8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 19, 2010

BAKBONE SOFTWARE INCORPORATED

(Exact name of registrant as specified in its charter)

Canada	000-12230	Not Applicable
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)

9540 Towne Center Drive, Suite 100

San Diego, California 92121

(Address of Principal Executive Offices) (Zip Code)

(858) 450-9009

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

The information under Item 5.02(e) below is incorporated by reference to this Item.

Item 2.05 Costs Associated with Exit or Disposal Activities.

On May 21, 2010, BakBone Software Incorporated (the “Company”) announced that it intends to exit its ColdSpark message management business, which it acquired in connection with its acquisition of ColdSpark, Inc. in May 2009. The Company will close its Broomfield, Colorado office and terminate employees associated with the ColdSpark operations. The Company expects to record charges of approximately $0.5 million in the aggregate, comprised of approximately $0.3 million for termination benefits and $0.2 million for certain amounts due under our lease agreement, substantially all of which are anticipated to be recorded in the quarter ended June 30, 2010. The action is estimated to result in future cash expenditures of approximately $0.5 million and will be treated as discontinued operations in the Company’s financial statements for the first fiscal quarter ended June 30, 2010 and the full fiscal year ended March 31, 2011.

Item 2.06 Material Impairments.

On May 21, 2010 the Company determined that it would be required to record an impairment charge in the fourth quarter of fiscal 2010 of approximately $12.6 million, comprised of $12.5 million from the impairment of goodwill and purchased intangible values of the ColdSpark business and $0.1 million from the write-off of certain uncollectible receivable balances, which reduce the current carrying value of the business to its estimated fair value as of March 31, 2010. The Company does not currently anticipate that the impairment charge will result in any material net future cash expenditures.

A copy of the press release issued on May 21, 2010 announcing the exit from the Coldspark message management business is attached as Exhibit 99.1.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

(b) On May 21, 2010, Kenneth Horner ceased to be the Company’s Senior Vice President, Corporate Development and Strategy and is no longer an employee of the Company.

(e) On May 19, 2010, the Company entered into a Separation Agreement and Release with James Johnson, former Chief Executive Officer of the Company. Mr. Johnson’s resignation as Chief Executive Officer of the Company on April 6, 2010 was previously reported on a Form 8-K dated April 8, 2010. Consistent with the terms of the Company’s existing employment agreement with Mr. Johnson, Mr. Johnson is entitled to receive $300,000, payable over a 12 month period following the termination of his employment, less applicable withholdings and in accordance with the Company’s regular payroll practices. In addition, any unvested equity awards accelerate on the termination date as if Mr. Johnson had been employed for an additional 12-month period after the termination date. The separation agreement also includes a mutual release of claims.

On May 20, 2010, the Company entered into a Separation Agreement and Release with Mr. Horner, effective May 21, 2010, Consistent with the terms of the existing employment agreement with Mr. Horner, as amended, Mr. Horner is entitled to receive $117,500, payable in a one-time lump sum payment, less applicable withholdings. The separation agreement also includes a release of claims by Mr. Horner.

On May 19, 2010, the Company entered into Retention Agreements with certain members of its senior management, including Steve Martin, the Company’s Senior Vice President, Chief Financial Officer and Interim Chief Executive Officer and named executive officer Dan Woodward, Senior Vice President, Product Delivery. Pursuant to the terms of the Retention Agreement with Mr. Martin, Mr. Martin is entitled to receive: (i) payment of a lump sum cash retention bonus of $125,000 if Mr. Martin remains continuously employed with the Company through the earlier to occur of April 30, 2011 or a change in control of the Company; (ii) payment of an additional lump sum cash retention bonus of $125,000, provided that Mr. Martin remains continuously employed with the Company through the earlier to occur of April 30, 2012 or a change in control; and (iii) payment of an additional lump sum payment of $250,000 if, within 12 months following the consummation of a change in control, Mr. Martin is either terminated by the Company or any successor entity without cause or voluntarily terminates his employment with the Company for good reason.

Pursuant to the terms of the Retention Agreement with Mr. Woodward, Mr. Woodward is entitled to receive: (i) payment of a lump sum cash retention bonus of $73,437.50 if Mr. Woodward remains continuously employed with the Company through the earlier to occur of April 30, 2011 or a change in control of the Company; (ii) payment of an additional lump sum cash retention bonus of $73,437.50, provided that Mr. Woodward remains continuously employed with the Company through the earlier to occur of April 30, 2012 or a change in control of the Company; and (iii) payment of an additional lump sum payment of $146,875 if, within 12 months following the consummation of a change in control, Mr. Woodward is either terminated by the Company or any successor entity without cause or voluntarily terminates his employment with the Company for good reason.

The above descriptions of the Retention Agreements with Mr. Martin and Mr. Woodward and the Separation Agreement and Releases with Mr. Johnson and Mr. Horner are qualified in their entirety by the text of those agreements, which are attached hereto as Exhibits 10.1, 10.2, 10.3 and 10.4, respectively.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits.

EXHIBIT NO.	DESCRIPTION
10.1	Retention Letter Agreement, dated May 19, 2010, by and between the Company and Steve Martin
10.2	Retention Letter Agreement, dated May 19, 2010, by and between the Company and Dan Woodward
10.3	Separation Agreement and Release, dated May 19, 2010, by and between the Company and James Johnson
10.4	Separation Agreement and Release, dated May 20, 2010, by and between the Company and Kenneth Horner
99.1	Press Release dated May 21, 2010

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	BAKBONE SOFTWARE INCORPORATED
May 21, 2010	By:	/s/    STEVE MARTIN
		Steve Martin
		Sr. Vice President, Chief Financial Officer and Interim Chief Executive Officer

EXHIBIT INDEX

EXHIBIT NO.	DESCRIPTION
10.1	Retention Letter Agreement, dated May 19, 2010, by and between the Company and Steve Martin
10.2	Retention Letter Agreement, dated May 19, 2010, by and between the Company and Dan Woodward
10.3	Separation Agreement and Release, dated May 19, 2010, by and between the Company and James Johnson
10.4	Separation Agreement and Release, dated May 20, 2010, by and between the Company and Kenneth Horner
99.1	Press Release dated May 21, 2010

EX-10.1

Exhibit 10.1

9540 Towne Centre Drive Suite 100 San Diego, CA 92121 Phone (858) 450-9009 Fax (858) 450-9929 www.bakbone.com

Date: May 19, 2010

To: Mr. Steve Martin, Senior Vice President, Chief Financial Officer and Interim Chief Executive Officer

Subject: Retention Incentive Bonus

We are pleased to offer you a cash incentive to continue to remain employed with the BakBone Software Incorporated (the “Company”) and promote the long-term success of the Company’s business operations. We are offering you the retention bonuses described in this letter agreement because we recognize your importance to the success of our business and to re-enforce that you have the potential to make a significant impact on our future growth. In consideration of the foregoing, we are offering you the additional benefits outlined below. These benefits are in addition to any you may already be entitled to receive pursuant to other agreements you have with the Company, including any restricted stock unit agreements, change in control agreements or employment agreements you may have previously entered into with the Company:

Retention Bonus.

You will be eligible to receive a lump sum cash retention bonus equal to $125,000 (the “2011 Retention Bonus”), less applicable withholding taxes, provided that you remain continuously employed with the Company through the earlier to occur of April 30, 2011 or a Change in Control of the Company (as defined below). You will be eligible to receive an additional lump sum cash retention bonus equal to $125,000 (the “2012 Retention Bonus”), less applicable withholding taxes, provided that you remain continuously employed with the Company through the earlier to occur of April 30, 2012 or a Change in Control of the Company (as defined below).

In addition, if, within twelve (12) months following the consummation of the Change in Control, you are either terminated by the Company or any successor entity without Cause (as hereinafter defined) or you voluntarily terminate your employment with the Company for “Good Reason” (as hereinafter defined), and provided you timely execute and not revoke a general release in a form provided by the Company or any successor entity at the time of termination, you will be entitled to receive a lump sum cash retention bonus equal to $250,000 (the “Change in Control Bonus”, and together with the 2011 Retention Bonus and the 2012 Retention Bonus, the “Retention Bonuses”).

Provided that you remain continuously employed with the Company as described in the preceding sentences, the 2011 and 2012 Retention Bonuses, less applicable withholding taxes, will be paid to you within ten (10) business days following the applicable date or event.

9540 Towne Centre Drive Suite 100 San Diego, CA 92121 Phone (858) 450-9009 Fax (858) 450-9929 www.bakbone.com

With respect to the Change in Control Bonus and any severance payments or benefits payable to you pursuant to that Change in Control Letter Agreement entered into by and between you and the Company as of August 20, 2008 (the “CIC Letter Agreement”), you must timely execute and not revoke a general release in a form provided by the Company or any successor entity at the time of termination (the “Release”). To be timely, the Release must become effective and irrevocable no later than sixty (60) days following your termination date (such deadline, the “Release Deadline”). If the Release does not become effective and irrevocable by the Release Deadline, you will forfeit any rights to the Change in Control Bonus and the severance payments and benefits under the CIC Letter Agreement. In no event will the Change in Control Bonus or the severance payments and benefits under the CIC Letter Agreement be paid or provided until the Release becomes effective and irrevocable. If the Release does become effective and irrevocable, the Change in Control Bonus and the severance payments and benefits under the CIC Letter will be paid in accordance with the paragraphs below under the heading “Section 409A.”

Definition of “Change in Control”.

For purposes of this Retention Incentive Bonus Letter (“Letter”), a Change in Control shall consist of any one or more of the following events (whether in a single transaction or a series of related transactions): (i) the consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if more than fifty percent (50%) of the combined voting power of the continuing or surviving entity’s securities outstanding immediately after such merger, consolidation or other reorganization is owned by persons who were not stockholders of the Company immediately prior to such merger, consolidation or other reorganization; (ii) the sale, transfer or other disposition of all or substantially all of the Company’s assets; or (iii) any transaction as a result of which any person or related group of persons becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or indirectly, of securities of the Company representing at least fifty percent (50%) of the total voting power represented by the Company’s then outstanding voting securities (other than as a result of the new issuance of securities by the Company in any transaction or series of related transactions determined by the Board of Directors to be for the primary purpose of raising capital). Notwithstanding the foregoing, a transaction shall not constitute a Change in Control if: (i) its sole purpose is to change the state of the Company’s incorporation; (ii) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction; or (iii) following the consummation of the transaction or series of related transactions, members of the Board of Directors of the Company prior to such transaction constitute a majority of the members of the Board of Directors of the continuing or surviving entity.

9540 Towne Centre Drive Suite 100 San Diego, CA 92121 Phone (858) 450-9009 Fax (858) 450-9929 www.bakbone.com

Definition of “Cause.”

