Employment Agreement between Extended Systems, Incorporated and Charles Jepson (President and CEO)

Summary

This agreement is between Extended Systems, Incorporated and Charles Jepson, who is being employed as President and CEO. The contract outlines that employment is at-will, meaning either party can end it at any time. It details compensation, including a base salary, bonus eligibility, stock options, and benefits. The agreement also covers vacation, notice of termination, and severance terms if employment ends without cause or due to certain changes in job conditions. Both parties must provide 14 days' notice for termination, and severance is contingent on signing a release of claims.

EX-10.33 15 exh10-33_12230.txt EXHIBIT 10.33 ------------- EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT is entered into as of August 22, 2003, (the `Effective Date") by and between EXTENDED SYSTEMS, INCORPORATED, a Delaware corporation (hereinafter referred to as the `Employer"), and Charles Jepson hereinafter referred to as the `Employee"). WITNESSETH: The Employer wishes to employ the Employee, and the Employee agrees to accept such employment, on the terms and conditions set forth herein. NOW THEREFORE, based on the foregoing premises and for and in consideration of the mutual promises contained herein, the Employer and Employee agree as follows: 1. Employment. From and after the Effective Date, Employer agrees to employ the Employee and Employee agrees to accept such employment as the President and CEO of Extended Systems, Incorporated (the `Employer"). Employee and Employer acknowledge and agree that such employment will be in accordance with Employer's standard employment policies, and Employee agrees to be bound by such employment policies, which shall be in addition to the terms and conditions contained herein. Employee further acknowledges that Employer policy manual or other similar documents are to be explanations of benefits or programs, and they do not change the terms of this Employment Agreement. 2. At-Will Employment. The parties agree that Employee's employment with the Employer will be "at-will" employment and may be terminated at any time with or without cause or notice. Employee understands and agrees that neither his/her job performance nor promotions, commendations, bonuses or the like from the Employer give rise to or in any way serve as the basis for modification, amendment, or extension, by implication or otherwise, of his/her employment with the Employer. 3. Duties of Emulovee. Employee agrees to perform the duties commensurate with employee's position and experience and as shall be assigned to employee from time to time by the Employer. Employee shall perform such duties in a diligent and loyal manner, shall devote his/her entire business time, attention, and efforts to the affairs of Employer within the scope of his/her employment as is reasonably necessary for the proper rendition of such services and shall diligently promote the interest of Employer. Employee shall not intentionally take any action against the best interest of Employer, or of Employer's parent, any other subsidiary, or affiliate of Employer. Employee agrees not to actively engage in any other employment, occupation or consulting activity for any direct or indirect remuneration without the prior approval of the Employer. Employee and the company will mutually agree if the employee's participation on outside boards of directors will be acceptable 4. Scone of Emplovment. The general scope of Employee's employment shall be to serve as the President and CEO for Employer and to perform such duties as described in Exhibit "A", attached hereto, and such other duties as may be mutually agreed upon by the parties in accordance therewith as Employer may reasonably request. 5. Compensation. (a) Base Salary. While employed hereunder, the Employer will pay Employee as compensation for his services a base salary at the monthly rate of $17,500 (the "Base Salary"). The Base Salary will be paid periodically in accordance with the Employer's normal payroll practices and be subject to the usual, required withholding. In addition to base pay, employee will be entitled to a bonus plan. Current bonus plan targets and details are outlined and attached in Exhibit "B" Subsequent bonus plan targets and details will be agreed upon at the beginning of each fiscal year by employee and employer. The employee shall also be entitled to participate in any generally applicable executive stock and cash compensation bonus plans, when put in place by the CEO and compensation committee of the Board of Directors of the company. (b) Stock Option. On the "effective date", Employee will be granted a stock option to purchase 213,333 shares at an exercise price per share equal to the per share FMV of ESI Stock on the date of grant (the "Option"). The Option will vest as to 25% of the shares shall vest twelve months after the Vesting Commencement Date, and as to 1148th of the shares subject to the Option shall vest each month thereafter, so that the Option will be fully vested and exercisable four (4) years from the date of grant, subject to Employee's continued service to the Employer on the relevant vesting dates. The Option will be subject to the terms, definitions and provisions of the Employer's Stock Plan and the stock option agreement by and between Employee and the Employer, both of which documents are incorporated herein by reference; provided, that Employee shall have until the first anniversary of his termination date (or second anniversary in the event Section 