use or disclosure of any trade secret, confidential or proprietary information
belonging to Employer shall be a material breach of this Agreement.

9.           Non-Disparagement.  The Parties agree not to make and/or publish
any derogatory or adverse statements, written or verbal, which tend to criticize
or discredit the other, except as required by law.  This is a material provision
of this Agreement.  (If Employee breaches this Non-Disparagement provision,
Employer shall have the right to recover fifty percent (50%) of the compensation
paid under this Agreement.)
 

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10.           No Future Employment.  Employee agrees that Employer shall not be
in any way obligated to offer employment to Employee or to hire him for any
reason, regardless of the circumstances, at any time on or after the date of
this Agreement. Employee acknowledges that any such application for employment
may be denied and agrees to waive any and all claims arising out of or related
to his application and/or the denial of such employment.

11.           No Admission of Liability.  This Agreement is a compromise and
settlement of all disputed and potentially disputed claims being released, and
therefore this Agreement and the payments provided for in this Agreement do not
constitute an admission of liability on the part of Employer, or an admission,
directly or by implication, that Employer has violated any law, rule,
regulation, policy or any contractual right or other obligation owed to
Employee.  Employer intends, by entering into this Agreement, to avoid
litigation.

12.           No Assignment or Transfer of Claims.  The Parties represent and
warrant that they have not assigned or transferred to any other person or entity
any rights, claims or causes of action  released and discharged, and no other
person or entity has any interest in the matters released and discharged, except
as disclosed by the terms of this Agreement.

13.           Entire Agreement.  The Parties declare and represent that no
promise, inducement or agreement not expressed in this Agreement has been made
to them and that this Agreement contains the full and entire agreement between
the Parties, and that the terms of this Agreement are contractual and not a mere
recital.

14.           Applicable Law.  The validity, interpretation, and performance of
this Agreement shall be construed and interpreted according to the laws of the
State of California.  To that end, this Agreement is binding on the Parties
pursuant to Section 664.6 of the California Code of Civil Procedure, even though
no lawsuit or claim has been filed.

15.           Arbitration of Disputes.  Any dispute arising out of this
Agreement or Employee’s employment and/or termination of said employment shall
be resolved by binding arbitration by a mutually agreed arbitrator, or, if no
arbitrator can be agreed to, then under the rules and procedures of the Judicial
Arbitration and Mediation Service (“JAMS”) in San Diego, California. The
findings of the arbitrator shall be final and binding upon the Parties.  The
Parties shall equally pay for the arbitration costs of any such arbitration, but
the prevailing party shall be entitled to reasonable attorneys’ fees and costs.

16.           Attorneys’ Fees.  In any dispute involving this Agreement, the
prevailing party shall be entitled to attorneys’ fees and costs.

17.           Complete Defense. This Agreement may be pleaded as a full and
complete defense against any action, suit or proceeding which may be prosecuted,
instituted or attempted by Employee.

18.           Severability.  If any provision of this Agreement, or part, is
held invalid, void or voidable as against public policy or otherwise, the
invalidity shall not affect other provisions, or parts, which may be given
effect without the invalid provision or part.  To this extent, the provisions,
and parts thereof, of this Agreement are declared to be severable.
 

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19.            Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their respective heirs, legal
representatives, successors and assigns.

20.            ADEA Release.

A.    Employee acknowledges Employer hereby has advised Employee in writing to
discuss this Agreement with an attorney before executing it and that Employer
has provided Employee at least twenty-one (21) days within which to review and
consider this Agreement before signing it.

B.    The Parties acknowledge and agree that Employee may revoke this Agreement
for up to seven (7) calendar days following the execution of this Agreement, and
that it shall not become effective or enforceable until the revocation period
has expired.  The Parties further acknowledge and agree that such a revocation
must be in writing, addressed to Michel Urich, Esq., 7668 El Camino Real, Suite
104-238, Carlsbad, CA 92009, and received not later than 5:00 p.m. on the
seventh (7th) day following execution of this Agreement by Employee.  If
Employee revokes this Agreement, it shall not be effective or enforceable and
Employee will not receive the monies and benefits described above.

C.    If Employee does not revoke this Agreement in the time frame specified in
this section 20, the Agreement shall become effective at 12:01 a.m. on the
eighth (8th) day after it is signed by Employee.

21.           Counterparts.  This Agreement may be signed in counterparts.  A
facsimile signature shall have the same force and effect as an original
signature, and trigger the obligations under this Agreement.

 
(Signatures on following page)

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EMPLOYEE HAS READ THIS AGREEMENT AND KNOWS ITS CONTENTS AND FULLY UNDERSTANDS
IT.  EMPLOYEE ACKNOWLEDGES THAT HE HAS FULLY DISCUSSED THIS AGREEMENT WITH HIS
ATTORNEY TO THE EXTENT DESIRED AND FULLY UNDERSTANDS THE CONSEQUENCES OF THIS
AGREEMENT.  NO PARTY IS BEING INFLUENCED BY ANY STATEMENT MADE BY OR ON BEHALF
OF ANY OF THE OTHER PARTY TO THIS AGREEMENT.  THE PARTIES HAVE RELIED AND ARE
RELYING SOLELY UPON THEIR BELIEF AND KNOWLEDGE OF THE NATURE, EXTENT, EFFECT AND
CONSEQUENCES RELATING TO THIS AGREEMENT AND/OR UPON THE ADVICE OF THEIR OWN
LEGAL COUNSEL CONCERNING THE CONSEQUENCES OF THIS AGREEMENT.

IN WITNESS WHEREOF, the undersigned have executed this Agreement on the dates
shown below.
 

 
DATED: December 2, 2008
 
/s/ Vincent Rossi                         VINCENT ROSSI  

  ST. BERNARD SOFTWARE, INC.          
DATED: December 2, 2008
By:
/s/ Louis Ryan                   
     
Louis Ryan
     
Executive Chairman of the
      Board of Directors  

 

DO NOT SIGN BELOW UNTIL ON OR AFTER THE TERMINATION DATE

I, Vincent Rossi, hereby affirm the terms and conditions of this release,
specifically including but not limited to the release in paragraph 3, and
paragraphs 5, 8 and 9.

Date:  January __, 2009
/s/                                 Vincent Rossi