As used in this Letter, the term “Cause” shall have the meaning, with respect to the termination of your employment by the Company or any successor entity, expressly set forth in any then-effective written agreement regarding your employment between you and the Company, or in the absence of such then-effective written agreement and definition, shall mean termination of your employment as a result of your: (i) performance of any act or failure to perform any act in bad faith and to the detriment of the Company; (ii) dishonesty, intentional misconduct or material breach of any agreement with the Company; (iii) commission of a crime involving dishonesty, breach of trust, or physical or emotional harm to any person; or (iv) failure to perform job duties diligently and/or professionally, as reasonably determined by the Company’s Board of Directors.

Definition of “Good Reason.”

As used in this Letter, the term “Good Reason” shall mean the termination of your employment by you following the occurrence of any of the following events or conditions (unless otherwise consented to by you, provided that you shall be deemed to have consented to any such event or condition unless you provide written notice of your non-acquiescence within thirty (30) days of the effective time of such event or condition): (i) a change in your responsibilities or duties which represents a material and substantial diminution in your responsibilities or duties as in effect immediately preceding the consummation of the Change in Control; (ii) a reduction in your base salary to a level below that in effect at any time within six (6) months preceding the consummation of a Change in Control or at any time thereafter; provided that an across-the-board reduction in the salary level of substantially all other individuals in positions similar to yours by the same percentage amount shall not constitute such a salary reduction; or (iii) requiring you to be based at any place outside a fifty (50) mile radius from your job location or residence prior to the Change in Control, except for reasonably required travel on business which is not materially greater than such travel requirements prior to the Change in Control.

9540 Towne Centre Drive Suite 100 San Diego, CA 92121 Phone (858) 450-9009 Fax (858) 450-9929 www.bakbone.com

Section 409A

Notwithstanding anything to the contrary in this Letter, the Change in Control Bonus, the severance payments and benefits payable under the CIC Letter Agreement, and any other severance pay or benefits to be paid or provided to you, if any, that are considered deferred compensation under Section 409A of the Internal Revenue Code of 1986, as amended, and the final regulations and any guidance promulgated thereunder (“Section 409A”) (together, the “Deferred Payments”) will be paid or otherwise provided until you have had a “separation from service” within the meaning of Section 409A. Similarly, no severance payable to you, if any, that otherwise would be exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9) will be payable until you have a “separation from service” within the meaning of Section 409A. Assuming that the Release becomes effective and irrevocable by the Release Deadline, the Deferred Payments will be paid (or will commence as applicable) on the sixtieth (60^th) day following your separation from service, or, if later, such time as required by the next paragraph. For purposes of clarity, the cash severance payments under the CIC Letter Agreement are deferred compensation under Section 409A and, in the absence of these provisions, would have been required to be delayed (as described in the CIC Letter Agreement) to comply with Section 409A. Consequently, notwithstanding anything to the contrary in the CIC Letter Agreement, the cash severance amounts payable under the CIC Letter Agreement could have only been paid in a lump sum and will continue to be paid only in a lump sum.

Notwithstanding anything to the contrary in this Letter (or the CIC Letter Agreement), if you are a “specified employee” within the meaning of Section 409A at the time of your termination (other than due to death), then the Deferred Payments that are payable within the first six (6) months following your separation from service will become payable on the first payroll date that occurs on or after the date six (6) months and one (1) day following the date of your separation from service. All subsequent Deferred Payments, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit. Notwithstanding anything herein to the contrary, if you die following your separation from service, then any payments delayed in accordance with this paragraph will be payable in a lump sum as soon as administratively practicable after the date of your death and all other Deferred Payments will be payable in accordance with the payment schedule applicable to each payment or benefit.

The foregoing provisions are intended to comply with the requirements of Section 409A so that neither the Change in Control Bonus nor any other severance payments or benefit will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so comply. The Company and you agree to work together in good faith to consider amendments to this Letter and to take such reasonable actions which are necessary, appropriate, or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to you under Section 409A.

9540 Towne Centre Drive Suite 100 San Diego, CA 92121 Phone (858) 450-9009 Fax (858) 450-9929 www.bakbone.com

At-Will Employment

Your employment with the Company is and shall continue to be “at-will” and may be terminated at any time with or without cause or notice by either the Company or you. This Letter does not constitute an express or implied promise of continued employment with the Company for any period and does not alter your “at-will” employment status. IF YOUR EMPLOYMENT WITH THE COMPANY TERMINATES FOR ANY OR NO REASON PRIOR TO THE EARLIER OF APRIL 30, 2011 OR A CHANGE IN CONTROL OF THE COMPANY, YOU WILL NOT BE ELIGIBLE TO RECEIVE THE 2011 RETENTION BONUS. IF YOUR EMPLOYMENT WITH THE COMPANY TERMINATES FOR ANY OR NO REASON PRIOR TO THE EARLIER OF APRIL 30, 2012 OR A CHANGE IN CONTROL OF THE COMPANY, YOU WILL NOT BE ELIGIBLE TO RECEIVE THE 2012 RETENTION BONUS. IF YOUR EMPLOYMENT WITH THE COMPANY TERMINATES FOR ANY OR NO REASON PRIOR TO A CHANGE IN CONTROL OF THE COMPANY, YOU WILL NOT BE ELIGIBLE FOR THE CHANGE IN CONTROL BONUS.                      (employee initials here)

To indicate your acceptance of the terms of this Letter, please sign and date this letter in the space provided below. A duplicate has been provided for your records. The terms of this Letter will expire if the Letter is not accepted, signed and returned by May 28, 2010.

You may not assign your rights under this Letter to any other party (whether by operation of law or otherwise). This Letter will be governed by and construed in accordance with the laws of the State of California (with the exception of its conflict of laws provisions).

THE PARTIES AGREE THAT ANY AND ALL DISPUTES ARISING OUT OF THE TERMS OF THIS LETTER, THEIR INTERPRETATION, AND ANY OF THE MATTERS HEREIN ADDRESSED, SHALL BE SUBJECT EXCLUSIVELY TO CONFIDENTIAL BINDING ARBITRATION IN SAN DIEGO COUNTY, BEFORE JUDICIAL ARBITRATION & MEDIATION SERVICES (“JAMS”), PURSUANT TO ITS EMPLOYMENT ARBITRATION RULES & PROCEDURES (“JAMS RULES”) IN EFFECT AT THE TIME OF THE COMMENCEMENT OF THE ARBITRATION. THE ARBITRATOR MAY GRANT INJUNCTIONS AND OTHER RELIEF IN SUCH DISPUTES. THE ARBITRATOR SHALL ADMINISTER AND CONDUCT ANY ARBITRATION IN ACCORDANCE WITH CALIFORNIA LAW, INCLUDING THE

9540 Towne Centre Drive Suite 100 San Diego, CA 92121 Phone (858) 450-9009 Fax (858) 450-9929 www.bakbone.com

CALIFORNIA CODE OF CIVIL PROCEDURE, AND THE ARBITRATOR SHALL APPLY SUBSTANTIVE AND PROCEDURAL CALIFORNIA LAW TO ANY DISPUTE OR CLAIM, WITHOUT REFERENCE TO ANY CONFLICT-OF-LAW PROVISIONS OF ANY JURISDICTION. TO THE EXTENT THAT THE JAMS RULES CONFLICT WITH CALIFORNIA LAW, CALIFORNIA LAW SHALL TAKE PRECEDENCE. THE DECISION OF THE ARBITRATOR SHALL BE FINAL, CONCLUSIVE, AND BINDING ON THE PARTIES TO THE ARBITRATION. THE PARTIES AGREE THAT THE PREVAILING PARTY IN ANY ARBITRATION SHALL BE ENTITLED TO INJUNCTIVE RELIEF IN ANY COURT OF COMPETENT JURISDICTION TO ENFORCE THE ARBITRATION AWARD. THE PARTIES TO THE ARBITRATION SHALL EACH PAY AN EQUAL SHARE OF THE COSTS AND EXPENSES OF SUCH ARBITRATION, AND EACH PARTY SHALL SEPARATELY PAY FOR ITS RESPECTIVE COUNSEL FEES AND EXPENSES. THE PARTIES HEREBY AGREE TO WAIVE THEIR RIGHT TO HAVE ANY DISPUTE BETWEEN THEM RESOLVED IN A COURT OF LAW BY A JUDGE OR JURY. NOTWITHSTANDING THE FOREGOING, THIS SECTION WILL NOT PREVENT EITHER PARTY FROM SEEKING INJUNCTIVE RELIEF (OR ANY OTHER PROVISIONAL REMEDY) FROM ANY COURT HAVING JURISDICTION OVER THE PARTIES AND THE SUBJECT MATTER OF THEIR DISPUTE RELATING TO THIS AGREEMENT AND THE AGREEMENTS INCORPORATED HEREIN BY REFERENCE. SHOULD ANY PART OF THE ARBITRATION AGREEMENT CONTAINED IN THIS PARAGRAPH CONFLICT WITH ANY OTHER ARBITRATION AGREEMENT BETWEEN THE PARTIES, THE PARTIES AGREE THAT THIS ARBITRATION AGREEMENT SHALL GOVERN. NOTWITHSTANDING THE FOREGOING, THE COMPANY SHALL HAVE THE RIGHT TO MAKE SUCH DISCLOSURES AND FILINGS AS REQUIRED BY APPLICABLE SECURITIES LAWS.

Sincerely,

BAKBONE SOFTWARE INCORPORATED

By:	/s/ Robert Wright
	Mr. Robert Wright	SVP and General Counsel

9540 Towne Centre Drive Suite 100 San Diego, CA 92121 Phone (858) 450-9009 Fax (858) 450-9929 www.bakbone.com

EXECUTIVE SIGNATURE PAGE FOR RETENTION INCENTIVE BONUS LETTER

Agreed to and accepted:
Signature:	/s/ Steve Martin
Printed Name:	Steve Martin

Date: May 19, 2010

Enclosures

Duplicate Original Letter

EX-10.2

Exhibit 10.2

9540 Towne Centre Drive Suite 100 San Diego, CA 92121 Phone (858) 450-9009 Fax (858) 450-9929 www.bakbone.com

Date: May 19, 2010

To: Mr. Dan Woodward, Senior Vice President Product Delivery

Subject: Retention Incentive Bonus

We are pleased to offer you a cash incentive to continue to remain employed with the BakBone Software Incorporated (the “Company”) and promote the long-term success of the Company’s business operations. We are offering you the retention bonuses described in this letter agreement because we recognize your importance to the success of our business and to re-enforce that you have the potential to make a significant impact on our future growth. In consideration of the foregoing, we are offering you the additional benefits outlined below. These benefits are in addition to any you may already be entitled to receive pursuant to other agreements you have with the Company, including any restricted stock unit agreements, change in control agreements or employment agreements you may have previously entered into with the Company:

Retention Bonus.