8(b) applies) to exercise any options which are vested or deemed vested as of such date. Options will be priced at FMV at close of market on the date of the grant. (c) Employee Benefits. While employed hereunder, Employee will be entitled to participate in the employee benefit plans currently and hereafter maintained by the Employer of general applicability to other employees of the Employer, including, without limitation, the Employer's group medical, dental, vision, disability, and life insurance plans. The Employer reserves the right to cancel or change the benefit plans and programs it offers to its employees at any time. 6. Vacation. Employee shall accrue three (3) weeks of paid vacation in accordance with Employer's time-off policy. Vacation is subject to the requirements of Employer's time-off policy. In the event Employee is terminated for any reason, Employee shall be paid his/her accrued vacation at 100 % of normal base pay 7. Notice of Termination. Each party agrees to provide the other with 14 days notice of termination, provided, however, this shall not alter any other term of this Agreement. 8. Severance Pay. (a) Termination Without Cause: Constructive Termination. Except as provided in Section 8(b), in the event EMPLOYEE is terminated without cause, or in the event any of the following events occur without EMPLOYEE'S consent: (i) EMPLOYEE is relocated; (ii) EMPLOYEE'S overall compensation package (including but not limited to salary,, bonus, commission structure, fringe benefits, perquisites, and vacation time) is detrimentally changed or modified other than in connection with a general change in compensation for all ESI employees or for all ESI employees in any group or classification that includes EMPLOYEE (provided that any reduction in compensation is made as a result of a decline in ESI's economic conditions, is temporary, and is no greater than twenty percent (20%) of Base Salary); or (iii) EMPLOYEE'S position within ESI (including EMPLOYEE'S officer status with ESI or its parent), or any of the duties, responsibilities or requirements of EMPLOYEE'S position, are substantially changed or modified, then EMPLOYEE shall be entitled to receive the following: (A) an amount equal to six (6) months of Base Salary at EMPLOYEE'S then current Base Salary; (B) $3,000.00 in lieu of fringe benefits; (C) all salary, vacation time and other benefits earned and accrued to the date of termination; and (D) a pro rata bonus for the year in which termination occurs assuming the EMPLOYEE would have received a bonus. In order to receive the severance payment under this Section 8(a), EMPLOYEE must execute a mutually agreeable form of "Release of All Employment Claims." Participation in all stock option plans, stock purchase plans, and other company personnel benefits shall cease on the EMPLOYEE'S date of termination, subject to the specific provisions of option agreements or plans that may extend EMPLOYEE'S rights beyond the date of termination. (b) Chance in Control. Notwithstanding the foregoing, if within 12 months following a Change in Control, EMPLOYEE is terminated for any reason other than for cause or any of the following events occur without EMPLOYEE'S consent: (i) EMPLOYEE is relocated; (ii) any component of EMPLOYEE'S compensation package (including but not limited to salary, bonus, commission structure, fringe benefits, perquisites, and vacation time) is detrimentally changed or modified; or (iii) EMPLOYEE'S position within the surviving entity, or any of the duties, responsibilities or requirements of EMPLOYEE'S position, are changed or modified in relation to EMPLOYEE'S position within ESI (including EMPLOYEE'S officer status with ESI or its parent), then EMPLOYEE shall be entitled to receive the following: (A) an amount equal to twelve (12) months of Base Salary at EMPLOYEE'S then current Base Salary; (B) $6,000 in lieu of fringe benefits; (C) all salary, vacation time and other benefits earned and accrued to the date of termination; and (D) a pro rata bonus for the year in which termination occurs assuming the EMPLOYEE would have received a bonus. Furthermore, all unvested ESI stock options held by EMPLOYEE shall automatically vest upon termination (or the occurrence of an event described in Sections 8(bXi)-(iii)) and, on or before the ninetieth (90th) day following termination (or the triggering event, as the case may be), EMPLOYEE shall have the option, exercisable by delivery of written notice of exercise to ESI or its successor, of converting any incentive stock options into nonqualified stock options with an exercise period extending until the earliest of twenty-four (24) months following such date, or the expiration date of such option. For purposes of this Agreement, a "Change In Control" shall mean the occurrence of any of the following events: (x) A third "person," including a "group," but excluding an existing stockholder of ESI who is the "beneficial owner" (as these terms are defined in or for the purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, and as in effect on the date hereof) of more than 20% of the total number of votes that may be cast for the election of directors of ESI, (A) becomes the beneficial owner of shares of ESI having more than 50% of the total number of votes that may be cast for the election of directors of ESI, or (B) otherwise is able to appoint, designate or control, by proxy, agreement or otherwise, a majority of the directors of ESI; (y) The merger or consolidation of ESI with or into any other corporation or entity or the merger or consolidation of any other corporation