Exhibit 99.2
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                       MUTUAL TERMINATION AGREEMENT AND
               AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION

     This MUTUAL TERMINATION AGREEMENT AND AMENDMENT TO AGREEMENT AND PLAN OF
REORGANIZATION ("Agreement") is made and entered into as of May 17, 2001,
between Palm, Inc., a Delaware corporation ("Parent") and Extended Systems
Incorporated, a Delaware corporation (the "Company").  Parent and Company are
collectively referred to herein as the "Parties" and each individually as a
"Party."  Unless defined herein, capitalized terms have the meaning given them
in the Merger Agreement (as defined below).

                                    RECITALS
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     A.  Parent and the Company are parties to that certain Agreement and Plan
of Reorganization dated as of March 6, 2001 (the "Merger Agreement") pursuant to
which it was contemplated that the Company would be merged with and into Parent.

     B.  Contemporaneously with the execution of the Merger Agreement, Parent,
Company and certain affiliate stockholders of the Company entered into (i) a
Stock Option Agreement, (ii) Company Voting Agreements, and (iii) Affiliate
Agreements (collectively, the "Ancillary Agreements").

     C.  Section 7.1 (a) of the Merger Agreement provides that the Merger
Agreement may be terminated at any time prior to the Effective Time by mutual
written consent duly authorized by the Boards of Directors of Parent and the
Company.

     D.  Each of Parent and the Company have determined to terminate the Merger
Agreement and each of the Ancillary Agreements as provided herein.

                                   AGREEMENT
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          NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties, intending to be legally bound, agree as follows:

          1. Amendment of Section 7.1(a) of the Merger Agreement. Section 7.1(a)
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of the Merger Agreement is hereby amended in its entirety to read as follows:

"(a) by mutual written consent duly authorized and executed by each of Parent
and the Company;"

          2. Termination of Merger Agreement.  The Parties agree that, effective
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immediately, (i) the Merger Agreement is hereby terminated pursuant to Section
7.1(a) of the Merger Agreement, with the effect set forth in Section 7.2 of the
Merger Agreement, and (ii) the Ancillary Agreements are hereby terminated, and
none of such Ancillary Agreements will be of any further force or effect.

          3. Publicity. The Parties will issue a mutually agreed upon joint
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press release (the "Initial Release") upon the signing of this Agreement with
respect to this Agreement and the termination of the Merger Agreement and the
Ancillary Agreements. Except as required by law or applicable listing agreement,
no other press release shall be issued regarding the termination of the Merger
Agreement by either


Parent or the Company without the prior written consent of the other.
Notwithstanding the foregoing, the Parties will be permitted to make reference
to the matters addressed in this Agreement in other press releases, provided
that such references are consistent in substance with the Initial Release.

          4. Amendment. This Agreement may be amended, supplemented or modified
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only by a written instrument duly executed by or on behalf of each Party hereto.

          5. Entire Agreement. This Agreement supercedes all prior discussions,
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representations, warranties and agreements, both written and oral, among the
Parties with respect to the subject matter hereof, and contains the sole and
entire agreement among the Parties with respect to the subject matter hereof.

          6. Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.

          7. Counterparts. This Agreement may be executed in one or more
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counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.


          IN WITNESS WHEREOF, Parent and the Company have caused this Mutual
Termination Agreement and Amendment to Agreement and Plan of Reorganization to
be duly executed as of the date first above written by their respective officers
duly authorized.

                                 PALM, INC.

                                 By:   /s/ Carl J. Yankowski
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                                    Carl J. Yankowski
                                    Chief Executive Officer


                                 EXTENDED SYSTEMS INCORPORATED

                                 By:   /s/ Steven D. Simpson
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                                    Steven D. Simpson
                                    President and Chief Executive Officer