You will be eligible to receive a lump sum cash retention bonus equal to $73,437.50 (the “2011 Retention Bonus”), less applicable withholding taxes, provided that you remain continuously employed with the Company through the earlier to occur of April 30, 2011 or a Change in Control of the Company (as defined below). You will be eligible to receive an additional lump sum cash retention bonus equal to $73,437.50 (the “2012 Retention Bonus”), less applicable withholding taxes, provided that you remain continuously employed with the Company through the earlier to occur of April 30, 2012 or a Change in Control of the Company (as defined below).

In addition, if, within twelve (12) months following the consummation of the Change in Control, you are either terminated by the Company or any successor entity without Cause (as hereinafter defined) or you voluntarily terminate your employment with the Company for “Good Reason” (as hereinafter defined), and provided you timely execute and not revoke a general release in a form provided by the Company or any successor entity at the time of termination, you will be entitled to receive a lump sum cash retention bonus equal to $146,875.00 (the “Change in Control Bonus”, and together with the 2011 Retention Bonus and the 2012 Retention Bonus, the “Retention Bonuses”).

Provided that you remain continuously employed with the Company as described in the preceding sentences, the 2011 and 2012 Retention Bonuses, less applicable withholding taxes, will be paid to you within ten (10) business days following the applicable date or event.

9540 Towne Centre Drive Suite 100 San Diego, CA 92121 Phone (858) 450-9009 Fax (858) 450-9929 www.bakbone.com

With respect to the Change in Control Bonus and any severance payments or benefits payable to you pursuant to that Change in Control Letter Agreement entered into by and between you and the Company as of June 19, 2009 (the “CIC Letter Agreement”), you must timely execute and not revoke a general release in a form provided by the Company or any successor entity at the time of termination (the “Release”). To be timely, the Release must become effective and irrevocable no later than sixty (60) days following your termination date (such deadline, the “Release Deadline”). If the Release does not become effective and irrevocable by the Release Deadline, you will forfeit any rights to the Change in Control Bonus and the severance payments and benefits under the CIC Letter Agreement. In no event will the Change in Control Bonus or the severance payments and benefits under the CIC Letter Agreement be paid or provided until the Release becomes effective and irrevocable. If the Release does become effective and irrevocable, the Change in Control Bonus and the severance payments and benefits under the CIC Letter will be paid in accordance with the paragraphs below under the heading “Section 409A.”

Definition of “Change in Control”.

For purposes of this Retention Incentive Bonus Letter (“Letter”), a Change in Control shall consist of any one or more of the following events (whether in a single transaction or a series of related transactions): (i) the consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if more than fifty percent (50%) of the combined voting power of the continuing or surviving entity’s securities outstanding immediately after such merger, consolidation or other reorganization is owned by persons who were not stockholders of the Company immediately prior to such merger, consolidation or other reorganization; (ii) the sale, transfer or other disposition of all or substantially all of the Company’s assets; or (iii) any transaction as a result of which any person or related group of persons becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or indirectly, of securities of the Company representing at least fifty percent (50%) of the total voting power represented by the Company’s then outstanding voting securities (other than as a result of the new issuance of securities by the Company in any transaction or series of related transactions determined by the Board of Directors to be for the primary purpose of raising capital). Notwithstanding the foregoing, a transaction shall not constitute a Change in Control if: (i) its sole purpose is to change the state of the Company’s incorporation; (ii) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction; or (iii) following the consummation of the transaction or series of related transactions, members of the Board of Directors of the Company prior to such transaction constitute a majority of the members of the Board of Directors of the continuing or surviving entity.

9540 Towne Centre Drive Suite 100 San Diego, CA 92121 Phone (858) 450-9009 Fax (858) 450-9929 www.bakbone.com

Definition of “Cause.”

As used in this Letter, the term “Cause” shall have the meaning, with respect to the termination of your employment by the Company or any successor entity, expressly set forth in any then-effective written agreement regarding your employment between you and the Company, or in the absence of such then-effective written agreement and definition, shall mean termination of your employment as a result of your: (i) performance of any act or failure to perform any act in bad faith and to the detriment of the Company; (ii) dishonesty, intentional misconduct or material breach of any agreement with the Company; (iii) commission of a crime involving dishonesty, breach of trust, or physical or emotional harm to any person; or (iv) i failure to perform job duties diligently and/or professionally, as reasonably determined by the Company’s Board of Directors.

Definition of “Good Reason.”

As used in this Letter, the term “Good Reason” shall mean the termination of your employment by you following the occurrence of any of the following events or conditions (unless otherwise consented to by you, provided that you shall be deemed to have consented to any such event or condition unless you provide written notice of your non-acquiescence within thirty (30) days of the effective time of such event or condition): (i) a change in your responsibilities or duties which represents a material and substantial diminution in your responsibilities or duties as in effect immediately preceding the consummation of the Change in Control; (ii) a reduction in your base salary to a level below that in effect at any time within six (6) months preceding the consummation of a Change in Control or at any time thereafter; provided that an across-the-board reduction in the salary level of substantially all other individuals in positions similar to yours by the same percentage amount shall not constitute such a salary reduction; or (iii) requiring you to be based at any place outside a fifty (50) mile radius from your job location or residence prior to the Change in Control, except for reasonably required travel on business which is not materially greater than such travel requirements prior to the Change in Control.

9540 Towne Centre Drive Suite 100 San Diego, CA 92121 Phone (858) 450-9009 Fax (858) 450-9929 www.bakbone.com

Section 409A

Notwithstanding anything to the contrary in this Letter, the Change in Control Bonus, the severance payments and benefits payable under the CIC Letter Agreement, and any other severance pay or benefits to be paid or provided to you, if any, that are considered deferred compensation under Section 409A of the Internal Revenue Code of 1986, as amended, and the final regulations and any guidance promulgated thereunder (“Section 409A”) (together, the “Deferred Payments”) will be paid or otherwise provided until you have had a “separation from service” within the meaning of Section 409A. Similarly, no severance payable to you, if any, that otherwise would be exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9) will be payable until you have a “separation from service” within the meaning of Section 409A. Assuming that the Release becomes effective and irrevocable by the Release Deadline, the Deferred Payments will be paid (or will commence as applicable) on the sixtieth (60^th) day following your separation from service, or, if later, such time as required by the next paragraph. For purposes of clarity, the cash severance payments under the CIC Letter Agreement are deferred compensation under Section 409A and, in the absence of these provisions, would have been required to be delayed (as described in the CIC Letter Agreement) to comply with Section 409A. Consequently, notwithstanding anything to the contrary in the CIC Letter Agreement, the cash severance amounts payable under the CIC Letter Agreement could have only been paid in a lump sum and will continue to be paid only in a lump sum.

Notwithstanding anything to the contrary in this Letter (or the CIC Letter Agreement), if you are a “specified employee” within the meaning of Section 409A at the time of your termination (other than due to death), then the Deferred Payments that are payable within the first six (6) months following your separation from service will become payable on the first payroll date that occurs on or after the date six (6) months and one (1) day following the date of your separation from service. All subsequent Deferred Payments, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit. Notwithstanding anything herein to the contrary, if you die following your separation from service, then any payments delayed in accordance with this paragraph will be payable in a lump sum as soon as administratively practicable after the date of your death and all other Deferred Payments will be payable in accordance with the payment schedule applicable to each payment or benefit.

The foregoing provisions are intended to comply with the requirements of Section 409A so that neither the Change in Control Bonus nor any other severance payments or benefit will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so comply. The Company and you agree to work together in good faith to consider amendments to this Letter and to take such reasonable actions which are necessary, appropriate, or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to you under Section 409A.

9540 Towne Centre Drive Suite 100 San Diego, CA 92121 Phone (858) 450-9009 Fax (858) 450-9929 www.bakbone.com

At-Will Employment

Your employment with the Company is and shall continue to be “at-will” and may be terminated at any time with or without cause or notice by either the Company or you. This Letter does not constitute an express or implied promise of continued employment with the Company for any period and does not alter your “at-will” employment status. IF YOUR EMPLOYMENT WITH THE COMPANY TERMINATES FOR ANY OR NO REASON PRIOR TO THE EARLIER OF APRIL 30, 2011 OR A CHANGE IN CONTROL OF THE COMPANY, YOU WILL NOT BE ELIGIBLE TO RECEIVE THE 2011 RETENTION BONUS. IF YOUR EMPLOYMENT WITH THE COMPANY TERMINATES FOR ANY OR NO REASON PRIOR TO THE EARLIER OF APRIL 30, 2012 OR A CHANGE IN CONTROL OF THE COMPANY, YOU WILL NOT BE ELIGIBLE TO RECEIVE THE 2012 RETENTION BONUS. IF YOUR EMPLOYMENT WITH THE COMPANY TERMINATES FOR ANY OR NO REASON PRIOR TO A CHANGE IN CONTROL OF THE COMPANY, YOU WILL NOT BE ELIGIBLE FOR THE CHANGE IN CONTROL BONUS.                      (employee initials here)

To indicate your acceptance of the terms of this Letter, please sign and date this letter in the space provided below. A duplicate has been provided for your records. The terms of this Letter will expire if the Letter is not accepted, signed and returned by May 28, 2010.

You may not assign your rights under this Letter to any other party (whether by operation of law or otherwise). This Letter will be governed by and construed in accordance with the laws of the State of California (with the exception of its conflict of laws provisions).

THE PARTIES AGREE THAT ANY AND ALL DISPUTES ARISING OUT OF THE TERMS OF THIS LETTER, THEIR INTERPRETATION, AND ANY OF THE MATTERS HEREIN ADDRESSED, SHALL BE SUBJECT EXCLUSIVELY TO CONFIDENTIAL BINDING ARBITRATION IN SAN DIEGO COUNTY, BEFORE JUDICIAL ARBITRATION & MEDIATION SERVICES (“JAMS”), PURSUANT TO ITS EMPLOYMENT ARBITRATION RULES & PROCEDURES (“JAMS RULES”) IN EFFECT AT THE TIME OF THE COMMENCEMENT OF THE ARBITRATION. THE ARBITRATOR MAY GRANT INJUNCTIONS AND OTHER RELIEF IN SUCH DISPUTES. THE ARBITRATOR SHALL ADMINISTER AND CONDUCT ANY ARBITRATION IN ACCORDANCE WITH CALIFORNIA LAW, INCLUDING THE

9540 Towne Centre Drive Suite 100 San Diego, CA 92121 Phone (858) 450-9009 Fax (858) 450-9929 www.bakbone.com

CALIFORNIA CODE OF CIVIL PROCEDURE, AND THE ARBITRATOR SHALL APPLY SUBSTANTIVE AND PROCEDURAL CALIFORNIA LAW TO ANY DISPUTE OR CLAIM, WITHOUT REFERENCE TO ANY CONFLICT-OF-LAW PROVISIONS OFANY JURISDICTION. TO THE EXTENT THAT THE JAMS RULES CONFLICT WITH CALIFORNIA LAW, CALIFORNIA LAW SHALL TAKE PRECEDENCE. THE DECISION OF THE ARBITRATOR SHALL BE FINAL, CONCLUSIVE, AND BINDING ON THE PARTIES TO THE ARBITRATION. THE PARTIES AGREE THAT THE PREVAILING PARTY IN ANY ARBITRATION SHALL BE ENTITLED TO INJUNCTIVE RELIEF IN ANY COURT OF COMPETENT JURISDICTION TO ENFORCE THE ARBITRATION AWARD. THE PARTIES TO THE ARBITRATION SHALL EACH PAY AN EQUAL SHARE OF THE COSTS AND EXPENSES OF SUCH ARBITRATION, AND EACH PARTY SHALL SEPARATELY PAY FOR ITS RESPECTIVE COUNSEL FEES AND EXPENSES. THE PARTIES HEREBY AGREE TO WAIVE THEIR RIGHT TO HAVE ANY DISPUTE BETWEEN THEM RESOLVED IN A COURT OF LAW BY A JUDGE OR JURY. NOTWITHSTANDING THE FOREGOING, THIS SECTION WILL NOT PREVENT EITHER PARTY FROM SEEKING INJUNCTIVE RELIEF (OR ANY OTHER PROVISIONAL REMEDY) FROM ANY COURT HAVING JURISDICTION OVER THE PARTIES AND THE SUBJECT MATTER OF THEIR DISPUTE RELATING TO THIS AGREEMENT AND THE AGREEMENTS INCORPORATED HEREIN BY REFERENCE. SHOULD ANY PART OF THE ARBITRATION AGREEMENT CONTAINED IN THIS PARAGRAPH CONFLICT WITH ANY OTHER ARBITRATION AGREEMENT BETWEEN THE PARTIES, THE PARTIES AGREE THAT THIS ARBITRATION AGREEMENT SHALL GOVERN. NOTWITHSTANDING THE FOREGOING, THE COMPANY SHALL HAVE THE RIGHT TO MAKE SUCH DISCLOSURES AND FILINGS AS REQUIRED BY APPLICABLE SECURITIES LAWS.

Sincerely,

BAKBONE SOFTWARE INCORPORATED

By:	/s/ Steve Martin
	Mr. Steve Martin	SVP, CFO and Interim CEO

9540 Towne Centre Drive Suite 100 San Diego, CA 92121 Phone (858) 450-9009 Fax (858) 450-9929 www.bakbone.com

EXECUTIVE SIGNATURE PAGE FOR RETENTION INCENTIVE BONUS LETTER

Agreed to and accepted:

Signature:	/s/ Dan Woodward
Printed Name:	Dan Woodward

Date: May 19, 2010

Enclosures

Duplicate Original Letter

EX-10.3

Exhibit 10.3

SEPARATION AGREEMENT AND RELEASE

This Separation Agreement and Release (this “Agreement”) is made by and between James R. Johnson (“Employee”) and BakBone Software Incorporated (the “Company”) (collectively referred to as the “Parties” or individually referred to as a “Party”).

RECITALS

WHEREAS, Employee was employed by the Company as Chief Executive Officer;

WHEREAS, Employee signed a Confidential Information, and Invention Assignment Agreement with the Company on November 3, 2004 (the “Confidentiality Agreement”);

WHEREAS, the Company and Employee entered into an employment agreement dated October 28, 2004 (the “Employment Agreement”);

WHEREAS, the Company and Employee have entered into Stock Option Agreements, dated November 1, 2004 and March 2, 2010 (the “Stock Options”), granting Employee the option to purchase shares of the Company’s common stock subject to the terms and conditions of the Company’s 2003 Equity Incentive Plan and the Stock Option Agreements (collectively the “Stock Agreements”);

WHEREAS, effective as of April 6, 2010, (the “Termination Date” or “Effective Date”) the Company terminated Employee’s employment, and, at Company’s request, Employee resigned as a member of the Company’s board of directors, and the Parties agree that such termination constitutes a “separation from service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, and applicable guidance issued thereunder (“Section 409A”); and

WHEREAS, the Parties wish to resolve any and all disputes, claims, complaints, grievances, charges, actions, petitions, and demands that the Employee may have against the Company and any of the Releasees as defined below, including, but not limited to, any and all claims arising out of or in any way related to Employee’s employment with or separation from the Company.

NOW, THEREFORE, in consideration of the mutual promises made herein, the Company and Employee hereby agree as follows:

COVENANTS

1. Consideration.

a. Payment. In accordance with Section 11(a) of the Employment Agreement, the Company shall pay Employee a total of Three Hundred Thousand Dollars ($300,000), at the rate of Twelve Thousand Five Hundred Dollars ($12,500) per bi-monthly pay period, less applicable withholdings, for twelve (12) months following the Termination Date, in accordance with the Company’s regular payroll practices (the “Payment Period”) but subject to Section 19 below.

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b. COBRA. In accordance with Section 11(a) of the Employment Agreement, and provided that Employee is eligible to continue coverage under the Company’s group health plans under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company shall reimburse Employee for the payments Employee makes for such COBRA coverage at the level in effect at the time of the Termination Date, beginning as of May 1, 2010 and continuing until April 30, 2011, or until the expiration of the COBRA continuation period, whichever occurs first, provided Employee timely elects and pays for COBRA coverage. COBRA reimbursements shall be made by the Company to Employee consistent with the Company’s normal expense reimbursement policy, provided that Employee submits documentation to the Company substantiating his payments for COBRA coverage.

2. Resignation from All Positions. The Employee confirms that he has resigned, effective April 6, 2010, from all positions, if any, that he held with the Company or any of its subsidiaries, and without further compensation, Employee agrees to sign any documents reasonably requested by the Company to accomplish such purpose.

3. Options. The Parties agree that, after giving effect to the acceleration of vesting provisions in the Stock Agreements and the Employment Agreement, Employee will have vested unexercised options to purchase 1,300,000 shares of common stock with an exercise price of CDN$1.24 per share and 360,938 shares of common stock with an exercise price of USD$0.35 per share and no more. Any Stock Options that remained unvested as of the Termination Date will be permanently forfeited as of such date, and Employee agrees and acknowledges that Employee will have no further rights or interests in the shares underlying the unvested, forfeited Stock Options. The exercise of Employee’s vested options shall continue to be governed by the terms and conditions of the Stock Agreements, including without limitation the ninety (90) day post-termination exercise period which expires on July 5, 2010.

4. Benefits. Employee’s health insurance benefits shall cease on the last day of April 2010, subject to Employee’s right to continue his health insurance under COBRA. Employee’s participation in all benefits and incidents of employment, including, but not limited to, vesting in stock options, and the accrual of bonuses, vacation, and paid time off, ceased as of the Termination Date.

5. Payment of Salary and Receipt of All Benefits. Employee acknowledges and represents that, other than the consideration set forth in this Agreement, the Company has paid or provided all salary, wages, bonuses, accrued vacation/paid time off, premiums, leaves, housing allowances, relocation costs, interest, severance, outplacement costs, fees, reimbursable expenses, commissions, stock, stock options, vesting, and any and all other benefits and compensation due to Employee.

6. Release of Claims.

a. Employee Releases. Employee agrees that the foregoing consideration represents settlement in full of all outstanding obligations owed to Employee by the Company and its current and former officers, directors, employees, agents, investors, attorneys, shareholders, administrators, affiliates, benefit plans, plan administrators, insurers, trustees, divisions, and subsidiaries, and predecessor and successor corporations and assigns (collectively,

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the “Company Releasees”). Employee, on his own behalf and on behalf of his heirs, family members, executors, agents, and assigns, hereby and forever releases the Company Releasees from, and agrees not to sue concerning, or in any manner to institute, prosecute, or pursue, any claim, complaint, charge, duty, obligation, demand, or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that Employee may possess against any of the Company Releasees arising from any omissions, acts, facts, or damages that have occurred up until and including the Effective Date of this Agreement, including, without limitation:

(i) any and all claims relating to or arising from Employee’s employment relationship with the Company and the termination of that relationship;

(ii) any and all claims relating to, or arising from, Employee’s right to purchase, or actual purchase of shares of stock of the Company, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law, and securities fraud under any state or federal law;

(iii) any and all claims for wrongful discharge of employment; termination in violation of public policy; discrimination; harassment; retaliation; breach of contract, both express and implied; breach of covenant of good faith and fair dealing, both express and implied; promissory estoppel; negligent or intentional infliction of emotional distress; fraud; negligent or intentional misrepresentation; negligent or intentional interference with contract or prospective economic advantage; unfair business practices; defamation; libel; slander; negligence; personal injury; assault; battery; invasion of privacy; false imprisonment; conversion; and disability benefits;

(iv) any and all claims for violation of any federal, state, or municipal statute, including, but not limited to, Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Rehabilitation Act of 1973; the Americans with Disabilities Act of 1990; the Equal Pay Act; the Fair Labor Standards Act, except as prohibited by law; the Fair Credit Reporting Act; the Age Discrimination in Employment Act of 1967; the Older Workers Benefit Protection Act; the Employee Retirement Income Security Act of 1974; the Worker Adjustment and Retraining Notification Act; the Family and Medical Leave Act, except as prohibited by law; the Sarbanes-Oxley Act of 2002; the California Family Rights Act; the California Labor Code, except as prohibited by law; the California Workers’ Compensation Act, except as prohibited by law; and the California Fair Employment and Housing Act;

(v) any and all claims for violation of the federal or any state constitution;

(vi) any and all claims arising out of any other laws and regulations relating to employment or employment discrimination; and

(vii) any and all claims for attorneys’ fees and costs.

