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                                                                   EXHIBIT 10.16



                    SEPARATION AGREEMENT AND MUTUAL RELEASE

        This Separation Agreement and Mutual Release ("Agreement") is made by
and between Novadigm, Inc. (the "Company"), and Stuart Jacobson ("Employee").

        WHEREAS, Employee was employed by the Company as an Executive Vice
President.

        WHEREAS, the Company and Employee have entered into an Employment,
Confidential Information and Invention Assignment Agreement (the
"Confidentiality Agreement");

        WHEREAS, the Company and Employee have mutually agreed to terminate the
employment relationship and to release each other from any claims arising from
or related to the employment relationship;

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

        1. Termination. Employee's employment shall terminate effective April 6,
1998.

        2. Consideration. The Company agrees to continue to pay Employee his
current salary and commissions if applicable, and to provide continued benefits,
including continued stock option vesting, all until the date of termination, as
set forth above. The Company agrees to reimburse Employee for any and all
business-related expenses incurred on or before April 6, 1998. In consideration
of the promises, agreements, releases and covenants below, the Company agrees to
pay Employee an 



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amount equal to his current base salary of Seven Thousand Two Hundred and
Ninety-One Dollars and Sixty-Seven Cents ($7,291.67) bimonthly less applicable
payroll taxes withholding for a period of six (6) months from the date of
termination. The Company further agrees that Employee and his dependents shall
continue to participate in the Company's group health insurance plan at the
Company's expense for a period of six (6) months from the date of termination.
Any undisputed amounts due and owing to the Company for outstanding advances,
draws, loans or property may be deducted from the consideration unless settled
beforehand except that as part of the consideration, the Company agrees to waive
its right for reimbursement of the bonus advance of $150,000 paid to Employee
and evidenced by an agreement signed by Employee on February 13, 1998.

        3. Stock Option. Employee will be entitled to continue to purchase stock
through May 6, 1998 pursuant to the terms and conditions of the Company's Stock
Option Plan at the Exercise Price Per Share for the Total Number of Shares
Granted as set forth in the Notice(s) of Grant in the Stock Option Agreement(s)
between Employee and the Company.

        4. Benefits. Employee shall have the right to continue to participate in
the Company's group health insurance plan under the terms and conditions of
COBRA after October 6, 1998.

        5. Confidential Information. Employee shall continue to maintain the
confidentiality of all trade secrets and proprietary information of the Company.
Employee shall continue to comply with the terms of the Confidentiality
Agreement (attached as Exhibit A). Employee shall return all the Company
property and 



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confidential and proprietary information in his possession to the Company within
five business days from the Effective Date of this Agreement.

        6. Payment of Salary. Employee acknowledges and represents that the
Company has paid salary, wages, accrued vacation, commissions and any and all
other benefits due to Employee.

        7. Release of Claims. Employee agrees that the foregoing consideration
represents settlement in full of all outstanding obligations owed to Employee by
the Company. Employee and the Company, on behalf of themselves, and their
respective heirs, executors, officers, directors, employees, investors,
shareholders, administrators, predecessor and successor corporations, and
assigns, hereby fully and forever release each other and their respective heirs,
executors, officers, directors, employees, investors, shareholders,
administrators, predecessor and successor corporations, and assigns, of and from
any claim, duty, obligation or cause of action relating to any matters of any
kind, whether presently known or unknown, suspected or unsuspected, that any of
them may possess arising from any omissions, acts or facts 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 the Company;

               (c) any and all claims for wrongful discharge of employment;
breach of contract, both express and implied; breach of a covenant of good faith
and fair dealing, 



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both express and implied; negligent or intentional infliction of emotional
distress; negligent or intentional misrepresentation; negligent or intention
interference with contract or prospective economic advantage; and defamation;

               (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 Age Discrimination in Employment
Act of 1967, the Americans with Disabilities Act of 1990, the Fair Labor
Standards Act, the California Fair Employment and Housing Act, and Labor Code
Section 201, et seq.;

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

               (f) any and all claims for attorney's fees and costs.

The Company and Employee agree 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.

        8. Non-solicitation of Employees and Non-compete. Employee further
agrees that for twelve (12) months from the date of termination, Employee will
not solicit, induce, recruit or encourage any of the Company's employees to
leave their employment. Employee further covenants and agrees that for a period
of twelve (12) months from the date of termination, Employee will not contract
with, will not be employed by, nor the Employee will represent as an agent, a
representative or in any other capacity, a person, firm, partnership, company or
corporation, or an affiliate of the 



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foregoing that competes with the Company in the field of software development,
sales and distribution.

        9. Acknowledgement 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 acknowledges that the consideration
given for this wavier and release Agreement 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 at least twenty-one (21) days
within which to consider this Agreement; (c) he has at least seven (7) days
following the execution of this Agreement by the parties to revoke the
Agreement; and (d) this Agreement shall not be effective until the revocation
period has expired.

