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                                  EXHIBIT 10.20

                       FORM OF SEVERANCE LETTER AGREEMENTS
               BETWEEN THE COMPANY AND EACH OF ITS VICE PRESIDENTS



Mr.
ENCAD, Inc.
6059 Cornerstone Court West
San Diego, CA 92121

Dear

                  We are pleased to inform you that the Company's Board of
Directors has recently approved a special severance benefit program for you. The
purpose of this letter agreement is to set forth the terms and conditions of
your benefit package and to explain the limitations which will govern the
overall value of your benefits.

                  Your severance benefits may become payable under if your
employment terminates under certain circumstances within a specified time period
following a substantial change in ownership or control of the Company. To
understand the full scope of your severance benefits, you should familiarize
yourself with the definitional provisions of Part One of this letter agreement.
The benefits comprising your severance package are detailed in Part Two, and the
dollar limitations on the overall value of your benefit package and other
applicable restrictions are specified in Parts Three and Four. Part Five deals
with ancillary matters affecting your severance arrangement.

                             PART ONE -- DEFINITIONS

                  For purposes of this letter agreement, the following
definitions will be in effect:

                  AVERAGE COMPENSATION means the average of your W-2 wages from
the Company for the five (5) calendar years (or such fewer number of calendar
years of employment with the Company) completed immediately prior to the
calendar year in which the Change of Control is effected. Any W-2 wages for a
partial year of employment will be annualized, in accordance with the frequency
which such wages are paid during such partial year, before inclusion in your
Average Compensation.

                  BASE SALARY means the annual rate of base salary in effect for
you immediately prior to the Change in Control or (if greater) the annual rate
of base salary in effect at the time of the termination of your employment
Without Cause.

                  BOARD means the Company's Board of Directors.

                  CAUSE means the following: (i) dishonesty resulting or
intending to result, directly or indirectly, in gain or personal enrichment at
the expense of the Company; (ii) gross misconduct, including, without
limitation, fraud, sexual harassment or misappropriation of Company property or
confidential information; (iii) conviction for a felony under the laws of the
United States or any state thereof; or (iv) willful and continued failure
substantially to perform your duties with the Company (other than any such
failure resulting from your incapacity due to physical or mental illness), which
is not remedied within a reasonable period after a written demand for
substantial performance is delivered to you which specifically identifies the
manner in which it is believed that you have not substantially performed your
duties.

                  CHANGE IN CONTROL means:

                           (i) a merger or consolidation in which securities
         possessing more than 50% of the total combined voting power of the
         Company's outstanding voting securities are


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         transferred to a person or persons different from the persons holding
         those securities immediately prior to such transaction;

                           (ii) a sale, transfer or other disposition of all or
         substantially all of the assets of the Company in liquidation or
         dissolution of the Company;

                           (iii) the acquisition of beneficial ownership, by any
         person or a group of related persons, of securities possessing
         twenty-five percent (25%) or more of the total combined voting power of
         the Company's outstanding voting securities pursuant to a third-party
         tender or exchange offer made directly to the Company's shareholders,
         private purchases from one or more of the Company's shareholders, open
         market purchases or any other transaction;

                           (iv) the acquisition of beneficial ownership, by any
         person or a group of related persons, of additional securities of the
         Company that increase the total holdings of such person (or group) to a
         level of securities possessing more than fifty percent (50%) of the
         total combined voting power of the Company's outstanding voting
         securities pursuant to a third-party tender or exchange offer made
         directly to the Company's shareholders, private purchases from one or
         more of the Company's shareholders, open market purchases or any other
         transaction;

                           (v) the acquisition of beneficial ownership, by any
         person or a group of related persons, of securities of the Company
         possessing sufficient voting power in the aggregate to elect an
         absolute majority of the members of the Board (rounded up to the
         nearest whole number) pursuant to a third-party tender or exchange
         offer made directly to the Company's shareholders, private purchases
         from one or more of the Company's shareholders, open market purchases
         or any other transaction; or

                           (vi) a change in the composition of the Board over a
         period of twenty-four (24) consecutive months or less such that a
         majority of the Board ceases, by reason of one or more contested
         elections for Board membership, to be comprised of individuals who
         either (a) have been Board members continuously since the beginning of
         such period or (b) have been elected or nominated for election as Board
         members during such period by at least a two-thirds majority of the
         Board members described in clause (a) who were still in office at the
         time such election or nomination was approved by the Board.

                  CODE means the Internal Revenue Code of 1986, as amended.

                  COMMON STOCK means the Company's common stock.

