Indemnification And Insurance Matters Agreement

INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT


BETWEEN


3COM CORPORATION


AND


PALM, INC.


FEBRUARY 26, 2000


TABLE OF CONTENTS


PAGE
---- ARTICLE I. MUTUAL RELEASES; INDEMNIFICATION...........................................................................1


Section 1.1. Release of Pre-Closing Claims...............................................................1
Section 1.2. Indemnification by Palm.....................................................................2
Section 1.3. Indemnification by 3Com.....................................................................2
Section 1.4. Indemnification With Respect to Environmental Actions and Conditions........................3
Section 1.5. Reductions for Insurance Proceeds and Other Recoveries......................................4
Section 1.6. Procedures for Defense, Settlement and Indemnification of Third Party Claims................4
Section 1.7. Additional Matters..........................................................................5
Section 1.8. Survival of Indemnities.....................................................................6


ARTICLE II. INSURANCE MATTERS.........................................................................................6


Section 2.1. Palm Insurance Coverage During the Transition Period........................................6
Section 2.2. Cooperation and Agreement Not to Release Carriers...........................................7
Section 2.3. Palm Insurance Coverage After the Insurance Transition Period...............................7
Section 2.4. Responsibilities for Deductibles and/or Self-insured Obligations............................7
Section 2.5. Procedures With Respect to Insured Palm Liabilities.........................................8
Section 2.6. Insufficient Limits of Liability for 3Com Liabilities and Palm Liabilities..................8
Section 2.7. Cooperation.................................................................................8
Section 2.8. No Assignment or Waiver.....................................................................8
Section 2.9. No Liability................................................................................8
Section 2.10. Additional or Alternate Insurance...........................................................9
Section 2.11. Further Agreements..........................................................................9
Section 2.12. Matters Governed by Employee Matters Agreement..............................................9


ARTICLE III. MISCELLANEOUS............................................................................................9


Section 3.1. Entire Agreement............................................................................9
Section 3.2. Governing Law...............................................................................9
Section 3.3. Dispute Resolution..........................................................................9
Section 3.4. Notices....................................................................................10
Section 3.5. Parties in Interest........................................................................11
Section 3.6. Other Agreements Evidencing Indemnification Obligations....................................11
Section 3.7. Counterparts...............................................................................11
Section 3.8. Assignment.................................................................................11
Section 3.9. Severability...............................................................................11
Section 3.10. Failure or Indulgence Not Waiver...........................................................12
Section 3.11. Amendment..................................................................................12
Section 3.12. Authority..................................................................................12
Section 3.13. Interpretation.............................................................................12


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TABLE OF CONTENTS
(Continued)
PAGE
---- ARTICLE IV. DEFINITIONS..............................................................................................12


Section 4.1. 3Com Business..............................................................................12
Section 4.2. 3Com Facilities............................................................................12
Section 4.3. 3Com Group.................................................................................12
Section 4.4. 3Com Indemnitees...........................................................................13
Section 4.5. Action.....................................................................................13
Section 4.6. Affiliated Company.........................................................................13
Section 4.7. Assets.....................................................................................13
Section 4.8. Assignment Agreement.......................................................................13
Section 4.9. Coverage Amount............................................................................13
Section 4.10. Employee Matters Agreement.................................................................13
Section 4.11. Environmental Actions......................................................................13
Section 4.12. Environmental Conditions...................................................................13
Section 4.13. Environmental Laws.........................................................................14
Section 4.14. Hazardous Materials........................................................................14
Section 4.15. Indemnitee.................................................................................14
Section 4.16. Insurance Policies.........................................................................14
Section 4.17. Insurance Proceeds.........................................................................14
Section 4.18. Insurance Transition Period................................................................14
Section 4.19. Insured Palm Liability.....................................................................14
Section 4.20. IPO Date...................................................................................14
Section 4.21. IPO Liabilities............................................................................14
Section 4.22. IPO Registration Statement.................................................................14
Section 4.23. Liabilities................................................................................15
Section 4.24. Non-US Plan................................................................................15
Section 4.25. Palm Business..............................................................................15
Section 4.26. Palm Contracts.............................................................................15
Section 4.27. Palm Covered Parties.......................................................................15
Section 4.28. Palm Facilities............................................................................15
Section 4.29. Palm Group.................................................................................15
Section 4.30. Palm Indemnitees...........................................................................15
Section 4.31. Palm Liabilities...........................................................................15
Section 4.32. Person.....................................................................................15
Section 4.33. Pre-Separation Third Party Site Liabilities................................................15
Section 4.34. Release....................................................................................15
Section 4.35. Separation.................................................................................16
Section 4.36. Separation Agreement.......................................................................16
Section 4.37. Separation Date............................................................................16
Section 4.38. Shared 3Com Percentage.....................................................................16


