<PAGE>


                                 Exhibit 10.1 Severance agreement with Gary Clow


                               Severance Agreement

This severance agreement ("Agreement") is made between Stac Software, Inc., a
Delaware company and its subsidiaries ("Stac" or the "Company"), and Gary Clow,
an individual ("Mr. Clow" or the "Executive").

         WHEREAS, Stac's Board of Directors believes it is in the best interests
of the Company, its shareholders and employees to separate the Company into two
publicly traded companies - Stac Software, a software company, and Hi/fn, a
semiconductor company (the "Spin-off"); and

         WHEREAS, the Executive has, in his capacity as Chief Executive Officer,
worked to timely accomplish the Spin-off and to retain and develop executive
management teams suited to continue the management of each of Stac Software and
Hi/fn; and

         WHEREAS, as a result of the Spin-off, the Executive's position with the
Company will become redundant; and

         WHEREAS, upon receipt of the Executive's resignation, the Company
wishes to receive a covenant not to compete from with Mr. Clow for the one year
period following the Resignation Date and to perfect the assignment of any
Company related innovations or inventions from Mr. Clow to the Company (Exhibit
A attached hereto);

         NOW THEREFORE, in consideration of the mutual promises made herein,
Company and Executive (sometimes collectively referred to herein as the
"parties") hereby agree as follows:

1.   TERMINATION AND RESIGNATION. Mr. Clow's employment by Stac, including all
     positions Mr. Clow holds at Stac, but excluding his positions as an elected
     Director and Chairman of the Board of Stac will terminate effective January
     4, 1999, or such other mutually agreed upon date (the "Resignation Date").

2.   CONSIDERATION. In consideration of the terms of this Agreement and
     contingent upon receipt of a Notice of Resignation in the form attached
     hereto as Exhibit B:

     (a)  Stac shall pay to Mr. Clow an amount equal to Mr. Clow's base salary
          for the immediately preceding 12 months less $48,000. Any payments to
          Mr. Clow shall be subject to all ordinary and appropriate federal,
          state, or local withholdings normally required for the payment of
          wages.

     (b)  Stac shall pay for Mr. Clow's COBRA healthcare benefits (as those
          benefits exist on the Resignation Date) until one year from the
          Resignation Date.

     (c)  In consideration for the agreement to not compete as specified in
          section 6 below, Stac shall pay to Mr. Clow a monthly retainer of
          $4,000 at the beginning of each of the twelve months starting the day
          immediately following the Resignation Date.. Such payments shall be
          gross and Mr. Clow shall be responsible for all federal, state, and
          local taxes related thereon.


                                       
<PAGE>


     (d)  Stac shall extend Mr. Clow's right to exercise the Stac stock options
          he is vested in as of the Resignation Date (Exhibit C attached
          hereto), at any time, in whole or part, for one year beyond the normal
          termination of exercise rights of such option(s), which such normal
          termination shall be ninety (90) days following Mr. Clow's departure
          from the Stac Board of Directors, provided such extension does not
          extend beyond the term of such option(s).

     (e)  Mr. Clow shall have all rights of indemnification (including
          advancement of expenses) in connection with his service as a director,
          officer or employee of Stac or any of its subsidiaries, that are in
          effect as of the date this Agreement is executed by Mr. Clow.

     (f)  Stac shall maintain during each of the years through December 31, 2003
          minimum directors and officers insurance of $10 million covering all
          customarily insurable activities of Mr. Clow both as an officer and a
          director.