Employee agrees that the release set forth in this section shall be and remain in effect in all respects as a complete general release as to the matters released. This release does not extend to any obligations incurred under this Agreement. This release does not release claims that cannot be released as a matter of law, including, but not limited to: (1) Employee’s right to file a

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charge with or participate in a charge by the Equal Employment Opportunity Commission, or any other local, state, or federal administrative body or government agency that is authorized to enforce or administer laws related to employment, against the Company (with the understanding that any such filing or participation does not give Employee the right to recover any monetary damages against the Company; Employee’s release of claims herein bars Employee from recovering such monetary relief from the Company); (2) rights for indemnification under the federal and state laws including, but not limited to claims arising under Division 3, Article 2 of the California Labor Code (which includes California Labor Code section 2802 regarding indemnity for necessary expenditures or losses by employee) or under any contract or agreement with the Company that provides for indemnification or under the Company’s by-laws or under any insurance policies of the Company; and (3) claims prohibited from release as set forth in California Labor Code section 206.5 (specifically “any claim or right on account of wages due, or to become due, or made as an advance on wages to be earned, unless payment of such wages has been made”). Employee represents that he/she has made no assignment or transfer of any right, claim, complaint, charge, duty, obligation, demand, cause of action, or other matter waived or released by this Section.

b. Company Releases. Company agrees that the foregoing consideration represents settlement in full of all outstanding obligations owed to Company by the Employee and his current and former agents, attorneys, administrators, affiliates, benefit plans, plan administrators, insurers, trustees, divisions, and subsidiaries (collectively, the “Employee Releasees”). Company, on its own behalf and on behalf of its agents and assigns, hereby and forever releases the Employee Releasees from, and agrees not to sue concerning, or in any manner to institute, prosecute, or pursue, any claim, complaint, charge, duty, obligation, demand, or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that Company may possess against any of the Employee Releasees arising from any omissions, acts, facts, or damages that have occurred up until and including the Effective Date of this Agreement, including, without limitation:

(i) any and all claims relating to or arising from Company’s employment relationship with the Employee and the termination of that relationship;

(ii) any and all claims relating to, or arising from, Employee’s right to purchase, or actual purchase of shares of stock of the Company, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law, and securities fraud under any state or federal law;

(iii) any and all claims for breach of contract, both express and implied; breach of covenant of good faith and fair dealing, both express and implied; promissory estoppel; negligent or intentional infliction of emotional distress; fraud; negligent or intentional misrepresentation; negligent or intentional interference with contract or prospective economic advantage; unfair business practices; defamation; libel; slander; negligence; personal injury; assault; battery; invasion of privacy; false imprisonment; conversion; and disability benefits;

(iv) any and all claims for violation of any federal, state, or municipal statute, including, but not limited to, Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Rehabilitation Act of 1973; the Americans with Disabilities Act of 1990; the Equal Pay

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Act; the Fair Labor Standards Act, except as prohibited by law; the Fair Credit Reporting Act; the Age Discrimination in Employment Act of 1967; the Older Workers Benefit Protection Act; the Company Retirement Income Security Act of 1974; the Worker Adjustment and Retraining Notification Act; the Family and Medical Leave Act, except as prohibited by law; the Sarbanes-Oxley Act of 2002; the California Family Rights Act; the California Labor Code, except as prohibited by law; the California Workers’ Compensation Act, except as prohibited by law; and the California Fair Employment and Housing Act;

(v) any and all claims for violation of the federal or any state constitution;

(vi) any and all claims arising out of any other laws and regulations relating to employment or employment discrimination; and

(vii) any and all claims for attorneys’ fees and costs.

Company agrees that the release set forth in this section shall be and remain in effect in all respects as a complete general release as to the matters released. This release does not extend to any obligations incurred under this Agreement. Company represents that it has made no assignment or transfer of any right, claim, complaint, charge, duty, obligation, demand, cause of action, or other matter waived or released by this Section.

7. Notwithstanding the foregoing, nothing contained in section 6(b) shall release any claim, complaint, charge, duty, obligation, demand, or cause of action (collectively, “Claim”) which Company has, or may have, against Employee Releasees, which such Claim arises out of any intentional or criminal act of Employee and where the material facts underlying such Claim are not known to Company as of May 14, 2010. Acknowledgment of Waiver of Claims under ADEA. Employee acknowledges that he is waiving and releasing any rights he may have under the Age Discrimination in Employment Act of 1967 (“ADEA”), and that this waiver and release is knowing and voluntary. Employee agrees that this waiver and release does not apply to any rights or claims that may arise under the ADEA after the Effective Date of this Agreement. Employee acknowledges that the consideration given for this waiver and release is in addition to anything of value to which Employee was already entitled. Employee further acknowledges that he has been advised by this writing that: (a) he should consult with an attorney prior to executing this Agreement; (b) he has twenty-one (21) days within which to consider this Agreement; (c) he has seven (7) days following his execution of this Agreement to revoke this Agreement; (d) this Agreement shall not be effective until after the revocation period has expired; and (e) nothing in this Agreement prevents or precludes Employee from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties, or costs for doing so, unless specifically authorized by federal law. In the event Employee signs this Agreement and returns it to the Company in less than the 21-day period identified above, Employee hereby acknowledges that he has freely and voluntarily chosen to waive the time period allotted for considering this Agreement. Employee acknowledges and understands that revocation must be accomplished by a written notification to the Company’s principal address, directed to the attention of the Company’s General Counsel, that is received prior to the Effective Date.

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8. California Civil Code Section 1542. Each party acknowledges that he and/or it has been advised to consult with legal counsel and is familiar with the provisions of California Civil Code Section 1542, a statute that otherwise prohibits the release of unknown claims, which provides as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW 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.

Each Party, being aware of said code section, agrees to expressly waive any rights he and/or it may have thereunder, as well as under any other statute or common law principles of similar effect.

9. No Pending or Future Lawsuits. Each Party represents that he and/or it has no lawsuits, claims, or actions pending in his or its name, or on behalf of any other person or entity, against the other Party or any of the other Employee Releasees or Company Releasees. Each Party also represents that he and/or it does not intend to bring any claims on his or its own behalf or on behalf of any other person or entity against the other Party or any of the other Employee Releasees or Company Releasees. Employee represents that, to the best of his knowledge, in the course of performing his duties to the Company during his employment, he has at all times complied in all material respects with all Company policies and applicable laws.

10. Application for Employment. Employee understands and agrees that, as a condition of this Agreement, Employee shall not be entitled to any employment with the Company, and Employee hereby waives any right, or alleged right, of employment or re-employment with the Company. Employee further agrees not to apply for employment with the Company.

11. Trade Secrets and Confidential Information/Company Property. Employee reaffirms and agrees to observe and abide by the terms of the Confidentiality Agreement, specifically including the provisions therein regarding nondisclosure of the Company’s trade secrets and confidential and proprietary information. Employee’s signature below constitutes his certification that, to the best of his knowledge, he has returned all documents and other items provided to Employee by the Company, developed or obtained by Employee in connection with his employment with the Company, or otherwise belonging to the Company. Notwithstanding the foregoing, Company hereby transfers ownership to Employee of his company computer and Blackberry and agrees that Employee may maintain possession of those two items.

12. No Cooperation. Employee and Company each agree that he and it will not knowingly encourage, counsel, or assist any attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints by any third party against any of the Company Releasees (in the case of Employee) and any of the Employee Releases (in the case of Company), unless under a subpoena or other court order to do so or as related directly to the ADEA waiver in this Agreement. Each Party agrees both to immediately notify the other Party upon receipt of any such subpoena or court order, and to furnish, within

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three (3) business days of its receipt, a copy of such subpoena or other court order. If approached by anyone for counsel or assistance in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints against any of the Company Releasees (in the case of Employee) and any of the Employee Releases (in the case of Company), each Party shall state no more than that he cannot provide counsel or assistance.

13. Nondisparagement. Employee, on the one hand, and Company, on the other hand, each agrees to refrain from any disparagement, criticism, defamation, or slander of any of the Company Releasees (in the case of Employee) and any of the Employee Releases (in the case of Company). The foregoing restrictions will not apply to any statements that are made truthfully in response to a subpoena or other compulsory legal process. Employee shall direct any inquiries by potential future employers to the Company’s human resources department, which shall provide only the Employee’s last position and dates of employment.

14. No Setoff. Company may not withhold any of the Severance Payments as an offset against any alleged damages incurred by Company as a result of any alleged breach of this Agreement by Employee.

15. No Admission of Liability. Employee and Company understand and acknowledge that this Agreement constitutes a compromise and settlement of any and all actual or potential disputed claims. No action taken by any Party, either previously or in connection with this Agreement, shall be deemed or construed to be (a) an admission of the truth or falsity of any actual or potential claims or (b) an acknowledgment or admission of any fault or liability whatsoever to any Party or to any third party.

16. Future Assistance. Throughout the Payment Period, Employee agrees to (i) respond to reasonable requests from the Company and its counsel for information needed to prepare such operational, financial and other reports, filings and documents that relate to the time period during which Employee was employed with the Company (ii) otherwise cooperate as reasonably requested by the Company in connection with customers or Company business. For purposes of clarity, any assistance provided by the Employee pursuant to the preceding sentence will be on a voluntary basis for no consideration and in no way shall be construed as providing assistance as an employee, consultant, independent contractor or other advisor or service provider to the Company.

17. Costs. The Parties shall each bear their own costs, attorneys’ fees, and other fees incurred in connection with the preparation of this Agreement.

18. ARBITRATION. THE PARTIES AGREE THAT ANY AND ALL DISPUTES ARISING OUT OF THE TERMS OF THIS AGREEMENT, THEIR INTERPRETATION, AND ANY OF THE MATTERS HEREIN RELEASED, SHALL BE SUBJECT EXCLUSIVELY TO CONFIDENTIAL BINDING ARBITRATION IN SAN DIEGO COUNTY, BEFORE JUDICIAL ARBITRATION & MEDIATION SERVICES (“JAMS”), PURSUANT TO ITS EMPLOYMENT ARBITRATION RULES & PROCEDURES (“JAMS RULES”) IN EFFECT AT THE TIME OF THE COMMENCEMENT OF THE ARBITRATION. THE ARBITRATOR MAY GRANT INJUNCTIONS AND OTHER RELIEF IN SUCH DISPUTES. THE ARBITRATOR SHALL ADMINISTER AND CONDUCT ANY ARBITRATION IN

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ACCORDANCE WITH CALIFORNIA LAW, INCLUDING THE CALIFORNIA CODE OF CIVIL PROCEDURE, AND THE ARBITRATOR SHALL APPLY SUBSTANTIVE AND PROCEDURAL CALIFORNIA LAW TO ANY DISPUTE OR CLAIM, WITHOUT REFERENCE TO ANY CONFLICT-OF-LAW PROVISIONS OF ANY JURISDICTION. TO THE EXTENT THAT THE JAMS RULES CONFLICT WITH CALIFORNIA LAW, CALIFORNIA LAW SHALL TAKE PRECEDENCE. THE DECISION OF THE ARBITRATOR SHALL BE FINAL, CONCLUSIVE, AND BINDING ON THE PARTIES TO THE ARBITRATION. THE PARTIES AGREE THAT THE PREVAILING PARTY IN ANY ARBITRATION SHALL BE ENTITLED TO INJUNCTIVE RELIEF IN ANY COURT OF COMPETENT JURISDICTION TO ENFORCE THE ARBITRATION AWARD. COMPANY SHALL PAY THE COSTS AND EXPENSES OF SUCH ARBITRATION, EXCEPT THAT, AS AN INITIAL MATTER, EACH PARTY SHALL SEPARATELY PAY FOR ITS RESPECTIVE COUNSEL FEES AND EXPENSES. THE PARTIES HEREBY AGREE TO WAIVE THEIR RIGHT TO HAVE ANY DISPUTE BETWEEN THEM RESOLVED IN A COURT OF LAW BY A JUDGE OR JURY. NOTWITHSTANDING THE FOREGOING, THIS SECTION WILL NOT PREVENT EITHER PARTY FROM SEEKING INJUNCTIVE RELIEF (OR ANY OTHER PROVISIONAL REMEDY) FROM ANY COURT HAVING JURISDICTION OVER THE PARTIES AND THE SUBJECT MATTER OF THEIR DISPUTE RELATING TO THIS AGREEMENT AND THE AGREEMENTS INCORPORATED HEREIN BY REFERENCE. SHOULD ANY PART OF THE ARBITRATION AGREEMENT CONTAINED IN THIS PARAGRAPH CONFLICT WITH ANY OTHER ARBITRATION AGREEMENT BETWEEN THE PARTIES, THE PARTIES AGREE THAT THIS ARBITRATION AGREEMENT SHALL GOVERN. NOTWITHSTANDING THE FOREGOING, THE COMPANY SHALL HAVE THE RIGHT TO MAKE SUCH DISCLOSURES AND FILINGS AS REQUIRED BY APPLICABLE SECURITIES LAWS.

19. Section 409A. The Parties agree that the severance payments payable pursuant to Section 1 of this Agreement are exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(i)(iii) and (v). This provision is intended to comply with the requirements of Section 409A so that none of the severance payments and benefits to be provided hereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so comply. The Company and Employee agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to Employee under Section 409A.

20. Tax Consequences. The Company makes no representations or warranties with respect to the tax consequences of the payments and any other consideration provided to Employee or made on his behalf under the terms of this Agreement. Employee agrees and understands that he is responsible for payment, if any, of local, state, and/or federal taxes on the payments and any other consideration provided hereunder by the Company and any penalties or assessments thereon. Employee further agrees to indemnify and hold the Company harmless from any claims, demands, deficiencies, penalties, interest, assessments, executions, judgments, or recoveries by any government agency against the Company for any amounts claimed due on account of (a) Employee’s failure to pay or delayed payment of federal or state taxes, or (b) damages sustained by the Company by reason of any such claims, including attorneys’ fees and costs.

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21. Authority. The Company represents and warrants that the undersigned has the authority to act on behalf of the Company and to bind the Company and all who may claim through it to the terms and conditions of this Agreement. Employee represents and warrants that he has the capacity to act on his own behalf and on behalf of all who might claim through him to bind them to the terms and conditions of this Agreement. Each Party warrants and represents that there are no liens or claims of lien or assignments in law or equity or otherwise of or against any of the claims or causes of action released herein.

22. No Company Representations. Employee represents that he has had an opportunity to consult with an attorney, and has carefully read and understands the scope and effect of the provisions of this Agreement. Employee has not relied upon any representations or statements made by the Company that are not specifically set forth in this Agreement.

23. Severability. In the event that any provision or any portion of any provision hereof or any surviving agreement made a part hereof becomes or is declared by a court of competent jurisdiction or arbitrator to be illegal, unenforceable, or void, this Agreement shall continue in full force and effect without said provision or portion of provision.

24. Attorneys’ Fees. In the event of any dispute and/or arbitration between the parties arising out, pertaining to or referencing any of the terms of this agreement, their interpretation, and/or any of the matters herein released, Except with regard to a legal action challenging or seeking a determination in good faith of the validity of the waiver herein under the ADEA, in the event that either party brings an action to enforce or effect its rights under this agreement, the non-prevailing party shall pay to the prevailing party his or its reasonable attorneys fees, costs and expenses incurred in connection with such dispute.

25. Entire Agreement. This Agreement represents the entire agreement and understanding between the Company and Employee concerning the subject matter of this Agreement and Employee’s employment with and separation from the Company and the events leading thereto and associated therewith, and supersedes and replaces any and all prior agreements and understandings concerning the subject matter of this Agreement and Employee’s relationship with the Company, with the exception of the Confidentiality Agreement and the Stock Agreements. The language of this agreement shall be construed as to its fair meaning and not strictly for or against either party.

26. No Oral Modification. This Agreement may only be amended in a writing signed by Employee and a duly authorized officer or agent of the Company.

27. Governing Law. This Agreement shall be governed by the laws of the State of California, without regard for choice-of-law provisions. The Parties consent to personal and exclusive jurisdiction and venue in the State of California.

28. Effective Date. Employee understands that this Agreement shall be null and void if not executed by him within twenty-one (21) days. Each Party has seven (7) days after that Party signs this Agreement to revoke it. This Agreement will become effective on the eighth (8th) day after Employee signed this Agreement, so long as it has been signed by the Parties and has not been revoked by either Party before that date (the “Effective Date”).

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29. Counterparts. This Agreement may be executed in counterparts and by facsimile, and each counterpart and facsimile shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned.

30. Voluntary Execution of Agreement. Employee understands and agrees that he executed this Agreement voluntarily, without any duress or undue influence on the part or behalf of the Company or any third party, with the full intent of releasing all of his claims against the Company and any of the other Releasees. Employee acknowledges that:

a. he has read this Agreement;

b. he has been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of his own choice;

c. he understands the terms and consequences of this Agreement and of the releases it contains; and

d. he is fully aware of the legal and binding effect of this Agreement.

IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below.

		JAMES R. JOHNSON, an individual
Dated as of:	May 19, 2010	/s/ James Johnson
		James R. Johnson
		BAKBONE SOFTWARE INCORPORATED
Dated as of:	May 19, 2010	By:	/s/ Steve Martin
		Name:	Steve Martin
		Title:

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EX-10.4

Exhibit 10.4

SEPARATION AGREEMENT AND RELEASE

This Separation Agreement and Release (“Agreement”) is made by and between Kenneth W. Horner (“Employee”) and BakBone Software Incorporated (the “Company”) (collectively referred to as the “Parties” or individually referred to as a “Party”).

RECITALS

WHEREAS, Employee was employed by the Company as Senior Vice President Corporate Development and Strategy;

WHEREAS, Employee signed a Confidential Information, and Invention Assignment Agreement with the Company on September 15, 2005 (the “Confidentiality Agreement”);

WHEREAS, the Company and Employee entered into an employment agreement dated September 1, 2005 (the “Employment Agreement”); and amended terms of offer of employment dated June 19, 2009.

WHEREAS, the Company and Employee have entered into Stock Option Agreements, dated March 2, 2010 (the “Stock Options”), granting Employee the option to purchase shares of the Company’s common stock subject to the terms and conditions of the Company’s 2003 Equity Incentive Plan and the Stock Option Agreements (collectively the “Stock Agreements”);

WHEREAS, Employee’s employment with the Company terminated effective May 21, 2010 (the “Termination Date”) and the Parties agree that such termination constitutes a “separation from service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, and applicable guidance issued thereunder (“Section 409A”); and

WHEREAS, the Parties wish to resolve any and all disputes, claims, complaints, grievances, charges, actions, petitions, and demands that the Employee may have against the Company and any of the Releasees as defined below, including, but not limited to, any and all claims arising out of or in any way related to Employee’s employment with or separation from the Company.

NOW, THEREFORE, in consideration of the mutual promises made herein, the Company and Employee hereby agree as follows:

COVENANTS

1. Consideration.

a. Payment. In accordance with the amended terms of offer of employment dated June 19, 2009 , and upon execution of this Agreement and the expiration of any rescission periods, the Company agrees to pay Employee a total of One Hundred Seventeen Thousand Five Hundred Dollars ($117,500), in a one-time lump sum payment, less applicable withholdings, but subject to Section 19 below.

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2. Resignation from All Positions. The Employee confirms that he has resigned, effective May 21, 2010, from all positions, if any, that he held with the Company or any of its subsidiaries, and without further compensation, Employee agrees to sign any documents reasonably requested by the Company to accomplish such purpose.

3. Options. The Parties agree that, , Employee will have vested unexercised options to purchase 84,375 shares of common stock with an exercise price of USD$0.35 per share and no more. Any Stock Options that remained unvested as of the Termination Date will be permanently forfeited as of such date, and Employee agrees and acknowledges that Employee will have no further rights or interests in the shares underlying the unvested, forfeited Stock Options. The exercise of Employee’s vested options shall continue to be governed by the terms and conditions of the Stock Agreements, including without limitation the ninety (90) day post-termination exercise period which expires on August 21, 2010.

4. Benefits. Employee’s health insurance benefits shall cease on the last day of May 2010, subject to Employee’s right to continue his health insurance under COBRA. Employee’s participation in all benefits and incidents of employment, including, but not limited to, vesting in stock options, and the accrual of bonuses, vacation, and paid time off, ceased as of the Termination Date.

5. Payment of Salary and Receipt of All Benefits. Employee acknowledges and represents that, other than the consideration set forth in this Agreement, the Company has paid or provided all salary, wages, bonuses, accrued vacation/paid time off, premiums, leaves, housing allowances, relocation costs, interest, severance, outplacement costs, fees, reimbursable expenses, commissions, stock, stock options, vesting, and any and all other benefits and compensation due to Employee.

6. Release of Claims. Employee agrees that the foregoing consideration represents settlement in full of all outstanding obligations owed to Employee by the Company and its current and former officers, directors, employees, agents, investors, attorneys, shareholders, administrators, affiliates, benefit plans, plan administrators, insurers, trustees, divisions, and subsidiaries, and predecessor and successor corporations and assigns (collectively, the “Releasees”). Employee, upon payment of the foregoing consideration, on his own behalf and on behalf of his respective heirs, family members, executors, agents, and assigns, hereby and forever releases the Releasees from, and agrees not to sue concerning, or in any manner to institute, prosecute, or pursue, any claim, complaint, charge, duty, obligation, demand, or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that Employee may possess against any of the Releasees arising from any omissions, acts, facts, or damages that have occurred up until and including the Effective Date of this Agreement, including, without limitation:

a. any and all claims relating to or arising from Employee’s employment relationship with the Company and the termination of that relationship;

b. any and all claims relating to, or arising from, Employee’s right to purchase, or actual purchase of shares of stock of the Company, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law, and securities fraud under any state or federal law;

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c. any and all claims for wrongful discharge of employment; termination in violation of public policy; discrimination; harassment; retaliation; breach of contract, both express and implied; breach of covenant of good faith and fair dealing, both express and implied; promissory estoppel; negligent or intentional infliction of emotional distress; fraud; negligent or intentional misrepresentation; negligent or intentional interference with contract or prospective economic advantage; unfair business practices; defamation; libel; slander; negligence; personal injury; assault; battery; invasion of privacy; false imprisonment; conversion; and disability benefits;

d. any and all claims for violation of any federal, state, or municipal statute, including, but not limited to, Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Rehabilitation Act of 1973; the Americans with Disabilities Act of 1990; the Equal Pay Act; the Fair Labor Standards Act, except as prohibited by law; the Fair Credit Reporting Act; the Age Discrimination in Employment Act of 1967; the Older Workers Benefit Protection Act; the Employee Retirement Income Security Act of 1974; the Worker Adjustment and Retraining Notification Act; the Family and Medical Leave Act, except as prohibited by law; the Sarbanes-Oxley Act of 2002; the California Family Rights Act; the California Labor Code, except as prohibited by law; the California Workers’ Compensation Act, except as prohibited by law; and the California Fair Employment and Housing Act;

e. any and all claims for violation of the federal or any state constitution;

f. any and all claims arising out of any other laws and regulations relating to employment or employment discrimination;

g. any claim for any loss, cost, damage, or expense arising out of any dispute over the nonwithholding or other tax treatment of any of the proceeds received by Employee as a result of this Agreement; and

h. any and all claims for attorneys’ fees and costs.

Employee agrees that the release set forth in this section shall be and remain in effect in all respects as a complete general release as to the matters released. This release does not extend to any obligations incurred under this Agreement. This release does not release claims that cannot be released as a matter of law, including, but not limited to: (1) Employee’s right to file a charge with or participate in a charge by the Equal Employment Opportunity Commission, or any other local, state, or federal administrative body or government agency that is authorized to enforce or administer laws related to employment, against the Company (with the understanding that any such filing or participation does not give Employee the right to recover any monetary damages against the Company; Employee’s release of claims herein bars Employee from recovering such monetary relief from the Company); (2) rights for indemnification under the federal and state laws including, but not limited to claims arising under Division 3, Article 2 of the California Labor Code (which includes California Labor Code section 2802 regarding indemnity for necessary expenditures or losses by employee) or under any contract or agreement

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with the Company that provides for indemnification or under the Company’s by-laws or under any insurance policies of the Company; and (3) claims prohibited from release as set forth in California Labor Code section 206.5 (specifically “any claim or right on account of wages due, or to become due, or made as an advance on wages to be earned, unless payment of such wages has been made”). Employee represents that he/she has made no assignment or transfer of any right, claim, complaint, charge, duty, obligation, demand, cause of action, or other matter waived or released by this Section.

7. Acknowledgment of Waiver of Claims under ADEA. Employee acknowledges that he is waiving and releasing any rights he may have under the Age Discrimination in Employment Act of 1967 (“ADEA”), and that this waiver and release is knowing and voluntary. Employee agrees that this waiver and release does not apply to any rights or claims that may arise under the ADEA after the Effective Date of this Agreement. Employee acknowledges that the consideration given for this waiver and release is in addition to anything of value to which Employee was already entitled. Employee further acknowledges that he has been advised by this writing that: (a) he should consult with an attorney prior to executing this Agreement; (b) he has forty-five (45) days within which to consider this Agreement; (c) he has seven (7) days following his execution of this Agreement to revoke this Agreement; (d) this Agreement shall not be effective until after the revocation period has expired; and (e) nothing in this Agreement prevents or precludes Employee from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties, or costs for doing so, unless specifically authorized by federal law. In the event Employee signs this Agreement and returns it to the Company in less than the 21-day period identified above, Employee hereby acknowledges that he has freely and voluntarily chosen to waive the time period allotted for considering this Agreement. Employee acknowledges and understands that revocation must be accomplished by a written notification to the Company’s principal address, directed to the attention of the Company’s General Counsel, that is received prior to the Effective Date.

8. California Civil Code Section 1542. Employee acknowledges that he has been advised to consult with legal counsel and is familiar with the provisions of California Civil Code Section 1542, a statute that otherwise prohibits the release of unknown claims, which provides as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW 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, being aware of said code section, agrees to expressly waive any rights he may have thereunder, as well as under any other statute or common law principles of similar effect.

9. No Pending or Future Lawsuits. Employee represents that he has no lawsuits, claims, or actions pending in his name, or on behalf of any other person or entity, against the Company or any of the other Releasees. Employee also represents that he does not intend to bring any claims on his own behalf or on behalf of any other person or entity against the Company or any of the other Releasees. Employee represents that, in the course of performing his duties to the Company during his employment, he has at all times complied in all material respects with all Company policies and applicable laws.

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10. Application for Employment. Employee understands and agrees that, as a condition of this Agreement, Employee shall not be entitled to any employment with the Company, and Employee hereby waives any right, or alleged right, of employment or re-employment with the Company. Employee further agrees not to apply for employment with the Company.

11. Trade Secrets and Confidential Information/Company Property. Employee reaffirms and agrees to observe and abide by the terms of the Confidentiality Agreement, specifically including the provisions therein regarding nondisclosure of the Company’s trade secrets and confidential and proprietary information. Employee’s signature below constitutes his certification under penalty of perjury that he has returned all documents and other items provided to Employee by the Company, developed or obtained by Employee in connection with his employment with the Company, or otherwise belonging to the Company.

12. No Cooperation. Employee agrees that he will not knowingly encourage, counsel, or assist any attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints by any third party against any of the Releasees, unless under a subpoena or other court order to do so or as related directly to the ADEA waiver in this Agreement. Employee agrees both to immediately notify the Company upon receipt of any such subpoena or court order, and to furnish, within three (3) business days of its receipt, a copy of such subpoena or other court order. If approached by anyone for counsel or assistance in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints against any of the Releasees, Employee shall state no more than that he cannot provide counsel or assistance.

13. Nondisparagement. Employee agrees to refrain from any disparagement, criticism, defamation, or slander of any of the Releasees, and agrees to refrain from any tortuous interference with the contracts and relationships of the Releasees. The foregoing restrictions will not apply to any statements that are made truthfully in response to a subpoena or other compulsory legal process. In the event Employee breaches this Section, all continuing payments and benefits to which Employee otherwise may be entitled pursuant to this Agreement will cease immediately. Employee shall direct any inquiries by potential future employers to the Company’s human resources department, which shall use its commercially reasonable efforts to provide only the Employee’s last position and dates of employment.

14. Breach. In addition to the rights provided in the “Attorneys’ Fees” section below, Employee acknowledges and agrees that any material breach of this Agreement, unless such breach constitutes a legal action by Employee challenging or seeking a determination in good faith of the validity of the waiver herein under the ADEA, or of any provision of the Confidentiality Agreement shall entitle the Company immediately to recover and/or cease providing the consideration provided to Employee under this Agreement and to obtain damages, except as provided by law.

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15. No Admission of Liability. Employee understands and acknowledges that this Agreement constitutes a compromise and settlement of any and all actual or potential disputed claims by Employee. No action taken by the Company hereto, either previously or in connection with this Agreement, shall be deemed or construed to be (a) an admission of the truth or falsity of any actual or potential claims or (b) an acknowledgment or admission by the Company of any fault or liability whatsoever to Employee or to any third party.

16. Future Assistance. Throughout the Payment Period, Employee agrees to (i) respond to reasonable requests from the Company and its counsel for information needed to prepare such operational, financial and other reports, filings and documents that relate to the time period during which Employee was employed with the Company (ii) otherwise cooperate as reasonably requested by the Company in connection with customers or Company business. For purposes of clarity, any assistance provided by the Employee pursuant to the preceding sentence will be on a voluntary basis for no consideration and in no way shall be construed as providing assistance as an employee, consultant, independent contractor or other advisor or service provider to the Company.

17. Costs. The Parties shall each bear their own costs, attorneys’ fees, and other fees incurred in connection with the preparation of this Agreement.

18. ARBITRATION. THE PARTIES AGREE THAT ANY AND ALL DISPUTES ARISING OUT OF THE TERMS OF THIS AGREEMENT, THEIR INTERPRETATION, AND ANY OF THE MATTERS HEREIN RELEASED, SHALL BE SUBJECT EXCLUSIVELY TO CONFIDENTIAL BINDING ARBITRATION IN SAN DIEGO COUNTY, BEFORE JUDICIAL ARBITRATION & MEDIATION SERVICES (“JAMS”), PURSUANT TO ITS EMPLOYMENT ARBITRATION RULES & PROCEDURES (“JAMS RULES”) IN EFFECT AT THE TIME OF THE COMMENCEMENT OF THE ARBITRATION. THE ARBITRATOR MAY GRANT INJUNCTIONS AND OTHER RELIEF IN SUCH DISPUTES. THE ARBITRATOR SHALL ADMINISTER AND CONDUCT ANY ARBITRATION IN ACCORDANCE WITH CALIFORNIA LAW, INCLUDING THE CALIFORNIA CODE OF CIVIL PROCEDURE, AND THE ARBITRATOR SHALL APPLY SUBSTANTIVE AND PROCEDURAL CALIFORNIA LAW TO ANY DISPUTE OR CLAIM, WITHOUT REFERENCE TO ANY CONFLICT-OF-LAW PROVISIONS OF ANY JURISDICTION. TO THE EXTENT THAT THE JAMS RULES CONFLICT WITH CALIFORNIA LAW, CALIFORNIA LAW SHALL TAKE PRECEDENCE. THE DECISION OF THE ARBITRATOR SHALL BE FINAL, CONCLUSIVE, AND BINDING ON THE PARTIES TO THE ARBITRATION. THE PARTIES AGREE THAT THE PREVAILING PARTY IN ANY ARBITRATION SHALL BE ENTITLED TO INJUNCTIVE RELIEF IN ANY COURT OF COMPETENT JURISDICTION TO ENFORCE THE ARBITRATION AWARD. THE PARTIES TO THE ARBITRATION SHALL EACH PAY AN EQUAL SHARE OF THE COSTS AND EXPENSES OF SUCH ARBITRATION, AND EACH PARTY SHALL SEPARATELY PAY FOR ITS RESPECTIVE COUNSEL FEES AND EXPENSES. THE PARTIES HEREBY AGREE TO WAIVE THEIR RIGHT TO HAVE ANY DISPUTE BETWEEN THEM RESOLVED IN A COURT OF LAW BY A JUDGE OR JURY. NOTWITHSTANDING THE FOREGOING, THIS SECTION WILL NOT PREVENT EITHER PARTY FROM SEEKING INJUNCTIVE RELIEF (OR ANY OTHER PROVISIONAL REMEDY) FROM ANY COURT HAVING JURISDICTION OVER THE PARTIES AND THE

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SUBJECT MATTER OF THEIR DISPUTE RELATING TO THIS AGREEMENT AND THE AGREEMENTS INCORPORATED HEREIN BY REFERENCE. SHOULD ANY PART OF THE ARBITRATION AGREEMENT CONTAINED IN THIS PARAGRAPH CONFLICT WITH ANY OTHER ARBITRATION AGREEMENT BETWEEN THE PARTIES, THE PARTIES AGREE THAT THIS ARBITRATION AGREEMENT SHALL GOVERN. NOTWITHSTANDING THE FOREGOING, THE COMPANY SHALL HAVE THE RIGHT TO MAKE SUCH DISCLOSURES AND FILINGS AS REQUIRED BY APPLICABLE SECURITIES LAWS.