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TABLE OF CONTENTS
(Continued)


PAGE
----
Section 4.39. Shared Palm Percentage.....................................................................16
Section 4.40. Shared Percentage..........................................................................16
Section 4.41. Subsidiary.................................................................................16
Section 4.42. Tax Sharing Agreement......................................................................16
Section 4.43. Taxes......................................................................................16
Section 4.44. Third Party Claim..........................................................................16
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INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT


This Indemnification and Insurance Matters Agreement (this "AGREEMENT") is entered into on February 26, 2000 between 3Com Corporation, a Delaware corporation ("3COM"), and Palm, Inc., a Delaware corporation ("PALM"). Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the ARTICLE IV below.


RECITALS


WHEREAS, 3Com and its Subsidiaries have transferred or will transfer to Palm and its Subsidiaries effective as of the Separation Date, substantially all of the assets of the Palm Business in accordance with the Master Separation and Distribution Agreement dated as of December 13, 1999 between 3Com and Palm's predecessor corporation, Palm Computing, Inc., a California corporation (the "SEPARATION AGREEMENT").


WHEREAS, the parties desire to set forth certain agreements regarding indemnification and insurance.


NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth below, the parties hereto agree as follows:


ARTICLE I.


MUTUAL RELEASES; INDEMNIFICATION


SECTION 1.1. RELEASE OF PRE-CLOSING CLAIMS.


(a) PALM RELEASE. Except as provided in SECTION 1.1(c) and SCHEDULE 1.1 to this Agreement, effective as of the Separation Date, Palm does hereby, for itself and as agent for each member of the Palm Group, remise, release and forever discharge the 3Com Indemnitees from any and all Liabilities whatsoever, whether at law or in equity (including any right of contribution), whether arising under any contract or agreement, by operation of law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Separation Date, including in connection with the transactions and all other activities to implement any of the Separation, the IPO and the Distribution.


(b) 3COM RELEASE. Except as provided in SECTION 1.1(c) and SCHEDULE 1.1 to this Agreement, effective as of the Separation Date, 3Com does hereby, for itself and as agent for each member of the 3Com Group, remise, release and forever discharge the Palm Indemnitees from any and all Liabilities whatsoever, whether at law or in equity (including any right of contribution), whether arising under any contract or agreement, by operation of law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Separation Date,


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including in connection with the transactions and all other activities to implement any of the Separation, the IPO and the Distribution.


(c) NO IMPAIRMENT. Nothing contained in Section 1.1(a) or (b) shall impair any right of any Person to enforce the Separation Agreement or any other Ancillary Agreement (including this Agreement), in each case in accordance with its terms.


(d) NO ACTIONS AS TO RELEASED CLAIMS. Palm agrees, for itself and as agent for each member of the Palm Group, not to make any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against 3Com or any member of the 3Com Group, or any other Person released pursuant to SECTION 1.1(A), with respect to any Liabilities released pursuant to SECTION 1.1(A). 3Com agrees, for itself and as agent for each member of the 3Com Group, not to make any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against Palm or any member of the Palm Group, or any other Person released pursuant to SECTION 1.1(B), with respect to any Liabilities released pursuant to SECTION 1.1(B).


(e) FURTHER INSTRUMENTS. At any time, at the request of any other party, each party shall cause each member of its respective Group to execute and deliver releases reflecting the provisions hereof.


SECTION 1.2. INDEMNIFICATION BY PALM. Except as otherwise provided in this Agreement, Palm shall, for itself and as agent for each member of the Palm Group, indemnify, defend (or, where applicable, pay the defense costs for) and hold harmless the 3Com Indemnitees from and against any and all Liabilities that any third party seeks to impose upon the 3Com Indemnitees, or which are imposed upon the 3Com Indemnitees, and that relate to, arise out of or result from any of the following items (without duplication):


(i) the Palm Business, any Palm Liability or any Palm Contract;


(ii) any breach by Palm or any member of the Palm Group of the Separation Agreement or any of the Ancillary Agreements (including this Agreement); and


(iii) any IPO Liabilities.


In the event that any member of the Palm Group makes a payment to the 3Com Indemnitees hereunder, and any of the 3Com Indemnitees subsequently diminishes the Liability on account of which such payment was made, either directly or through a third-party recovery, 3Com will promptly repay (or will procure a 3Com Indemnitee to promptly repay) such member of the Palm Group the amount by which the payment made by such member of the Palm Group exceeds the actual cost of the associated indemnified Liability. This SECTION 1.2 shall not apply to any Liability indemnified under SECTION 1.4.


SECTION 1.3. INDEMNIFICATION BY 3COM. Except as otherwise provided in this Agreement, 3Com shall, for itself and as agent for each member of the 3Com Group, indemnify, defend (or, where applicable, pay the defense costs for) and hold harmless the Palm Indemnitees from and


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against any and all Liabilities that any third party seeks to impose upon the Palm Indemnitees, or which are imposed upon the Palm Indemnitees, and that relate to, arise out of or result from any of the following items (without duplication):


(i) the 3Com Business or any Liability of the 3Com Group other than the Palm Liabilities; and


(ii) any breach by 3Com or any member of the 3Com Group of the Separation Agreement or any of the Ancillary Agreements (including this Agreement).


In the event that any member of the 3Com Group makes a payment to the Palm Indemnitees hereunder, and any of the Palm Indemnitees subsequently diminishes the Liability on account of which such payment was made, either directly or through a third-party recovery, Palm will promptly repay (or will procure a Palm Indemnitee to promptly repay) such member of the 3Com Group the amount by which the payment made by such member of the 3Com Group exceeds the actual cost of the indemnified Liability. This SECTION 1.3 shall not apply to any Liability indemnified under SECTION 1.4.


SECTION 1.4. INDEMNIFICATION WITH RESPECT TO ENVIRONMENTAL ACTIONS AND CONDITIONS.


(a) INDEMNIFICATION BY PALM. Palm shall, for itself and as agent for each member of the Palm Group, indemnify, defend and hold harmless the 3Com Indemnitees from and against any and all Environmental Actions relating to, arising out of or resulting from Environmental Conditions (i) arising out of operations occurring on and after the Separation Date at any of the Palm Facilities, or (ii) on any of the Palm Facilities arising from an event causing contamination that first occurs on or after the Separation Date (including any Release of Hazardous Materials occurring after the Separation Date that migrates to any of the Palm Facilities), except to the extent that such Environmental Conditions arise out of the operations of the 3Com Group on and after the Separation Date.


(b) INDEMNIFICATION BY 3COM. 3Com shall, for itself and as agent for each member of the 3Com Group, indemnify, defend and hold harmless the Palm Indemnitees from and against any and all Environmental Actions relating to, arising out of or resulting from any of the following items:


(i) Environmental Conditions (x) existing on, under, about or in the vicinity of any of the Palm Facilities prior to the Separation Date, or (y) arising out of operations occurring on or before the Separation Date at any of the Palm Facilities;


(ii) Except as arising out of the operations of the Palm Group on and after the Separation Date, Environmental Conditions on, under, about or arising out of operations occurring at any time, whether before or after the Separation Date, at any of the 3Com Facilities; and


(iii) Pre-Separation Third Party Site Liabilities.


(C) AGREEMENT REGARDING PAYMENTS TO INDEMNITEE. In the event an Indemnifying Party makes any payment to or on behalf of an Indemnitee with respect to an Environmental Action for


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which the Indemnifying Party is obligated to indemnify under this SECTION 1.4, and the Indemnitee subsequently receives any payment from a third party on account of the same financial obligation covered by the payment made by the Indemnifying Party for that Environmental Action or otherwise diminishes the financial obligation, the Indemnitee will promptly pay the Indemnifying Party the amount by which the payment made by the Indemnifying Party, exceeds the actual cost of the financial obligation.


SECTION 1.5. ...