                  COMPANY means ENCAD, Inc. or any successor corporation,
whether or not resulting from a Change in Control.

                  FAIR MARKET VALUE means, with respect to any shares of Common
Stock subject to any of your Options, the closing selling price per share of
Common Stock on the date in question, as reported on the Nasdaq National Market.
If there is no reported sale of Common Stock on such date, then the closing
selling price on the next preceding day for which there exists such quotation
will be determinative of Fair Market Value.

                  GENERAL RELEASE means the form of general release attached to
this letter as EXHIBIT A.

                  OPTION means any option granted to you under the Plan which is
outstanding at the time of the Change in Control or upon the subsequent
termination of your employment.

                  OPTION PARACHUTE PAYMENT means, with respect to any Option,
the portion of that Option deemed to be a parachute payment under Code Section
280G and the Treasury Regulations issued thereunder. The portion of such Option
which is categorized as an Option Parachute Payment will be calculated in
accordance with the valuation provisions established under Code Section 280G and
the applicable Treasury Regulations and will include an appropriate dollar
adjustment to reflect the lapse of your obligation to remain in the Company's
employ as a condition to the vesting of the accelerated installment. In no
event, however, will the Option Parachute


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Payment attributable to any Option (or accelerated installment) exceed the
spread (the excess of the Fair Market Value of the accelerated option shares
over the option exercise price payable for those shares) existing at the time of
acceleration.

                  OTHER PARACHUTE PAYMENT means any payment in the nature of
compensation (other than the benefits to which you become entitled under Part
Two of this letter agreement) which are made to you in connection with the
Change in Control and which accordingly qualify as parachute payments within the
meaning of Code Section 280G(b)(2) and the Treasury Regulations issued
thereunder. Your Other Parachute Payment will include (without limitation) the
Present Value, measured as of the Change in Control, of the aggregate Option
Parachute Payment attributable to your Options (if any).

                  PARACHUTE PAYMENT means any payment or benefit provided you
under Part Two of this letter agreement which is deemed to constitute a
parachute payment within the meaning of Code Section 280G(b)(2) and the Treasury
Regulations issued thereunder.

                  PLAN means (i) the Company's 1993 Stock Option/Stock Issuance
Plan, as amended or restated from time to time, and (ii) any successor stock
incentive plan subsequently implemented by the Company.

                  PRESENT VALUE means the value, determined as of the date of
the Change in Control, of any payment in the nature of compensation to which you
become entitled in connection with the Change in Control or the subsequent
termination of your employment, including (without limitation) any Option
Parachute Payment and the additional benefits to which you become entitled under
Part Two of this letter agreement. The Present Value of each such payment shall
be determined in accordance with the provisions of Code Section 280G(d)(4),
utilizing a discount rate equal to one hundred twenty percent (120%) of the
applicable Federal rate in effect at the time of such determination, compounded
semi-annually to the effective date of the Change in Control.

                  TOTAL COMPENSATION means:

                  (i) if a Change in Control occurs before January 1, 2001 AND
         prior to the payment of your 2000 annual bonus, the aggregate of: (a)
         Base Salary; (b) your target annual award in effect at the time of the
         Change in Control; and (c) the value of all general benefits and all
         supplemental benefits or perquisites (including, without limitation,
         financial planning services, annual physical examination, and
         supplemental disability and life insurance premiums; but excluding any
         auto allowance) made available to you in the fiscal year immediately
         preceding the fiscal year of your termination, and in the event that
         you were not employed during the entire fiscal year described in (c)
         above, such amounts will be annualized in accordance with the frequency
         for which the amounts were paid during the partial year; or

                  (ii) if a Change in Control occurs after December 31, 2000 OR
         subsequent to the payment of your 2000 annual bonus, the aggregate of:
         (a) Base Salary; (b) the average cash bonuses paid to you by the
         Company for services rendered during the two (2) fiscal years
         immediately preceding the fiscal year of your termination; and (c) the
         value of all general benefits and all supplemental benefits or
         perquisites (including, without limitation, financial planning
         services, annual physical examination, and supplemental disability and
         life insurance premiums; but excluding any auto allowance) made
         available to you in the fiscal year immediately preceding the fiscal
         year of your termination, and in the event that you were not employed
         during the entire period described in (b) or (c) above, such amounts
         will be annualized in accordance with the frequency for which the
         amounts were paid during the partial period.

                  WITHOUT CAUSE means that the Company has without Cause and
without your written consent: (i) terminated your services with the Company;
(ii) materially reduced your job title, duties, and material responsibilities
with the Company; (iii) reduced your compensation (including base salary, fringe
benefits and participation in non-discretionary bonus programs under which
awards are payable pursuant to objective financial or performance standards) by
more than fifteen percent (15%); or (iv) required that you be based at a
location more than twenty-five (25) miles from the Company's present location.

                     PART TWO -- CHANGE IN CONTROL BENEFITS


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                  Subject to the release requirement of Part Four of this
letter agreement, should your employment be terminated Without Cause within
___________ months after a Change in Control, then you will become entitled
to receive the special severance benefits provided in this Part Two.

                  You will be entitled to a lump sum payment equal to _______
times your Total Compensation and payable within thirty (30) days after your
termination Without Cause.

                  Your payments will be subject to the Company's collection of
applicable federal and state income and employment withholding taxes.

                      PART THREE -- LIMITATION ON BENEFITS

                  1.       BENEFIT LIMIT.

                  The aggregate Present Value (measured as of the Change in
Control) of the severance payment to which you become entitled under Part Two at
the time of your termination Without Cause will in no event exceed 2.99 times
your Average Compensation, less the Present Value, measured as of the Change in
Control, of all Other Parachute Payments to which you are entitled (the "Benefit
Limit").

                  2.       RESOLUTION PROCEDURE.

                  For purposes of the foregoing Benefit Limit, the following
provisions will be in effect:

                           (a) In the event there is any disagreement between
you and the Company as to whether one or more payments to which you become
entitled in connection with either the Change in Control or the subsequent
termination of employment Without Cause constitute Parachute Payments, Option
Parachute Payments or Other Parachute Payments or as to the determination of the
Present Value thereof, such dispute will be resolved as follows:

                                (i) In the event temporary, proposed or final
         Treasury Regulations in effect at the time under Code Section 280G (or
         applicable judicial decisions) specifically address the status of any
         such payment or the method of valuation therefor, the characterization
         afforded to such payment by the Regulations (or such decisions) will,
         together with the applicable valuation methodology, be controlling.

                                (ii) In the event Treasury Regulations (or
         applicable judicial decisions) do not address the status of any payment
         in dispute, the matter will be submitted for resolution to independent
         counsel mutually acceptable to you and the Company ("Independent
         Counsel"). The resolution reached by Independent Counsel will be final
         and controlling; PROVIDED, however, that if in the judgment of
         Independent Counsel the status of the payment in dispute can be
         resolved through the obtainment of a private letter ruling from the
         Internal Revenue Service, a formal and proper request for such ruling
         will be prepared and submitted by Independent Counsel, and the
         determination made by the Internal Revenue Service in the issued ruling
         will be controlling. All expenses incurred in connection with the
         retention of Independent Counsel and (if applicable) the preparation
         and submission of the ruling request shall be shared equally by you and
         the Company.

                                (iii) In the event Treasury Regulations (or
         applicable judicial decisions) do not address the appropriate valuation
         methodology for any payment in dispute, the Present Value thereof will,
         at the Independent Counsel's election, be determined through an
         independent third-party appraisal, and the expenses incurred in
         obtaining such appraisal shall be shared equally by you and the
         Company.


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                  3.       STATUS OF BENEFITS.

                  (a) No severance payment will be made to you under Part Two of
this letter agreement until the Present Value of the Option Parachute Payment
attributable to your Options (if any) have been determined and the status of any
payments in dispute under Paragraph 2 above has been resolved in accordance
therewith.

                  (b) Once the requisite determinations under Paragraph 2 have
been made, then to the extent the aggregate Present Value, measured as of the
Change in Control, of the Parachute Payment attributable to your benefit
entitlements under Part Two of this letter agreement would, when added to the
Present Value of all your Other Parachute Payments (including the Option
Parachute Payment attributable to your Options (if any)), exceed the Benefit
Limit, your severance payment will be accordingly reduced.

                              PART FOUR -- RELEASE

                  You will be entitled to receive the special severance benefits
provided in Part Two of this letter agreement only upon: (i) execution of the
General Release (that is not subsequently revoked within seven (7) days) to the
Company within three (3) days of your termination Without Cause and (ii)
expiration of the seven (7)-day period following your execution of the General
Release.

                              PART FIVE -- GENERAL

                  1.       TERMINATION FOR CAUSE.

                  Should your employment be terminated for Cause, the Company
will only be required to pay you (i) any unpaid compensation earned for services
previously rendered through the date of such termination and (ii) any accrued
but unpaid vacation benefits or sick days, and no benefits will be payable to
you under Part Two of this letter agreement.

