**Exhibit10.16**

 

**SEVERANCEAGREEMENT AND GENERAL RELEASE**

 

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

 

1.             EmploymentStatus and Final Payments.

 

(a)           Youand the Company agree that you are resigning from your employment with OMTOOLeffective September 30, 2003, (the “Separation Date”).  As of the Separation Date, your salary willcease and any entitlement You have or might have under any employer providedbenefit plans, programs or practices will terminate, except as required byfederal or state law or otherwise described below.  You and the Company agree that the severance letter agreementbetween you and the Company dated March 29, 2002 (the “letter agreement”) ishereby terminated and of no further force and effect.

 

(b)           Onthe Separation Date, the Company will pay to You all base salary earned butunpaid 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 theSeparation Date.

 

(c)           Allvesting of any and all stock options granted to You by OMTOOL under the OMTOOLStock 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 withoutlimitation vesting and expiration, will continue to be governed by the termsand conditions of the Option Agreement and the Stock Option Plan.

 

2.             Consideration.  In consideration of and contingent upon yourfull execution of this Agreement, which includes your obligation to returnCompany Property as outlined in Section 9, the Company will provide you withthe following after the Effective Date of this Agreement (as defined in Section12):

 

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

 

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

 

All amounts set forth in this Agreement are subject toall applicable (if any) federal, state and local withholding, payroll and othertaxes.

 

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

 

 

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4.             Release.  In exchange for the benefits and servicesdescribed in Section 2 and other good and valuable consideration, the receiptof which is hereby acknowledged, You and your representatives, agents, estate,heirs, successors and assigns (“You”), absolutely and unconditionally herebyrelease, indemnify, hold harmless and forever discharge the Releasees (definedto include OMTOOL, LTD., its predecessors, successors, parents, subsidiaries,divisions, affiliates and assigns and its and their current and formerdirectors, shareholders, officers, insurers, employees, representatives,attorneys and/or agents, all both individually, in their capacity acting on theCompany’s behalf, and in their official capacities), of and from any and allactions 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 withyour employment, change in employment status, and/or termination of employmentwith the Company; (ii) any and all claims arising out of or in connectionwith any relationship between You and the Company; (iii) any and all claimsbased on any federal, state or local law, constitution or regulation regardingeither employment, employment benefits, or employment discrimination and/orretaliation including, without limitation, those laws or regulations concerningdiscrimination on the basis of race, color, creed, religion, age, sex, sexharassment, sexual orientation, genetic information, national origin, ancestry,handicap or disability, veteran status or any military service or applicationfor military service; (iv) any contract, whether oral or written, expressor implied, any tort, or common law; and (v) any and all claims relating toyour ownership of the Company’s stock. This release is intended by You to be all encompassing and to act as afull and total release of any claims, whether specifically enumerated herein ornot, that You have, may have or have had against the Releasees up to theEffective Date.

 

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

 

5.             Settlementof Amounts Due.  You agree that theamounts set forth above in Sections 1 and 2, together with any amountspreviously provided to You by the Releasees, shall be complete andunconditional payment, settlement, satisfaction and accord with respect to allobligations and liabilities of the Releasees to You arising out of youremployment, or the cessation of said employment with OMTOOL, whether financialor 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 orsums.

 

You will have untilOctober 31, 2003 to submit business expenses related to your employment withOMTOOL for approval and reimbursement.

 

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

 

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

 

(b)           youdo not waive any rights or claims under the ADEA that may arise after the datethis Agreement is executed;

 

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

 

(d)           havebeen advised in writing to consider the terms of this Agreement carefully andconsult with or seek advice from an attorney of your choice or any other personof your choosing prior to executing this agreement;

 

(e)           the21-day review period will not be affected or extended by any revisions, whethermaterial or immaterial, that might be made to this Agreement.

 

7.             Confidentiality.  You shall maintain confidentialityconcerning this Agreement, including the substance, terms, existence and/or anydiscussions relating to this Agreement. Except as required pursuant to legal process, you will not discuss thesame with anyone except your immediate family, accountant, tax advisor orattorney when such disclosure is necessary for them to render professionalservices, provided, however, that thisSection 7 shall not apply to information related to the tax treatment or thetax structure of the transactions contemplated within this Agreement.  For this purpose, “tax structure” is limitedto any facts relevant to the US Federal Income Tax Treatment of thistransaction and does not include information related to the identity of the parties.  Nothing herein shall prohibit or bar youfrom providing truthful testimony in any legal proceeding or in communicatingwith any governmental agency or representative or from making any truthfuldisclosure required, authorized or permitted under law; provided however, thatin providing such testimony or making such disclosures or communications, youwill use your best efforts to ensure that this Section is complied with to themaximum extent possible.  However, you will be prohibited to the fullest extentauthorized by law from obtaining monetary damages in any agency proceeding inwhich you do so participate.