        10. Confidentiality. The Parties hereby each agree to use their best
efforts to maintain in confidence the existence of this Agreement, the contents
and terms of this Agreement, and the consideration for this Agreement
(hereinafter collectively referred to as "Settlement Information"). Each Party
hereto agrees to take every reasonable precaution to prevent disclosure of any
Settlement Information only to those employees, officers, directors, attorneys,
accountants, governmental entities, and family members who have a reasonable
need to know of such Settlement Information.

        11. Disparagement. Each party agrees to refrain from any comments which
are defamatory or slanderous of the other, or tortious interference with the
contracts and relationship of the other.



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        12, Tax Consequences. The Company makes no representations or warranties
with respect to the tax consequences of the payment of any sums to Employee
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
sums paid hereunder by the Company and any penalties or assessments thereon.

        13. No Admission of Liability. No action taken by the Parties hereto, or
either of them, either previously or in connection with this Agreement shall be
deemed or constructed to be (a) an admission of the truth or falsity of any
claims heretofore made or (b) an acknowledgment or admission by either party of
any fault or liability whatsoever to the other party or to any third party.

        14. Costs. The Parties shall each bear their own costs, expert fees,
attorneys' fees and other fees incurred in connection with this Agreement.

        15. 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 that 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 the terms and
conditions of this Agreement.

        16. No Representatives. Each party represents that it has had the
opportunity to consult with an attorney, and has carefully read understands the
scope and effect of the provisions of this Agreement. Neither party has relied
upon any representations or statements made by the other party hereto which are
not specifically set forth in this Agreement.



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

        18. Entire Agreement. This Agreement and the Confidentiality Agreement
represents the entire agreement and understanding between the Company and
Employee concerning Employee's separation from the Company, and supersedes and
replaces any and all prior agreements and understandings concerning Employee's
relationship with the Company and his compensation by the Company.

        19. No Oral Modification. This Agreement may only be amended in writing
signed by Employee and the President of the Company.

        20. Governing Law. This Agreement shall be governed by the laws of the
State of California.

        21. Arbitration. Any and all disputes arising out of this Separation
Agreement and Mutual Release, including but not limited to disputes concerning
interpretation of its terms and its enforcement, shall be resolved through
binding arbitration as follows:

               a. The parties agree that binding arbitration shall be the sole
method of resolving any and all disputes between the parties, including but not
limited to the interpretation and enforcement of this Separation Agreement and
Mutual Release. The parties knowingly and voluntarily agree to waive all rights
to resolve such disputes in state and federal court or before administrative
tribunals.

               b. Either party may request that a dispute be submitted to an
arbitrator. A party must provide a written request to submit a matter to
arbitration to the other party within thirty (30) days of the facts or
circumstances giving rise to the dispute.



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               c. In the event that the Company asserts that Employee has
breached this Separation Agreement and Mutual Release, any unpaid consideration
due pursuant to Paragraph 2 above shall be paid in accordance with this
Agreement into an escrow account established with Wells Fargo Bank or its
successor entities. The monies deposited into such escrow account shall earn
interest at not less than the passbook savings account rate then in effect at
Wells Fargo Bank. The monies shall be distributed by Wells Fargo Bank in
accordance with written instructions signed by both parties or in accordance
with an arbitrator's decision. Any interest accrued on the monies held in an
escrow account shall be payable to the Employee.

               d. The parties shall attempt to agree on an arbitrator. If the
parties cannot agree upon an arbitrator, the parties shall request a list of
five (5) arbitrators with prior experience in labor and employment matters from
the American Arbitration Association. Each party shall alternatively strike a
name from the list until only one name remains. Employee shall strike a name
from the list first.

               e. The arbitrator's decision shall be in writing and shall set
forth the findings of fact, reasoning and conclusion of the issues submitted.
The arbitrator shall not have the authority or jurisdiction to issue a decision
which violates or contradicts the terms of this Agreement. The decision of the
arbitrator shall be submitted to the parties within thirty (30) days of the
hearing and shall be final and binding upon the parties.

               f. The prevailing party shall recover its attorneys' fees and any
expenses associated with the arbitration, including the costs for the services
of the arbitrator.



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        21. Effective Date. This Agreement is effective seven days after it has
been signed by both parties.

        22. Counterparts. This Agreement may be executed in counterparts, and
each counterparts 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.

        23. Voluntary Execution of Agreement. This Agreement is executed
voluntarily and without any duress or undue influence on the part or behalf of
the Parties hereto, with the full intent of releasing all claims. The Parties
acknowledge that:

               (a) They have read this Agreement;

               (b) They have been represented in the preparation, negotiation,
and execution of this Agreement by legal counsel of their own choice or that
they have voluntarily declined to seek such counsel;

               (c) They understand the terms and consequences of this Agreement
and of the releases it contains;

               (d) They are 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.

                                        NOVADIGM, INC.

Dated:  June 11, 1998                   By:  /s/ WALLACE D. RUIZ
                                             -----------------------------------
                                             WALLACE D. RUIZ
                                             Vice President & Chief
                                             Financial Officer



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                                        STUART JACOBSON, an
                                        Individual

Dated:  June 9, 1998                    By:  /s/ STUART JACOBSON
                                             -----------------------------------
                                             STUART JACOBSON



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