                  2.       DEATH.

                  Should you die before receipt of the severance payment to
which you become entitled under this letter agreement, then that payment will be
made to the executors or administrators of your estate.

                  3.       GENERAL CREDITOR STATUS.

                  The payments and benefits to which you become entitled
hereunder will be paid, when due, from the general assets of the Company, and no
trust fund, escrow arrangement or other segregated account will be established
as a funding vehicle for such payment. Accordingly, your right (or the right of
the personal representatives or beneficiaries of your estate) to receive any
payments or benefits hereunder will at all times be that of a general creditor
of the Company and will have no priority over the claims of other general
creditors.

                  4.       INDEMNIFICATION.

                  If applicable, the indemnification provisions for Officers and
Directors under the Company by-laws will (to the maximum extent permitted by
law) be extended to you, during the period following your termination Without
Cause, with respect to any and all matters, events or transactions occurring or
effected during your employment with the Company.

                  5.       MISCELLANEOUS.

                  This letter agreement will be binding upon the Company, its
successors and assigns (including, without limitation, the surviving entity in
any Change in Control) and is to be construed and interpreted under the laws of
the State of California applicable to agreements executed and to be wholly
performed within the State of California. This letter agreement supersedes all
prior agreements between you and the Company relating to the subject of
severance benefits payable upon a change in control or ownership of the Company,
and you will not be entitled to any other severance benefits upon your
termination of employment. This letter may only be amended by


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written instrument signed by you and an authorized officer of the Company. If
any provision of this letter agreement as applied to you or the Company or to
any circumstance should be adjudged by a court of competent jurisdiction to be
void or unenforceable for any reason, the invalidity of that provision will in
no way affect (to the maximum extent permissible by law) the application of such
provision under circumstances different from those adjudicated by the court, the
application of any other provision of this letter agreement, or the
enforceability or invalidity of this letter agreement as a whole. Should any
provision of this letter agreement become or be deemed invalid, illegal or
unenforceable in any jurisdiction by reason of the scope, extent or duration of
its coverage, then such provision will be deemed amended to the extent necessary
to conform to applicable law so as to be valid and enforceable or, if such
provision cannot be so amended without materially altering the intention of the
parties, then such provision will be stricken and the remainder of this letter
agreement will continue in full force and effect.

                  6.       NO EMPLOYMENT OR SERVICE CONTRACT.

                  Nothing in this letter agreement is intended to provide you
with any right to continue in the employ of the Company (or any subsidiary) for
any period of specific duration or interfere with or otherwise restrict in any
way your rights or the rights of the Company (or any subsidiary), which rights
are hereby expressly reserved by each, to terminate your employment at any time
for any reason whatsoever, with or without cause.

                  7.       REMEDIES.

                  All rights and remedies provided pursuant to this letter
agreement or by law will be cumulative, and no such right or remedy will be
exclusive of any other. A party may pursue any one or more rights or remedies
hereunder or may seek damages or specific performance in the event of another
party's breach hereunder or may pursue any other remedy at law or in equity,
whether or not stated in this letter agreement.

                  8.       ARBITRATION.

                  Except for the dispute resolution procedure in Paragraph 2 of
Part Three of this letter agreement, any controversy that may arise between you
and the Company with respect to the construction, interpretation or application
of any of the terms, provisions or conditions of this agreement or any monetary
claim arising from or relating to this agreement will be submitted to final and
binding arbitration in San Diego, California in accordance with the rules of the
American Arbitration Association then in effect. The prevailing party in the
arbitration shall be entitled to the recovery of all reasonable attorney's fees
and costs incurred with respect to the arbitration. Both parties understand and
agree that the arbitration shall be instead of any civil litigation and that the
arbitrator's decision shall be final and binding to the fullest extent permitted
by law and enforceable by any court having jurisdiction thereof.

                  9.       EXCLUSIVE BENEFITS.

                  Any severance benefits to which you may become entitled upon
the termination of your employment will be governed solely by the terms of this
letter agreement.

                  Please indicate your acceptance of the foregoing by signing
the enclosed copy of this letter and returning it to the Company.

                                             Very truly yours,

                                             ENCAD, INC.



                                             By:
                                                   -----------------------------
                                             Name: David Purcell
                                             Title: Chief Executive Officer


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                                   ACCEPTANCE

                  I hereby agree to all the terms and provisions of the
foregoing letter agreement governing the special benefits to which I may become
entitled upon a termination of my employment under certain prescribed
circumstances.


Dated:  January____, 2000


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                                      Name