 

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

 

9.             Proprietaryand Company Materials.  No laterthan **September30, 2003**, You will return to the Company all property, materials,and information belonging to the Company in your possession, custody orcontrol, including, but not limited to, personal computers, laptops, companycredit cards, telephone charge cards, manuals, building keys and passes, namesand addresses of the Releasees’ customers and potential customers, customer andvendor business cards and all other contact information, customer lists, salesmaterials, diskettes, intangible information stored on diskettes, business ormarketing plans, reports, projections, software programs and data compiled withthe use of such programs, tangible copies of trade secrets and confidentialinformation, and any and all other Company property or information previouslyor currently held or used by You (“Company Property”).  You agree that in the event you discover anyother proprietary materials belonging to the Company in your possession afterEffective Date, you will immediately return such materials to the Company.

 

10.           ProprietaryRights and Noncompetition and Nonsolicitation Agreements.  You acknowledge that you entered into aProprietary Rights Agreement (the “Proprietary Rights Agreement”) andNoncompetition and Nonsolicitation Agreement (the “Noncompetition Agreement”)commensurate with and as a condition of your employment with theReleasees.  If OMTOOL determines thatyou have violated the terms of any provision contained in the ProprietaryRights Agreement, in this Agreement, or in the Noncompetition Agreement, thenYou agree that, regardless of the manner of your employment termination, theCompany can refuse to pay and/or cease paying and/or performing allseverance-related obligations under Section 2 to the extent permitted byapplicable law.  The cessation of theseseverance payments and benefits shall be in addition to, and not as an alternativeto, any other remedies at law or in equity available to the Company, includingthe right to seek an injunction, which You shall not oppose.

 

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11.           Representationsand Governing Law.

 

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

 

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

 

(c)           Theinvalidity or unenforceability of any provision of this Agreement shall notaffect the other provisions of this Agreement, but this Agreement shall berevised, construed and reformed to the fullest extent possible to effectuatethe purposes of this Agreement.

 

(d)           Youmay not assign any of your rights or delegate any of your duties under thisAgreement. The Company shall have to assignthis Agreement to any successor, including, but not limited to, any successorresulting from (i) any transaction in which the Company is to be consolidatedwith or acquired by another entity in a merger, tender offer or otherreorganization in which the holders of the outstanding voting stock of theCompany immediately preceding the consummation of such event, shall,immediately following such event, hold, as a group, less than a majority of thevoting securities of the surviving or successor entity, or (ii) the sale of allor 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) shallhave 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 yourdeath.

 

(e)           Theparties hereto agree and acknowledge that this Agreement is intended only topurchase peace and nothing in this Agreement, nor any of the proceedingsconnected with it, is to be construed as, offered as, received as, or deemed tobe evidence of an admission by the Releasees of any liability or unlawfulconduct whatsoever, and each of the Releasees expressly denies any suchliability or wrongdoing.

 

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

 

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

 

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

 

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

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**YOU REPRESENT THAT YOU HAVE READ THIS AGREEMENT, THAT YOUFULLY UNDERSTAND THE TERMS AND CONDITIONS OF SUCH AGREEMENT AND THAT YOU AREVOLUNTARILY EXECUTING THE SAME.  INENTERING INTO THIS AGREEMENT, YOU DO NOT RELY ON ANY REPRESENTATION, PROMISE ORINDUCEMENT MADE BY THE RELEASEES OR THEIR ATTORNEYS WITH THE EXCEPTION OF THECONSIDERATION 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                    |   |
|        |                                                         |        |  |

 

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**WAIVEROF THE 21-DAY REVIEW PERIOD**

 

I, Timothy P.Losik, acknowledge that I was informed and understand that I have 21 dayswithin which to consider the attached Severance Agreement and General Release,have had the opportunity to consult with an attorney regarding such Agreementand have considered carefully every provision of the Agreement, and that afterhaving engaged in those actions, I prefer to and have requested that I enterinto 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                  |
|        |                          |                  |                                   |        |  |

 

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