Exhibit 10.16

 

SEVERANCE AGREEMENT AND GENERAL RELEASE

 

This Severance Agreement and General Release (the “Agreement”) is hereby entered
into by and between Timothy P. Losik (“Timothy P. Losik” or “You”) and OMTOOL,
LTD. (“OMTOOL” or the “Company”) for good and sufficient consideration more
fully described below.

 

1.             Employment Status and Final Payments.

 

(a)           You and the Company agree that you are resigning from your
employment with OMTOOL effective September 30, 2003, (the “Separation Date”). 
As of the Separation Date, your salary will cease and any entitlement You have
or might have under any employer provided benefit plans, programs or practices
will terminate, except as required by federal or state law or otherwise
described below.  You and the Company agree that the severance letter agreement
between you and the Company dated March 29, 2002 (the “letter agreement”) is
hereby terminated and of no further force and effect.

 

(b)           On the Separation Date, the Company will pay to You all base
salary earned but unpaid along with any accrued but unused vacation pay due as
of September 30, 2003.  As set forth in Section 1(a), accrual of vacation pay
and eligibility for paid holidays will cease on the Separation Date.

 

(c)           All vesting of any and all stock options granted to You by OMTOOL
under the OMTOOL Stock Option Agreement (the “Option Agreement”) prior to the
Separation Date, shall cease as of the Separation Date.  All of your rights and
obligations to stock options, including without limitation vesting and
expiration, will continue to be governed by the terms and conditions of the
Option Agreement and the Stock Option Plan.

 

2.             Consideration.  In consideration of and contingent upon your full
execution of this Agreement, which includes your obligation to return Company
Property as outlined in Section 9, the Company will provide you with the
following after the Effective Date of this Agreement (as defined in Section 12):

 

(a)           Severance. The Company will provide you with severance pay, in
equal installments at your gross monthly base salary rate in effect immediately
prior to the Separation Date, for 12 months (i.e., until September 24,  2004)
from the Separation Date.  The first severance payment will be made upon the
first regularly scheduled Company payday on or following the Effective Date. 
Payments will be made in accordance with the Company’s normal severance pay
practices as established or modified from time to time.

 

(b)           Health Insurance.  If You are eligible for and elect COBRA
coverage, the Company shall pay your COBRA premiums for and any previously
covered family members until the earlier of (i) 12 months from the Separation
Date (i.e., until September 30, 2004) or (ii) the date on which You and/or such
family members become ineligible to receive COBRA benefits.  You will receive
COBRA information under separate cover upon termination of insurance coverage.

 

All amounts set forth in this Agreement are subject to all applicable (if any)
federal, state and local withholding, payroll and other taxes.

 

3.             Cooperation:  The Company expects that You will transition all of
your work prior to the Separation Date.  In addition, You agree that following
the Separation Date, You will make yourself reasonably available to the Company
on an as needed basis to assist with any further transitional issues.

 

 

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

 

4.             Release.  In exchange for the benefits and services described in
Section 2 and other good and valuable consideration, the receipt of which is
hereby acknowledged, You and your representatives, agents, estate, heirs,
successors and assigns (“You”), absolutely and unconditionally hereby release,
indemnify, hold harmless and forever discharge the Releasees (defined to include
OMTOOL, LTD., its predecessors, successors, parents, subsidiaries, divisions,
affiliates and assigns and its and their current and former directors,
shareholders, officers, insurers, employees, representatives, attorneys and/or
agents, all both individually, in their capacity acting on the Company’s behalf,
and in their official capacities), of and from any and all actions or causes of
action, suits, claims, complaints, obligations, contracts, demands, liabilities,
agreements, promises, judgments, rights, controversies, debts and damages,
whether existing or contingent, known or unknown including, but not limited to,
(i) any and all claims arising out of or in connection with your employment,
change in employment status, and/or termination of employment with the Company;
(ii) any and all claims arising out of or in connection with any relationship
between You and the Company; (iii) any and all claims based on any federal,
state or local law, constitution or regulation regarding either employment,
employment benefits, or employment discrimination and/or retaliation including,
without limitation, those laws or regulations concerning discrimination on the
basis of race, color, creed, religion, age, sex, sex harassment, sexual
orientation, genetic information, national origin, ancestry, handicap or
disability, veteran status or any military service or application for military
service; (iv) any contract, whether oral or written, express or implied, any
tort, or common law; and (v) any and all claims relating to your ownership of
the Company’s stock.  This release is intended by You to be all encompassing and
to act as a full and total release of any claims, whether specifically
enumerated herein or not, that You have, may have or have had against the
Releasees up to the Effective Date.

 

You further agree to release and discharge the Releasees from any and all claims
which might be made by any other person or organization on your behalf and you
specifically waive any right to become, and promise not to become, a member of
any class in a case in which a claim or claims against the Company are made
involving any matters subject to release pursuant to Section 4.