3.   GENERAL AND SPECIAL RELEASE. In consideration of the terms of this
     Agreement, and subject to the indemnification and insurance provisions
     above, Mr. Clow hereby releases, acquits, and forever discharges Stac, its
     officers, directors, agents, servants, insurers, employees, shareholders,
     partners, successors, assigns, affiliates, customers, and clients of and
     from any and all claims, liabilities and demands, causes of action, costs,
     expenses, attorneys' fees, damages, indemnities and obligations of every
     kind and nature, in law, equity, or otherwise, know or unknown, suspected
     and unsuspected, disclosed and undisclosed, arising out of or in any way
     connected with Stac's employment of Mr. Clow, the termination of that
     employment, and Stac's performance of its obligations as Mr. Clow's former
     employer; claims or demands related to salary, bonuses, commissions, stock,
     stock options, vacation pay, fringe benefits, expense reimbursements, or
     any form of compensation; claims pursuant to any federal, state or local
     law cause of action including, but not limited to, the California Fair
     Employment Practices Act; the federal Civil Right Act of 1964, as amended;
     the federal Age Discrimination in Employment Act of 1967, as amended; the
     Americans With Disabilities Act; wrongful discharge; discrimination; fraud;
     defamation; emotional distress; and breach of the implied covenant of good
     faith and fair dealing. The effective date of this release shall be the
     eighth day after this Agreement is signed by Mr. Clow.

4.   AGE DISCRIMINATION. Mr. Clow further acknowledges that he is knowingly and
     voluntarily waiving and releasing any rights he may have under the Age
     Discrimination in Employment Act of 1967 ("ADEA"). Mr. Clow also
     acknowledges the consideration given for the waiver and release in the
     preceding paragraphs hereof is in addition to anything of value to which he
     was already entitled. Mr. Clow hereby provides the further acknowledgment
     that he is advised by this writing, as required by the Older Workers
     Benefit Protection Act, that: (a) his waiver and release does not apply to
     any rights or claims that may arise after the effective date of this
     release; (b) he should consult with an attorney prior to executing his
     release (although he may voluntarily choose not to do so); (c) he may have
     at least twenty-one (21) days to consider this Agreement (although he may
     by his own choice execute this release earlier); (d) he has seven (7) days
     following the execution of this release to revoke the release; and (e) this
     Agreement shall not be effective until the date upon which the revocation
     period has expired, therefor making the effective date the eighth day after
     this release is signed by Mr. Clow.

5.   SECTION 1542 AND RELATED LAW. Mr. Clow hereby acknowledges that he has read
     and understands Section 1542 of the Civil Code of the State of California
     which reads 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."


                                       
<PAGE>


     Mr. Clow hereby expressly waives and relinquishes all rights and benefits
     under that section and any similar law or common law principle of similar
     effect of any state or territory of the United States with respect to the
     claims released hereby.

6.   COVENANT NOT TO COMPETE - In consideration of the retainer being paid to
     Mr. Clow pursuant to this Agreement, Mr. Clow agrees that during the one
     year period ending December 31, 1999, he will not directly or indirectly as
     an individual proprietor, partner, corporation, stockholder, officer,
     employee, consultant, director, joint venturer, investor, lender, or in any
     other capacity (except as the holder of not more than one percent (1%) of
     the total outstanding stock of a publicly held company), engage in any
     business activity that involves development, production, marketing or
     selling of products, processes, techniques or technology which are
     identical to, substantially similar to or directly competitive with the
     products of the Company.

7.   NO ADMISSION OF LIABILITY OR OBLIGATION BY STAC. Mr. Clow hereby
     acknowledges that this Agreement is a compromise settlement of potential
     claims and that the promises in, and consideration of, this Agreement shall
     not be construed to be an admission of any liability or obligation
     whatsoever by Stac to Mr. Clow or to any person whomsoever.

8.   CONFIDENTIALITY. Mr. Clow hereby agrees and acknowledges that he will keep
     the terms, amount and fact of this Agreement completely confidential, and
     that he will not hereafter disclose any such information to anyone other
     than his immediate family and professional representatives unless required
     to do so. Prior to any disclosure of the terms, amount or fact of this
     agreement to any other person, Mr. Clow shall inform that person of the
     existence of this confidentiality requirement, and obtain the agreement of
     that person to be bound by this confidentiality clause.

9.   ASSIGNMENT OR TRANSFER. Mr. Clow hereby represents to Stac that he has not
     previously assigned or transferred any interest in any of the claims
     released herein.