19. Section 409A. The Parties agree that the severance payments payable pursuant to Section 1 of this Agreement are exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(i)(iii) and (v). This provision is intended to comply with the requirements of Section 409A so that none of the severance payments and benefits to be provided hereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so comply. The Company and Employee agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to Employee under Section 409A.

20. Tax Consequences. The Company makes no representations or warranties with respect to the tax consequences of the payments and any other consideration provided to Employee or made on his behalf under the terms of this Agreement. Employee agrees and understands that he is responsible for payment, if any, of local, state, and/or federal taxes on the payments and any other consideration provided hereunder by the Company and any penalties or assessments thereon. Employee further agrees to indemnify and hold the Company harmless from any claims, demands, deficiencies, penalties, interest, assessments, executions, judgments, or recoveries by any government agency against the Company for any amounts claimed due on account of (a) Employee’s failure to pay or delayed payment of federal or state taxes, or (b) damages sustained by the Company by reason of any such claims, including attorneys’ fees and costs.

21. Authority. The Company represents and warrants that the undersigned has the authority to act on behalf of the Company and to bind the Company and all who may claim through it to the terms and conditions of this Agreement. Employee represents and warrants that he has the capacity to act on his own behalf and on behalf of all who might claim through him to bind them to the terms and conditions of this Agreement. Each Party warrants and represents that there are no liens or claims of lien or assignments in law or equity or otherwise of or against any of the claims or causes of action released herein.

22. No Company Representations. Employee represents that he has had an opportunity to consult with an attorney, and has carefully read and understands the scope and effect of the provisions of this Agreement. Employee has not relied upon any representations or statements made by the Company that are not specifically set forth in this Agreement.

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23. Severability. In the event that any provision or any portion of any provision hereof or any surviving agreement made a part hereof becomes or is declared by a court of competent jurisdiction or arbitrator to be illegal, unenforceable, or void, this Agreement shall continue in full force and effect without said provision or portion of provision.

24. Attorneys’ Fees. Except with regard to a legal action challenging or seeking a determination in good faith of the validity of the waiver herein under the ADEA, in the event that either Party brings an action to enforce or effect its rights under this Agreement, each Party shall bear its own costs and expenses, including the costs of mediation, arbitration, litigation, court fees, and attorneys’ fees incurred in connection with such an action.

25. Entire Agreement. This Agreement represents the entire agreement and understanding between the Company and Employee concerning the subject matter of this Agreement and Employee’s employment with and separation from the Company and the events leading thereto and associated therewith, and supersedes and replaces any and all prior agreements and understandings concerning the subject matter of this Agreement and Employee’s relationship with the Company, with the exception of the Confidentiality Agreement and the Stock Agreements. The language of this agreement shall be construed as to its fair meaning and not strictly for or against either party.

26. No Oral Modification. This Agreement may only be amended in a writing signed by Employee and a duly authorized officer or agent of the Company.

27. Governing Law. This Agreement shall be governed by the laws of the State of California, without regard for choice-of-law provisions. Employee consents to personal and exclusive jurisdiction and venue in the State of California.

28. Effective Date. Employee understands that this Agreement shall be null and void if not executed by him within twenty-one (21) days. Each Party has seven (7) days after that Party signs this Agreement to revoke it. This Agreement will become effective on the eighth (8th) day after Employee signed this Agreement, so long as it has been signed by the Parties and has not been revoked by either Party before that date (the “Effective Date”).

29. Counterparts. This Agreement may be executed in counterparts and by facsimile, and each counterpart and facsimile shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned.

30. Voluntary Execution of Agreement. Employee understands and agrees that he executed this Agreement voluntarily, without any duress or undue influence on the part or behalf of the Company or any third party, with the full intent of releasing all of his claims against the Company and any of the other Releasees. Employee acknowledges that:

a. he has read this Agreement;

b. he has been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of his own choice;

c. he understands the terms and consequences of this Agreement and of the releases it contains; and

d. he is fully aware of the legal and binding effect of this Agreement.

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IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below.

		KENNETH W. HORNER an individual
Dated as of:	May 19, 2010	/s/ Ken Horner
		Kenneth W. Horner
		BAKBONE SOFTWARE INCORPORATED
Dated as of:	May 20, 2010	By:	/s/ Steve Martin
		Name:
		Title:

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EX-99.1

Exhibit 99.1

Investor Contact:	Corporate Contact:	Media Contact:
Doug Sherk / Jenifer Kirtland	Steve Martin	Amber Winans
415-896-6820	858-795-7525	858-795-7584
jkirtland@evcgroup.com	IR@bakbone.com	amber.winans@bakbone.com

FOR IMMEDIATE RELEASE

BakBone Announces Realigned Corporate Strategy Focused on Core

Storage and Data Protection Markets

ColdSpark Division Closed

Non-Cash Charge of $12.6 Million to be Recorded for 4Q Fiscal 2010

Approximately $300,000 in Cash Expenses Related to Exiting Message Management Business

Decision Expected to Result in Stronger, More Profitable Company

Company Schedules 4Q Fiscal 2010 Conference Call for June 10, 2010

SAN DIEGO, Calif. — May 21, 2010 — BakBone Software^® (OTCBB: BKBO), a leading provider of storage and data protection software, today announced a realigned corporate strategy focused on its core markets. The realigned strategy includes the closing, effective today, of the Company’s ColdSpark operations, which were acquired in May 2009. The Company will effect a smooth transition for those customers who currently utilize the technologies offered by ColdSpark to facilitate message management in enterprise environments. BakBone will record a non-cash impairment charge of approximately $12.6 million in the fourth quarter ended March 31, 2010 and expects to incur approximately $300,000 in personnel related expenses related to closing ColdSpark.

“Our Board of Directors and senior management team have concluded that the best opportunity for BakBone to gain consistent profitability and generate returns to shareholders is by focusing our resources on our core storage and data protection markets,” said Steve Martin, senior vice president, Chief Financial Officer and Interim CEO. “By exiting the message management business, our entire organization of some 240 dedicated and motivated employees can devote their full attention to our existing 15,000 customers and our expanding NetVault^® product suite. The NetVault product line includes NetVault: Backup, NetVault: FASTRecover and NetVault: SmartDisk products, which are gaining increased traction in the market, and is offered through

our worldwide network of channel partners. By reinforcing our relationship with these partners, and offering best-of-class products and customer service, we believe that BakBone will be a more focused and financially-capable company. Furthermore, we expect our realigned strategy will eliminate the risk of ColdSpark’s comparatively longer sales cycle, stabilize our cash utilization and position the Company to generate enhanced returns for our shareholders,” Mr. Martin added.

Fourth Quarter Fiscal 2010 Conference Call

The Company announced that it will release its fourth quarter fiscal 2010 financial results on June 10, 2010, after the market close. The company has scheduled a conference call with analysts and investors for 5:00 p.m. ET that day to discuss the financial results for the fourth quarter and current business developments. The call will be hosted by Steve Martin, senior vice president, Chief Financial Officer and Interim CEO of BakBone.

To access the conference call, please dial 800-854-3238; internationally, dial 706-634-9547 (Passcode: 76750537). An audio replay of the call will be available for seven days following the call at 800-642-1687 for U.S. callers or 706-645-9291 for those calling outside the U.S.

The call will also be webcast and can be accessed at www.bakbone.com by clicking on “Company Info” and then “Investor Relations.” The webcast is also being distributed through the Thomson StreetEvents Network. Individual investors can listen to the call at www.earnings.com, Thomson’s individual investor portal, powered by StreetEvents. Institutional investors can access the call via Thomson StreetEvents (www.streetevents.com), a password-protected event management site.

About BakBone Software

BakBone makes data protection a simple, straightforward process with an award-winning product suite. From real-time data protection to deduplication, disk-based and tape backup and application protection, BakBone’s solutions manage resources across all platforms, providing improved operational efficiency, reduced system downtime, improved data and application availability and enhanced security to support the business growth of enterprise environments. For more information about BakBone, visit www.bakbone.com or email info@bakbone.com

Safe Harbor

This press release contains express and/or implied forward-looking statements including, without limitation, statements regarding anticipated financial results and market developments that involve risks, uncertainties, assumptions and other factors, which, if they do not materialize or prove correct, could cause BakBone’s results to differ materially from historical results, or those expressed or implied by such forward-looking statements. The potential risks and uncertainties

may include, but are not limited to: risks that the costs of exiting the ColdSpark business will be higher than anticipated; risks that the ongoing weak economic and market conditions, particularly in North America, could continue to lead to reduced spending on information technology products; competition in our target markets; potential capital needs; management of future growth and expansion; the development, implementation and execution of the Company’s strategic vision; risk of third-party claims of infringement; protection of proprietary information; customer acceptance of the Company’s existing and newly introduced products and fee structures; the success of the Company’s brand development efforts; risks associated with strategic alliances; reliance on distribution channels; product concentration; need to develop new and enhanced products; potential product defects; our ability to hire and retain qualified employees and key management personnel; and risks associated with changes in domestic and international market conditions and the entry into and development of international markets for the Company’s products. Our forward-looking statements should be considered in the context of these and other risk factors disclosed in our most recent report filed with the Securities and Exchange Commission, which may be found at www.sec.gov, as well as those risk factors disclosed in our current report filed with the relevant Canadian securities regulators, which is available on SEDAR at www.sedar.com. All future written and oral forward-looking statements made by us or on our behalf are also subject to these factors. BakBone assumes no obligation to update any forward-looking statement to reflect events or circumstances arising after the date on which it was made, other than as required under applicable securities laws.

BakBone®, BakBone Software®, NetVault®, Application Plugin Module™, BakBone logo®, Integrated Data Protection™, NetVault: SmartDisk™, Asempra®, FASTRecover™, ColdSpark® and SparkEngine™ are all trademarks or registered trademarks of BakBone Software, Inc., in the United States and/or in other countries. All other brands, products or service names are or may be trademarks, registered trademarks or service marks of, and used to identify, products or services of their respective owners.