 

5.             Settlement of Amounts Due.  You agree that the amounts set forth
above in Sections 1 and 2, together with any amounts previously provided to You
by the Releasees, shall be complete and unconditional payment, settlement,
satisfaction and accord with respect to all obligations and liabilities of the
Releasees to You arising out of your employment, or the cessation of said
employment with OMTOOL, whether financial or otherwise, including, without
limitation, any and all claims for back wages, salary, draws, commissions,
bonuses, vacation pay, compensation, severance pay, attorney’s fees,
compensatory damages, exemplary damages, or other cost or sums.

 

You will have until October 31, 2003 to submit business expenses related to your
employment with OMTOOL for approval and reimbursement.

 

6.             Waiver of Rights and Claims Under the Age Discrimination in
Employment Act of 1967.  Since you are 40 years of age or older, you have been
informed that you have or may have specific rights and/or claims under the Age
Discrimination in Employment Act of 1967, as amended (the “ADEA”) and you
understand and agree that:

 

(a)           in consideration for payment and benefits described in this
Agreement, which are in addition to anything of value to which you already may
be entitled, you specifically waive such rights and/or claims you might have
against the Releasees under the ADEA to the extent such rights and/or claims
arose prior to the date this Agreement was executed;

 

(b)           you do not waive any rights or claims under the ADEA that may
arise after the date this Agreement is executed;

 

2

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

 

(c)           you were advised when presented by the Company with the original
draft of this Agreement on September 30, 2003 that you had at least 21 days
within which to consider this Agreement;

 

(d)           have been advised in writing to consider the terms of this
Agreement carefully and consult with or seek advice from an attorney of your
choice or any other person of your choosing prior to executing this agreement;

 

(e)           the 21-day review period will not be affected or extended by any
revisions, whether material or immaterial, that might be made to this Agreement.

 

7.             Confidentiality.  You shall maintain confidentiality concerning
this Agreement, including the substance, terms, existence and/or any discussions
relating to this Agreement.  Except as required pursuant to legal process, you
will not discuss the same with anyone except your immediate family, accountant,
tax advisor or attorney when such disclosure is necessary for them to render
professional services, provided, however, that this Section 7 shall not apply to
information related to the tax treatment or the tax structure of the
transactions contemplated within this Agreement.  For this purpose, “tax
structure” is limited to any facts relevant to the US Federal Income Tax
Treatment of this transaction and does not include information related to the
identity of the parties.  Nothing herein shall prohibit or bar you from
providing truthful testimony in any legal proceeding or in communicating with
any governmental agency or representative or from making any truthful disclosure
required, authorized or permitted under law; provided however, that in providing
such testimony or making such disclosures or communications, you will use your
best efforts to ensure that this Section is complied with to the maximum extent
possible.  However, you will be prohibited to the fullest extent authorized by
law from obtaining monetary damages in any agency proceeding in which you do so
participate.

 

8.             Non-Disparagement.  You agree that no statements will be issued
or published by You or any of your authorized representatives, whether spoken or
in writing, that would be disparaging to, or derogatory of the Company or the
relationship between the parties.

 

9.             Proprietary and Company Materials.  No later than September 30,
2003, You will return to the Company all property, materials, and information
belonging to the Company in your possession, custody or control, including, but
not limited to, personal computers, laptops, company credit cards, telephone
charge cards, manuals, building keys and passes, names and addresses of the
Releasees’ customers and potential customers, customer and vendor business cards
and all other contact information, customer lists, sales materials, diskettes,
intangible information stored on diskettes, business or marketing plans,
reports, projections, software programs and data compiled with the use of such
programs, tangible copies of trade secrets and confidential information, and any
and all other Company property or information previously or currently held or
used by You (“Company Property”).  You agree that in the event you discover any
other proprietary materials belonging to the Company in your possession after
Effective Date, you will immediately return such materials to the Company.

 

10.           Proprietary Rights and Noncompetition and Nonsolicitation
Agreements.  You acknowledge that you entered into a Proprietary Rights
Agreement (the “Proprietary Rights Agreement”) and Noncompetition and
Nonsolicitation Agreement (the “Noncompetition Agreement”) commensurate with and
as a condition of your employment with the Releasees.  If OMTOOL determines that
you have violated the terms of any provision contained in the Proprietary Rights
Agreement, in this Agreement, or in the Noncompetition Agreement, then You agree
that, regardless of the manner of your employment termination, the Company can
refuse to pay and/or cease paying and/or performing all severance-related
obligations under Section 2 to the extent permitted by applicable law.  The
cessation of these severance payments and benefits shall be in addition to, and
not as an alternative to, any other remedies at law or in equity available to
the Company, including the right to seek an injunction, which You shall not
oppose.