10.  TRANSFER OF ASSETS IN POSSESSION. Stac shall assign all right, title and
     interest in and to those Stac assets in his personal possession listed in
     Exhibit D to Mr. Clow on the Resignation Date.

11.  CALIFORNIA LAW. This Agreement shall be deemed to have been entered into
     and shall be construed and enforced in accordance with the laws of the
     State of California as applied to contracts made and to be performed
     entirely within California.


     IN WITNESS WHEREOF, I have carefully read this Agreement, understand its
terms and conditions, and agree to be bound thereby.



--------------------------------------------         ---------------------------
 Charles Gaylord                                      Date
 Chairman - Compensation Committee



--------------------------------------------         ---------------------------
 Gary Clow                                            Date



<PAGE>


                                   STAC, INC.
                                    EXHIBIT A
                             PROPRIETARY INFORMATION
                            AND INVENTIONS AGREEMENT


In consideration of this Severance Agreement, of which this is a part, I hereby
agree as follows:

     1. RECOGNITION OF COMPANY'S RIGHTS; NONDISCLOSURE. I will hold in strictest
confidence and will not disclose, use, lecture upon or publish any of the
Company's Proprietary Information (defined below). I hereby assign to the
Company any rights I may have or acquire in such Proprietary Information and
recognize that all Proprietary Information shall be the sole property of the
Company and its assigns and the Company and its assigns shall be the sole owner
of all trade secret rights, patent rights, copyrights, mask work rights and all
other rights throughout the world (collectively, "Proprietary Rights") in
connection therewith.


The term "Proprietary Information" shall mean trade secrets, confidential
knowledge, data or any other proprietary information of the Company. By way of
illustration but not limitation, "Proprietary Information" includes (a) trade
secrets, inventions, mask works, ideas, processes, formulas, source and object
codes, data, programs, - other works of authorship, know-how, improvements,
discoveries, developments, designs and techniques (hereinafter collectively
referred to as "Inventions"); and (b) information regarding plans for research,
development, new products, marketing and selling, business plans, budgets and
unpublished financial statements, licenses, prices and costs, suppliers and
customers; and information regarding the skills and compensation of other
employees of the Company.


     2. THIRD PARTY INFORMATION. I understand, in addition, that the Company has
received and in the future will receive from third parties confidential or
proprietary information ( Third Party Information") subject to a duty on the
Company's part to maintain the confidentiality of such information and to use it
only for certain limited purposes. I will hold such Third Party Information in
my possession in confidence and will not disclose (to anyone other than Company
personnel who need to know such information in connection with their work for
the Company) or use, Third Party Information unless expressly authorized by an
officer of the Company in writing.


     3. ASSIGNMENT OF INVENTIONS.

          A. ASSIGNMENT. I hereby assign to the Company all my right, title and
     interest in and to any and all Inventions (and all Proprietary Rights with
     respect thereto) whether or not patentable or registrable under copyright
     or similar statutes, made or conceived or reduced to practice or learned by
     me, either alone or jointly with others, during the period of my employment
     with the Company. Inventions assigned to or as directed by the Company by
     this paragraph 3 are hereinafter referred to as "Company Inventions." I
     recognize that this Agreement does not require assignment of any invention
     which qualifies fully for protection under Section 2870 of the California
     Labor Code (hereinafter "Section 2870") (or any similar or comparable
     statute or law in effect in the state I am employed), which provides as
     follows:


<PAGE>


               1. ANY PROVISION IN AN EMPLOYMENT AGREEMENT WHICH PROVIDES THAT
          AN EMPLOYEE SHALL ASSIGN, OR OFFER TO ASSIGN, ANY OF HIS OR HER RIGHTS
          IN AN INVENTION TO HIS OR HER EMPLOYER SHALL NOT APPLY TO AN INVENTION
          THAT THE EMPLOYEE DEVELOPED ENTIRELY ON HIS OR HER OWN TIME WITHOUT
          USING THE EMPLOYER'S EQUIPMENT, SUPPLIES, FACILITIES, OR TRADE SECRET
          INFORMATION EXCEPT FOR THOSE INVENTIONS THAT EITHER:


                    a) RELATE AT THE TIME OF CONCEPTION OR REDUCTION TO PRACTICE
               OF THE INVENTION TO THE EMPLOYER'S BUSINESS, OR ACTUAL OR
               DEMONSTRABLY ANTICIPATED RESEARCH OR DEVELOPMENT OF THE EMPLOYER.

                    b) RESULT FROM ANY WORK PERFORMED BY THE EMPLOYEE FOR THE
               EMPLOYER.