or entity into or with ESI, in which case those persons who are stockholders of ESI immediately prior to such merger or consolidation do not receive, as a result of such merger or consolidation, more than 50% in voting power of the outstanding capital stock of the surviving corporation; or (z) Any sale or transfer in a single transaction or series of related transactions of more than 50% of fair market value of ESI's assets. Notwithstanding the above, ESI and EMPLOYEE acknowledge that this Section 8(b) shall be triggered and EMPLOYEE shall be entitled to severance thereunder if after execution of a definitive agreementbut . prior to the actual closing of a Change in Control, EMPLOYEE is terminated in relation to the Change in Control. (d) Payments. Severance payments may be paid in one lump sum or in installments at the option of EMPLOYEE. (e) Excess Parachute Payments. If any portion of the payments or benefits under this Agreement or any other agreement or benefit plan of the Company (including stock options) would be characterized as an "excess parachute payment" to the Employee under Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), the Employee shall be paid any excise tax that the Employee owes under Section 4999 of the Code as a result of such characterization, such excise tax to be paid to the Employee at least ten (10) days prior to the date that he or she is obligated to make the excise tax payment. The determination of whether and to what extent any payments or benefits would be "excess parachute payments" and the date by which any excise tax shall be due, shall be determined by recognized tax counsel selected by ESI and reasonably acceptable to the Employee. 9. Confidential Information. Employee agrees to sign the Nondisclosure Agreement. 10. Return of Pronerty. On termination of his/her employment with Employer, Employee will immediately surrender to Employer, in good condition, all sales manuals, price lists, customer account lists, copies of invoices, mailing lists, letters, notes, memoranda, design specifications, drawings, minutes of meetings, financial reports, computer software programs, source codes, works in progress and any other similar items that have been supplied to Employee by Employer, or generated by Employee for the Employer's use or business and that are in Employee's possession, custody, or control wherever located, including all reproductions or copies of such materials. Unless the severance is as a result of a change of control, in this event the employee will be granted company owned office equipment in his possession, not to exceed $5000. 11. Equitable Relief. In the event of a breach of any covenant contained in this Agreement, the non-breaching party shall be entitled to an injunction restraining such breach in addition to any other remedies provided by law or in equity. 12. Assignment of Inventions. (a) Inventions Retained and Licensed. The Employee has attached to this Employment Agreement, as Exhibit "C" a list describing all inventions, original works of authorship, developments, improvements, and trade secrets that were made by him/her prior to his/her employment with the Employer, that relate to the Employer's proposed business, products or research and development, and that are not assigned to the Employer under this Employment Agreement (collectively, "Prior Inventions"). If no such list is attached, the Employee represents that there are no Prior Inventions. If in the course of the Employee's employment with the Employer, he/she incorporates into an Employer product, process or machine a Prior invention owned by him/her or in which he/she have an interest, the Employer is granted a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license to make, have made, modify, use and sell the Prior Invention as part of or in connection with the Employer's product, process or machine. (b) Assignment of Inventions. The Employee will promptly make a full written disclosure to the Employer, will hold in trust for the sole right and benefit of the Employer, and hereby assigns to the Employer, or its designee, all his/her right, title, and interest in and to any and all inventions, original works of authorship, developments, concepts, improvements, designs, discoveries, ideas, trademarks or trade secrets, whether or not patentable or registrable under copyright or similar laws, that he/she may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice, during the period of time the Employee is in the employ of the Employer (collectively referred to as "Inventions"). The Employee further acknowledges that all original works of authorship that are made by him/her (solely or jointly with others) within the scope of and during the period of his/her employment with the Employer and that are protectable by copyright are "works made for hire," as that term is defined in the United States Copyright Act. The decision whether or not to commercialize or market any Invention developed by the Employee solely or jointly with others is within the Employer's sole discretion and for the Employer's sole benefit. Neither the Employer nor any other entity will pay the Employee a royalty as a result of the Employer's efforts to commercialize or market any such Invention. The Employee will not incorporate any original work of authorship, development, concept, improvement, or trade secret owned, in whole or in part, by any third party, into any Invention without the Employer's prior written permission signed by the President of the Employer. (c) Inventions Assigned to the United States. The Employee agrees to assign