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

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