               2. TO THE EXTENT A PROVISION IN AN EMPLOYMENT AGREEMENT PURPORTS
          TO REQUIRE AN EMPLOYEE TO ASSIGN AN INVENTION OTHERWISE EXCLUDED FROM
          BEING REQUIRED TO BE `ASSIGNED UNDER SUBDIVISION (i), THE PROVISION IS
          AGAINST THE PUBLIC POLICY OF THIS STATE AND IS UNENFORCEABLE.


          B. GOVERNMENT. I also assign to or as directed by the Company all my
     right, title and interest in and to any and all Inventions, full title to
     which is required to be in the United States by a contract between the
     Company and the United States or any of its agencies.


          C. WORKS FOR HIRE. I acknowledge that all original works of authorship
     which are made by me (solely or jointly with others) within the scope of my
     employment and which are protectable by copyright are "works made for
     hire," as that term is defined in the United States Copyright Act (17
     U.S.C., Section 101).


     4. ENFORCEMENT OF PROPRIETARY RIGHTS. I will assist the Company in every
proper way to obtain and from time to time enforce United States and foreign
Proprietary Rights relating to Company Inventions in any and all countries. To
that end I will execute, verify and deliver such documents and perform such
other acts as the Company may reasonably request for use in applying for,
obtaining, perfecting, evidencing, sustaining and enforcing such Proprietary
Rights and the assignment thereof. In addition, I will execute, verify and
deliver assignments of such Proprietary Rights to the Company or its designee.
My obligation to assist the Company with respect to Proprietary Rights relating
to such Company Inventions in any and all countries shall continue beyond the
termination of my employment, but the Company shall compensate me at .a
reasonable rate after my termination for the time actually spent by me at the
Company's request on such assistance.

In the event the Company is unable for any reason, after reasonable effort, to
secure my signature on any document needed in connection with the actions
specified in the preceding paragraph, I


<PAGE>



hereby irrevocably designate and appoint the Company and its duly authorized
officers and agents as my agent and attorney in fact, which appointment is
coupled with an interest, to act for and in my behalf to execute, verify and
file any such documents and to do all other lawfully permitted acts to further
the purposes of the preceding paragraph with the same legal force and effect as
if executed by me. I hereby waive and quitclaim to the Company any and all
claims, of any nature whatsoever, which I now or may hereafter have for
infringement of any Proprietary Rights assigned hereunder to the Company.

     5. RETURN OF COMPANY DOCUMENTS. When I leave the employ of the Company, I
will deliver to the Company any and all drawings, notes, memoranda,
specifications, devices, formulas, and documents, together with all copies
thereof, and any other material containing or disclosing any Company Inventions,
Third Party Information or Proprietary Information of the Company. I further
agree that any property situated on the Company's premises and owned by the
Company, including disks and other storage media, filing cabinets or other work
areas, is subject to inspection by Company personnel at any time with or without
notice. Prior to leaving, I will cooperate with the Company in completing and
signing the Company's current termination statement for technical and management
personnel.

     6. NOTICES. Any notices required or permitted hereunder shall be given to
the appropriate party at the address specified below or at such other address as
the party shall specify in writing. Such notice shall be deemed given upon
personal delivery to the appropriate address or if sent by certified or
registered mail, three (3) days after the date of mailing.

     7. GENERAL PROVISIONS.


          A. GOVERNING LAW. This Agreement will be governed by and construed
     according to the laws of the State of California.


          B. ENTIRE AGREEMENT. This Agreement is the final, complete and
     exclusive agreement of the parties with respect to the subject matter
     hereof and supersedes and merges all prior discussions between us. No
     modification of or amendment to this Agreement, nor any waiver of any
     rights under this Agreement, will be effective unless in writing and signed
     by the party to be charged. Any subsequent change or changes in my duties,
     salary or compensation will not affect the validity or scope of this
     Agreement. As used in this Agreement, the period of my employment includes
     any time during which I may be retained by the Company as a consultant.


          C. SEVERABILITY. If one or more of the provisions in this Agreement
     are deemed unenforceable by law, then such provision will be deemed
     stricken from this Agreement and the remaining provisions will continue in
     full force and effect.


<PAGE>


          D. SUCCESSORS AND ASSIGNS. This Agreement will be binding upon my
     heirs, executors, administrators and other legal representatives and will
     be for the benefit of the Company, its successors, and its assigns.


          E. SURVIVAL. The provisions of this Agreement shall survive the
     termination of my employment and the assignment of this Agreement by the
     Company to any successor in interest or other assignee.


          F. WAIVER. No waiver by the Company of any breach of this Agreement
     shall be a waiver of any preceding or succeeding breach. No waiver by the
     Company of any right under this Agreement shall be construed as a waiver of
     any other right. The Company shall not be required to give notice to
     enforce strict adherence to all terms of this Agreement.


     I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE
COMPLETELY FILLED OUT EXHIBIT A TO THIS AGREEMENT.

     Dated: 12/23/98                           /s/ Gary W. Clow
           -----------------                   ---------------------------
                                               Signature

                                               Gary W. Clow
                                               ---------------------------
                                               (Printed Name)



<PAGE>


                                   STAC, INC.
                                    EXHIBIT B
                              NOTICE OF RESIGNATION


     To:  The Board of Directors of Stac, Inc.

     I hereby tender my resignation as Chief Executive Officer of Stac, Inc.
Pursuant to the terms and conditions of the Severance Agreement between Stac and
me, this resignation becomes effective as of the date below.




     /s/ Gary W. Clow                                12/23/98
     ---------------------------                     ------------
     Gary W. Clow                                    Date


<PAGE>

                                   STAC, INC.
                                   EXHIBIT C
                           STOCK OPTIONS OUTSTANDING


CLOSING STATEMENT                       STAC
                                        ID: 953825313
                                        12636 High Bluff Drive
                                        San Diego, Ca 92130
                                        (619) 794-4300

TERMINATION DATE    1/4/99

--------------------------------------------------------------------------------

GARY CLOW                               ID:  442-60-473

--------------------------------------------------------------------------------
<TABLE>

EXERCISABLE OPTIONS
<CAPTION>

                                                                Vesting                              Late
Option     Option     Plan/      Option   Shares     Shares     Stop     Shares                      Date to
Number     Date       Type       Price    Granted    Exercised  Date     Exercisable  Total Price    Exercise
--------   --------   --------   -------  ---------  ---------  -------  -----------  -------------  --------

<S>        <C>        <C>        <C>        <C>        <C>       <C>         <C>      <C>  
000015     7/27/89    1989/ISO   $0.0700    844,200    844,200   1/4/99            0          $0.00
000135    10/22/93    1992/NQ    $0.6500    675,360    105,525   1/4/99      569,835    $370,392.75
000921    10/ 1/96    1992/ISO   $1.9000    263,813          0   1/4/99      158,287    $300,745.30
000922    10/ 1/96    1992/NQ    $1.9000    918,068          0   1/4/99      506,519    $962,386.10
                                                                         -----------  -------------
                                                     TOTALS                1,234,641  $1,633,524.15
</TABLE>


<PAGE>

                                   STAC, INC.
                                   EXHIBIT D
                  TRANSFERRED ASSETS IN MR. CLOW'S POSSESSION

Dell Latitude Laptop PC

Serial #: 7147346BYK8850A