Master Transitional Services Agreement

MASTER TRANSITIONAL SERVICES AGREEMENT


BETWEEN


3COM CORPORATION


AND


PALM, INC.


EFFECTIVE AS OF FEBRUARY 26, 2000


MASTER TRANSITIONAL SERVICES AGREEMENT


This Master Transitional Services Agreement (the "Agreement") is effective as of February 26, 2000 (the "Effective Date"), between 3Com Corporation, a Delaware corporation ("3Com"), having an office at 5400 Bayfront Plaza, Santa Clara, California, 95052 and Palm, Inc., a Delaware corporation ("Palm"), having an office at 5470 Great America Parkway, Santa Clara, California, 95052.


ARTICLE 1
DEFINITIONS
For the purpose of this Agreement, the following capitalized terms shall have the following meanings:


1.1 ADDITIONAL SERVICES. "Additional Services" shall have the meaning set forth in Section 3.5.


1.2 ANCILLARY AGREEMENTS. "Ancillary Agreements" shall have the meaning set forth in the Master Separation and Distribution Agreement.


1.3 DISTRIBUTION DATE. "Distribution Date" shall have the meaning set forth in the Master Separation and Distribution Agreement.


1.4 IMPRACTICABLE. "Impracticable" shall have the meaning set forth in Section 3.3.


1.5 LOCALIZED VERSION. "Localized Version" means localized versions of the Software.


1.6 MASTER CONFIDENTIAL DISCLOSURE AGREEMENT. "Master Confidential Disclosure Agreement" shall mean that certain Master Confidential Disclosure Agreement between 3Com and Palm.


1.7 MASTER SEPARATION AND DISTRIBUTION AGREEMENT. "Master Separation and Distribution Agreement" shall mean that certain Master Separation and Distribution Agreement between 3Com and Palm.


1.8 SEPARATION DATE. Unless otherwise provided in this Agreement, or in any agreement to be executed in connection with this Agreement, the effective time and date of each transfer of property, assumption of liability, license, undertaking, or agreement in connection with the Separation shall be 12:01 a.m., Pacific Time, February 26, 2000 or such other date as may be fixed by the Board of Directors of 3Com (the "Separation Date").


1.9 SERVICE(S). "Service(s)" shall have the meaning set forth in Section 3.1.


1.10 SOFTWARE. "Software" means 3Com's software program(s), in object code only, listed and described in the relevant Transition Service Schedule.


1.11 SOURCE CODE. "Source Code" means any human readable code, including interpreted code, of 3Com, listed and described in the relevant Transition Service Schedule.


1.12 SOURCE CODE DOCUMENTATION. "Source Code Documentation" means the manuals and other documentation that are reasonably necessary to use the Source Code licensed herein, including those items listed and described in the relevant Transition Service Schedule hereto.


1.13 SUBSIDIARY. "Subsidiary" of any Person means a corporation or other organization whether incorporated or unincorporated of which at least a majority of the securities or interests having by the terms thereof ordinary voting power to elect at least a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such Person or by any one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries; provided, however, that no Person that is not directly or indirectly wholly-owned by any other Person shall be a Subsidiary of such other Person unless such other Person controls, or has the right, power or ability to control, that Person. For purposes of this Agreement, Palm shall be deemed not to be a subsidiary of 3Com.


ARTICLE 2
TRANSITION SERVICE SCHEDULES
This Agreement will govern individual transitional services as requested by Palm and provided by 3Com, the details of which are set forth in the Transition Service Schedules attached to this Agreement. Each Service shall be covered by this Agreement upon execution of a transition service schedule in the form attached hereto (each transition service schedule, a "Transition Service Schedule").


For each Service, the parties shall set forth, among other things, the time period during which the Service will be provided if different from the term of this Agreement determined pursuant to Article 4 hereof, a summary of the Service to be provided; a description of the Service; and the estimated charge, if any, for the Service and any other terms applicable thereto on the Transition Service Schedule. Obligations regarding each Transition Service Schedule shall be effective upon execution of this Agreement. This Agreement and all the Transition Service Schedules shall be defined as the "Agreement" and incorporated herein wherever reference to it is made.


ARTICLE 3
SERVICES
3.1 SERVICES GENERALLY. Except as otherwise provided herein, for the term determined pursuant to Article 4 hereof, 3Com shall provide or cause to be provided to Palm the service(s) described in the Transition Service Schedule(s) attached hereto. The service(s) described


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on a single Transition Service Schedule shall be referred to herein as a "Service." Collectively, the services described on all the Transition Service Schedules (including Additional Services) shall be referred to herein as "Services."


3.2 SERVICE BOUNDARIES. Except as provided in a Transition Service Schedule for a specific Service: (i) 3Com shall be required to provide the Services only to the extent and only at the locations such Services are being provided by 3Com for Palm immediately prior to the Effective Date; and (ii) the Services will be available only for purposes of conducting the business of Palm substantially in the manner it was conducted prior to the Effective Date.


3.3 IMPRACTICABILITY. 3Com shall not be required to provide any Service to the extent the performance of such Service becomes "Impracticable" as a result of a cause or causes outside the reasonable control of 3Com including unfeasible technological requirements, or to the extent the performance of such Services would require 3Com to violate any applicable laws, rules or regulations or would result in the breach of any software license or other applicable contract.


3.4 ADDITIONAL RESOURCES. Except as provided in a Transition Service Schedule for a specific Service, in providing the Services, 3Com shall not be obligated to: (i) hire any additional employees; (ii) maintain the employment of any specific employee; (iii) purchase, lease or license any additional equipment or software; or (iv) pay any costs related to the transfer or conversion of Palm's data to Palm or any alternate supplier of Services.


3.5 ADDITIONAL SERVICES. From time to time after the Effective Date, the parties may identify additional services that one party will provide to the other party in accordance with the terms of this Agreement (the "Additional Services"). Accordingly, the parties shall execute additional Transition Service Schedules for such Additional Services pursuant to Article 2. Except as set forth in Section 3.6, the parties may agree in writing on Additional Services during the term of this Agreement.


3.6 OBLIGATIONS AS TO ADDITIONAL SERVICES. Except as set forth in the next sentence, 3Com shall be obligated to perform, at a charge determined using the principles for determining fees under Section 5.1, any Additional Service that: (a) was provided by 3Com immediately prior to the Separation Date and that Palm reasonably believes was inadvertently or unintentionally omitted from the list of Services, or (b) is essential to effectuate an orderly transition under the Master Separation and Distribution Agreement unless such performance would significantly disrupt 3Com's operations or materially increase the scope of its responsibility under this Agreement. If 3Com reasonably believes the performance of Additional Services required under subparagraphs (a) or (b) would significantly disrupt its operations or materially increase the scope of its responsibility under this Agreement, 3Com and Palm shall negotiate in good faith to establish terms under which 3Com can provide such Additional Services, but 3Com shall not be obligated to provide such Additional Services if, following good faith negotiation, it is unable to reach agreement on such terms.


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ARTICLE 4
TERM
The term of this Agreement shall commence on the Effective Date and shall remain in effect until one (1) year after the Effective Date (the "Expiration Date"), unless earlier terminated under Article 7. This Agreement may be extended by the parties in writing, either in whole or with respect to one or more of the Services; provided, however, that such extension shall only apply to the Services for which the Agreement was extended. The parties shall be deemed to have extended this Agreement with respect to a specific Service if the Transition Service Schedule for such Service specifies a completion date beyond the aforementioned Expiration Date. The parties may agree on an earlier expiration date respecting a specific Service by specifying such date on the Transition Service Schedule for that Service. Services shall be provided up to and including the date set forth in the applicable Transition Service Schedule, subject to earlier termination as provided herein.


ARTICLE 5
COMPENSATION
5.1 CHARGES FOR SERVICES. Palm shall pay 3Com the charges, if any, set forth on the Transition Service Schedules for each of the Services listed therein as adjusted, from time to time, in accordance with the processes and procedures established under Section 5.4 and Section 5.5 hereof. Such fees shall include the direct costs, as determined using the process described in such Transition Service Schedule, and indirect costs of providing the Services plus five percent (5%), unless specifically indicated otherwise on a Transition Service Schedule. However, if the term of this Agreement is extended beyond the Expiration Date as provided in Article 4, Palm will reimburse 3Com such costs plus ten percent (10%) for the Services unless the Transition Service Schedule for such Service indicates it is to extend beyond the Expiration Date. The parties also intend for charges to be easy to administer and justify and, therefore, they hereby acknowledge it may be counterproductive to try to recover every cost, charge or expense, particularly those that are insignificant or de minimus. The parties shall use good faith efforts to discuss any situation in which the actual charge for a Service is reasonably expected to exceed the estimated charge, if any, set forth on a Transition Service Schedule for a particular Service; provided, however, that the incurrence of charges in excess of any such estimate on such Transition Service Schedule shall not justify stopping the provision of, or payment for, Services under this Agreement.


5.2 PAYMENT TERMS. 3Com shall bill Palm monthly for all charges pursuant to this Agreement. Such bills shall be accompanied by reasonable documentation or other reasonable explanation supporting such charges. Palm shall pay 3Com for all Services provided hereunder within forty-five (45) days after receipt of an invoice therefor. Late payments shall bear interest at the lesser of 12% or the maximum rate allowed by law.


5.3 PERFORMANCE UNDER ANCILLARY AGREEMENTS. Notwithstanding anything to the contrary contained herein, Palm shall not be charged under this Agreement for any


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obligations that are specifically required to be performed under the Master Separation and Distribution Agreement or any other Ancillary Agreement and any such other obligations shall be performed and charged for (if applicable) in accordance with the terms of the Master Separation and Distribution Agreement or such other Ancillary Agreement.


5.4 ERROR CORRECTION; TRUE-UPS; ACCOUNTING. The parties shall reasonably agree on a process and procedure for conducting internal audits and making adjustments to charges as a result of the movement of employees and functions between parties, the discovery of errors or omissions in charges, as well as a true-up of amounts owed. In no event shall such processes and procedures extend beyond two (2) years after completion of a Service.


5.5 PRICING ADJUSTMENTS. In the event of a tax audit adjustment relating to the pricing of any or all Services provided pursuant to this Agreement in which it is determined by a taxing authority that any of the charges, individually or in combination, did not result in an arm's-length payment, as determined under internationally accepted arm's-length standards, then the parties, including any 3Com subcontractor providing Services hereunder, may agree to make corresponding adjustments to the charges in question for such period to the extent necessary to achieve arm's-length pricing. Any adjustment made pursuant to this Section 5.5 at any time during the term of this Agreement or after termination of this Agreement and shall be reflected in the parties' legal books and records, and the resulting underpayment or overpayment shall create, respectively, an obligation to be paid in the manner specified in Section 5.2, or shall create a credit against amounts owed under this Agreement.


ARTICLE 6


GENERAL OBLIGATIONS; STANDARD OF CARE


6.1 PERFORMANCE METRICS: 3COM. Subject to Sections 3.4 and any other terms and conditions of this Agreement, 3Com shall maintain sufficient resources to perform its obligations hereunder. Specific performance metrics for 3Com for a specific Service may be set forth in the corresponding Transition Service Schedule. Where none is set forth, 3Com shall use reasonable efforts to provide Services in accordance with the policies, procedures and practices in effect before the Effective Date and shall exercise the same care and skill as it exercises in performing similar services for itself.


6.2 DISCLAIMER OF WARRANTIES. 3COM MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THE SERVICES, SOFTWARE OR OTHER DELIVERABLES PROVIDED BY IT HEREUNDER.


6.3 PERFORMANCE METRICS: PALM. Specific performance metrics for Palm for a specific Service may be set forth in the corresponding Transition Service Schedule. Where none is set forth, Palm shall use reasonable efforts, in connection with receiving Services, to follow the policies, procedures and practices in effect before the Effective Date including providing


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information and documentation sufficient for 3Com to perform the Services as they were performed before the Effective Date and making available, as reasonably requested by 3Com, sufficient resources and timely decisions, approvals and acceptances in order that 3Com may accomplish its obligations hereunder in a timely manner.


6.4 TRANSITIONAL NATURE OF SERVICES; CHANGES. The parties acknowledge the transitional nature of the Services and that 3Com may make changes from time to time in the manner of performing the Services if 3Com is making similar changes in performing similar services for itself and if 3Com furnishes to Palm sixty (60) days written notice regarding such changes.


6.5 RESPONSIBILITY FOR ERRORS; DELAYS. 3Com's sole responsibility to Palm:


(a) for errors or omissions in Services, shall be to furnish correct information, payment and/or adjustment in the Services, at no additional cost or expense to Palm; provided, Palm must promptly advise 3Com of any such error or omission of which it becomes aware after having used reasonable efforts to detect any such errors or omissions in accordance with the standard of care set forth in Section 6.1; and


(b) for failure to deliver any Service because of Impracticability, shall be to use reasonable efforts, subj ...