 

3

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

 

11.           Representations and Governing Law.

 

(a)           This Agreement represents the complete and sole understanding
between the parties, supersedes any and all other agreements and understandings,
whether oral or written; provided, however, that nothing in this Agreement will
affect, modify, supersede or cancel the Proprietary Rights Agreement, the
Noncompetition Agreement or the Option Agreement, all of which shall remain in
full force and effect in accordance with their respective terms.

 

(b)           This Agreement may not be modified, altered or rescinded except
upon written consent of the Company’s Chief Executive Officer and You.

 

(c)           The invalidity or unenforceability of any provision of this
Agreement shall not affect the other provisions of this Agreement, but this
Agreement shall be revised, construed and reformed to the fullest extent
possible to effectuate the purposes of this Agreement.

 

(d)           You may not assign any of your rights or delegate any of your
duties under this Agreement. The Company shall have to assign this Agreement to
any successor, including, but not limited to, any successor resulting from (i)
any transaction in which the Company is to be consolidated with or acquired by
another entity in a merger, tender offer or other reorganization in which the
holders of the outstanding voting stock of the Company immediately preceding the
consummation of such event, shall, immediately following such event, hold, as a
group, less than a majority of the voting securities of the surviving or
successor entity, or (ii) the sale of all or substantially all of the Company’s
assets.  Any such successor shall be bound by all of the provisions hereto.  In
addition, in the event of your death, your estate, legal representative or
beneficiaries (as the case may be) shall have the right to receive all of the
benefits that accrued to you pursuant to, and in accordance with, the terms of
this Agreement prior to the date of your death.

 

(e)           The parties hereto agree and acknowledge that this Agreement is
intended only to purchase peace and nothing in this Agreement, nor any of the
proceedings connected with it, is to be construed as, offered as, received as,
or deemed to be evidence of an admission by the Releasees of any liability or
unlawful conduct whatsoever, and each of the Releasees expressly denies any such
liability or wrongdoing.

 

(f)            This Agreement shall be governed by and construed in accordance
with the laws of New Hampshire, without giving effect to the principles of
conflicts of law thereof. If OMTOOL determines that you have violated the terms
of any provision contained in the Proprietary Rights Agreement, in this
Agreement, or in any employment, consulting, advisory, non-disclosure,
non-competition or similar agreement between You and OMTOOL, then You agree
that, regardless of the manner of your employment termination, the Company can
refuse to pay and/or cease paying and/or performing all severance-related
obligations under Section 2 to the extent permitted by applicable law.  The
cessation of these severance payments and benefits shall be in addition to, and
not as an alternative to, any other remedies at law or in equity available to
the Company, including the right to seek an injunction, which You shall not
oppose.

 

(g)           You represent that you have not been subject to any retaliation or
any other form of adverse action by the Releasees for any action taken by you as
an employee of the Company or resulting from your exercise of or attempt to
exercise any statutory rights recognized under federal, state or local law.

 

12.           Effective Date:  For a period of seven (7) days following the
execution of this Agreement, you may revoke this Agreement and this Agreement
shall not become effective or enforceable until this

 

4

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

 

revocation period has expired (“Effective Date”).  To revoke this Agreement, you
must deliver a letter stating that you are revoking the Agreement to the
Company’s Human Resources Manager within the time prescribed in this Section.

 

YOU REPRESENT THAT YOU HAVE READ THIS AGREEMENT, THAT YOU FULLY UNDERSTAND THE
TERMS AND CONDITIONS OF SUCH AGREEMENT AND THAT YOU ARE VOLUNTARILY EXECUTING
THE SAME.  IN ENTERING INTO THIS AGREEMENT, YOU DO NOT RELY ON ANY
REPRESENTATION, PROMISE OR INDUCEMENT MADE BY THE RELEASEES OR THEIR ATTORNEYS
WITH THE EXCEPTION OF THE CONSIDERATION DESCRIBED IN THIS DOCUMENT.

 

By:

     /s/ Timothy P. Losik

 

 

 

Dated:

     9/2/03

 

 

 

 

 

 

OMTOOL, LTD.

 

 

By:

     /s/ Ann Tayolor

 

 

 

Title:

     Manager, Human Resources

 

 

 

 

Dated:

     9/2/03

 

 

5

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

 

WAIVER OF THE 21-DAY REVIEW PERIOD

 

I, Timothy P. Losik, acknowledge that I was informed and understand that I have
21 days within which to consider the attached Severance Agreement and General
Release, have had the opportunity to consult with an attorney regarding such
Agreement and have considered carefully every provision of the Agreement, and
that after having engaged in those actions, I prefer to and have requested that
I enter into the Agreement prior to the expiration of the 21-day period.

 

Dated:

   9/2/03

 

  /s/ Timothy P. Losik

 

 

 

Timothy P. Losik

 

 

 

 

 

 

Dated:

   9/2/03

 

  /s/ Ann Taylor

 

 

Witness

 

6

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