to the United States government all his/her right, title, and interest in and to any and all Inventions whenever such full title is required to be in the United States by a contract between the Employer and the United States or any of its agencies. (d) Maintenance of Records. The Employee will keep and maintain adequate and current written records of all Inventions made by him/her (solely or jointly with others) during the term of his/her employment with the Employer. The records will be in the form of notes, sketches, drawings, laboratory notebooks, and any other format that may be specified by the Employer. At all times, the records will (a) be available to Employer, and (b) remain the sole property of the Employer. (e) Patent and Convriaht Registrations. The Employee will assist the Employer, or its designee, at the Employer's expense, in every proper way to secure and protect the Employer's rights in the Inventions and any related copyrights, patents, mask work rights or other intellectual property rights in any and all countries. The Employee will disclose to the Employer all pertinent information and data. The Employee will execute all applications, specifications, oaths, assignments and all other instruments that the Employer deems necessary in order to apply for and obtain such rights and in order to assign and convey to the Employer, its successors, assigns, and nominees the sole and exclusive rights, title and interest in and to such Inventions, and any related copyrights, patents, mask work rights or other intellectual property rights. The Employee's obligation to execute or cause to be executed, when it is in his/her power to do so, any such instrument or papers will continue after the termination of this Employment Agreement. If the Employer is unable because of the Employee's mental or physical incapacity or for any other reason to secure the Employee's signature to apply for or to pursue any application for any United States or foreign patents or copyright registrations covering Inventions or original works of authorship assigned to the Employer as above, then the Employee hereby irrevocably designates and appoints the Employer and its duly authorized officers and agents as his/her agent and attorney-in-fact. Accordingly, the Employer may act for and in the Employee's behalf to execute and file any applications and to do all other lawfully permitted acts to further the prosecution and issuance of letters patent or copyright registrations with the same legal force and effect as if executed by the Employee. 13. Conflicting Employment. During the term of the Employee's employment with the Employer, he/she will not engage in any other employment, occupation, consulting or other business activity directly related to the business that the Employer is now involved or becomes involved during the term of the Employee's employment. The Employee will also not engage in any other activities that conflict with his/her obligations to the Employer. The employee is currently being paid as an employee of Diligent Software Systems. This arrangement will continue no longer than July 15, 2003. The employee has no obligations under his agreement with Diligent Systems that require any of his time to be devoted to that company. 14. Survival. The provisions of paragraphs 8, 9, 10, 11 and 12 hereof shall survive the termination of the Agreement. 15. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity and enforceability of the other provisions hereof. If any provision of this Agreement is unenforceable for any reason whatsoever, such provision shall be appropriately limited and given effect to the extent that it may be enforceable. 16. Governing Law. All rights and obligations of the parties arising out of this Agreement will be construed and enforced in accordance with the laws of the state of Idaho, without reference to its rules as to conflicts of laws. 17. Prevailing Party's Fees. If the parties hereto become parties to any litigation, commented by or against one another involving the enforcement of any rights or remedies under this Agreement, or arising on account of a default of the other party in its performance of such party's obligations hereunder, the prevailing party in such litigation shall be entitled to reimbursement of all of its legal fees, costs, and expenses incurred in connection with such litigation, and interest accrued thereon from the date of judgment, at the maximum rate permitted by law. 18. Assignment. This Agreement may not be assigned or otherwise transferred by Employer without the prior written consent of Employee, which consent shall not be unreasonably withheld. No such consent shall be required for a transfer of value of all or substantially all of Employer's assets, whether such transfer is effected by asset sale, merger, stock sale or otherwise. Any attempted assignment in violation of the provisions of this section will be void. Subject to the foregoing, this Agreement shall be binding on and inure to the benefit of the parties and their respective successors and assigns. 19. Notices. All notices, requests, demands and other communications called for hereunder shall be in writing and shall be deemed given (i) on the date of delivery if delivered personally, (ii) one (1) day after being sent by a well established commercial overnight service, or (iii) four (4) days after being mailed by registered or certified mail, return receipt requested, prepaid and addressed to the parties or their successors at the following addresses, or at such other addresses as the parties may later designate in writing: