Exhibit 10.47
 
PALM, INC.
 
MANAGEMENT RETENTION AGREEMENT
 
This Management Retention Agreement (the “Agreement”) is made and entered into
by and between Theodore Theophilos (the “Employee”) and Palm, Inc. (the
“Company”), effective as of the latest date set forth by the signatures of the
parties hereto below (the “Effective Date”).
 
R E C I T A L S
 
A.    It is expected that the Company from time to time may consider a Change of
Control (as defined below). The Board of Directors of the Company (the “Board”)
recognizes that such consideration can be a distraction to the Employee and can
cause the Employee to consider alternative employment opportunities. The Board
has determined that it is in the best interests of the Company and its
stockholders to assure that the Company will have the continued dedication and
objectivity of the Employee, notwithstanding the possibility, threat or
occurrence of a Change of Control of the Company.
 
B.    The Board believes that it is in the best interests of the Company and its
stockholders to provide the Employee with an incentive to continue his
employment and to motivate the Employee to maximize the value of the Company
upon a Change of Control for the benefit of its stockholders.
 
C.    The Board believes that it is imperative to provide the Employee with
severance benefits upon Employee’s termination of employment following a Change
of Control which provides the Employee with enhanced financial security and
incentive and encouragement to remain with the Company notwithstanding the
possibility of a Change of Control.
 
D.    Certain capitalized terms used in this Agreement are defined in Section 5
below.
 
The parties hereto agree as follows:
 
1.    Term of Agreement.    This Agreement shall terminate upon the date that
all obligations of the parties hereto with respect to this Agreement have been
satisfied.
 
2.    At-Will Employment.    The Company and the Employee acknowledge that the
Employee’s employment is and shall continue to be at-will, as defined under
applicable law, and may be terminated by either party at any time, with or
without cause or notice. If the Employee’s employment terminates for any reason,
including (without limitation) any termination prior to a Change of Control, the
Employee shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
available in accordance with the Company’s established employee plans or
pursuant to other written agreements with the Company.

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3.    Change of Control Severance Benefits.
 
(a)    Involuntary Termination other than for Cause, Death or Disability or
Voluntary Termination for Good Reason Following A Change of Control.    If,
within twelve (12) months following a Change of Control, Employee’s employment
with the Company (or any subsidiary thereof) is terminated (i) involuntarily by
the Company (or any subsidiary thereof) other than for Cause, death or
Disability or (ii) by the Employee pursuant to a Voluntary Termination for Good
Reason, then, subject to Employee entering into a standard form of mutual
release of claims with the Company, the Company shall provide Employee with the
following benefits upon such termination:
 
(i)    Severance Payment.    A lump-sum cash payment in an amount equal to one
hundred percent (100%) of the Employee’s Annual Compensation;
 
(ii)    Continued Employee Benefits.    Company-paid health, dental, vision,
long-term disability and life insurance coverage at the same level of coverage
as was provided to such Employee immediately prior to the Change of Control and
at the same ratio of Company premium payment to Employee premium payment as was
in effect immediately prior to the Change of Control (the “Company-Paid
Coverage”). If such coverage included the Employee’s dependents immediately
prior to the Change of Control, such dependents shall also be covered at Company
expense. Company-Paid Coverage shall continue until the earlier of (A) two years
from the date of termination, or (B) the date upon which the Employee and his
dependents become covered under another employer’s group health, dental, vision,
long-term disability or life insurance plans that provide Employee and his
dependents with comparable benefits and levels of coverage. For purposes of
Title X of the Consolidated Budget Reconciliation Act of 1985 (“COBRA”), the
date of the “qualifying event” for Employee and his or her dependents shall be
the date upon which the Company-Paid Coverage commences, and each month of
Company-Paid Coverage provided hereunder shall offset a month of continuation
coverage otherwise due under COBRA.
 
(iii)    Pro-Rated Bonus Payment.    A lump-sum cash payment equal to one
hundred percent (100%) of the higher of (A) Employee’s target bonus as in effect
for the fiscal year in which the Change of Control occurs or (B) Employee’s
target bonus as in effect for the fiscal year in which Employee’s termination
occurs, pro-rated by multiplying such bonus amount in clause (A) or (B), as
applicable, by a fraction, the numerator of which shall be the number of days
prior to Employee’s termination during such fiscal year, and the denominator of
which shall be three-hundred and sixty-five.
 
(iv)    Equity Compensation Accelerated Vesting.    One Hundred percent (100%)
of the unvested portion of any stock option, restricted stock or other Company
equity compensation held by the Employee shall be automatically accelerated in
full so as to become completely vested.

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Notwithstanding the foregoing, in the event the Employee is employed by a
subsidiary of the Company at the time of a Spin-Off of such subsidiary, then the
Employee shall not be deemed to have been terminated for Cause nor shall
Employee be permitted to terminate his or her employment pursuant to a Voluntary
Termination for Good Reason and receive the benefits provided for in this
Section 3(a) as a result of such Spin-Off, but rather the Former Subsidiary
shall assume the obligations under this Agreement as provided for in Section 7.
 
(b)    Voluntary Resignation; Termination For Cause.    If the Employee’s
employment terminates by reason of the Employee’s voluntary resignation (and is
not a Voluntary Termination for Good Reason), or if the Employee is terminated
for Cause, then the Employee shall not be entitled to receive severance or other
benefits except for those (if any) as may then be established under the
Company’s (or any subsidiary’s) then existing severance and benefits plans or
pursuant to other written agreements with the Company (or any subsidiary
thereof).
 
(c)    Disability; Death.    If the Employee’s employment with the Company (or
any subsidiary thereof) terminates as a result of the Employee’s Disability, or
if Employee’s employment is terminated due to the death of the Employee, then
the Employee shall not be entitled to receive severance or other benefits except
for those (if any) as may then be established under the Company’s (or any
subsidiary’s) then existing severance and benefits plans or pursuant to other
written agreements with the Company (or any subsidiary thereof).
 
(d)    Termination Apart from Change of Control.    In the event the Employee’s
employment is terminated for any reason, either prior to the occurrence of a
Change of Control or after the twelve (12) month period following a Change of
Control, then the Employee shall be entitled to receive severance and any other
benefits only as may then be established under the Company’s (or any
subsidiary’s) then existing severance and benefits plans or pursuant to other
written agreements with the Company.
 
4.    Golden Parachute Excise Tax.
 
(a)    In the event that the benefits provided for in this Agreement or
otherwise provided by the Company (or any subsidiary thereof) to the Employee
(including, but not by way of limitation, any accelerated vesting on stock
options) (the “Total Payments”) would subject the Employee to an excise tax (the
“Excise Tax”) imposed under Section 4999 of the Internal Revenue Code of 1986,
as amended (the “Code”), then the Company (or any subsidiary thereof that
employs the Employee at such time) will pay the Employee (i) an amount
sufficient to pay the excise tax, and (ii) an additional amount sufficient to
pay the Excise Tax and federal, state and local income and employment taxes
arising from the payments made by the Company (or any subsidiary thereof that
employs the Employee at such time) pursuant to this sentence. Any amount
required to paid to the Employee pursuant to the preceding sentence shall be
referred to as the “Gross-Up Payment.”
 
(b)    The determination of the Employee’s Excise Tax liability and the amount,
if any, required to be paid under this Section 4 will be made in writing by the
Company’s independent auditors (the “Accountants”). For purposes of making the
calculations required by this Section 4, the Employee shall be deemed to pay
federal, state and local income taxes at the highest marginal rate in effect in
the calendar year in which the Gross-Up Payment will be made, based on the

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Employee’s residence. The Accountants may make reasonable assumptions and
approximations concerning applicable taxes and may rely on reasonable, good
faith interpretations concerning the application of Sections 280G and 4999 of
the Code. The Company (or any subsidiary thereof that employs the Employee at
such time) and the Employee shall furnish to the Accountants such information
and documents as the Accountants may reasonably request in order to make a
determination under this Section 4. The Company will pay all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section 4.
 
(c)    The Accountants shall determine the Gross-Up Payment as soon as
practicable after the Employee’s termination of employment (but in no event
later than 15 days after the termination). In addition, the Accountants shall
make a determination of any Gross-Up Payment prior to termination of employment
upon written request of the Employee and assuming the Employee has a reasonable
basis for believing that the or she may be entitled to a Gross-Up Payment prior
to termination of employment. The Gross-Up Payment shall be paid to the Employee
within five days after the Accountants’ determination. In the event that the
initial Gross-Up Payment made to the Employee is finally determined to be too
large or small, the following rules shall apply. If the initial Gross-Up Payment
was too small, the Company (or any subsidiary thereof that employs the Employee
at such time) shall promptly made an additional payment to the Employee equal to
the shortfall (plus any interest, penalties or additional payable by executive
with respect to such excess). If the initial Gross-Up Payment is too large, then
the Employee shall repay the amount of the excess to the Company (or any
subsidiary that has made such payment to the Employee), plus interest on the
amount of such repayment at 120% of the applicable federal rate provided in
section 1274 of the Code, but only to the extent that such repayment by the
Employee would result in a dollar-for-dollar reduction in the Executive’s
taxable income and wages for purposes of federal, state and local income and
employment taxes). The Executive and the Company (or any subsidiary thereof that
employs the Employee at such time) shall each reasonably cooperate with the
other in connection with any administrative or judicial proceedings concerning
the existence or amount of the Excise Tax with respect to the Total Payments
(and associated income taxes, penalties and interest).
 
5.    Definition of Terms.    The following terms referred to in this Agreement
shall have the following meanings:
 
(a)    Annual Compensation.    “Annual Compensation” shall mean an amount equal
to the sum of (i) the Employee’s annual base salary, and (ii) 100% of the
Employee’s Target Bonus, as in effect on the date of the Change of Control or
Employee’s termination, in each case, whichever is higher.
 
(b)    Target Bonus.    “Target Bonus” shall mean Employee’s annual bonus,
assuming 100% “on target” satisfaction of any objective or subjective
performance milestones.
 
(c)    Cause.    “Cause” shall mean (i) an act of personal dishonesty taken by
the Employee in connection with his responsibilities as an employee and intended
to result in substantial personal enrichment of the Employee, (ii) Employee
being convicted of a felony, (iii) a willful act by the Employee which
constitutes gross misconduct and which is injurious to the Company (or any
subsidiary thereof that employs the

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Employee at such time), (iv) following delivery to the Employee of a written
demand for performance from the Company (or any subsidiary thereof that employs
the Employee at such time) which describes the basis for the Company’s (or any
subsidiary’s) reasonable belief that the Employee has not substantially
performed his duties, continued violations by the Employee of the Employee’s
obligations to the Company (or any subsidiary thereof that employs the Employee
at such time) which are demonstrably willful and deliberate on the Employee’s
part.
 
(d)    Change of Control.    “Change of Control” means the occurrence of any of
the following events:
 
(i)    Any “person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) becomes the “beneficial owner” (as
defined in Rule 13d-3 under said Act), directly or indirectly, of securities of
the Company representing fifty percent (50%) or more of the total voting power
represented by the Company’s then outstanding voting securities who is not
already such as of the Effective Date of this Agreement; or
 
(ii)    The consummation of the sale or disposition by the Company of all or
substantially all the Company’s assets; or
 
(iii)    The consummation of a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which would result in
the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining out-standing or by being converted
into voting securities of the surviving entity or its parent) at least fifty
percent (50%) of the total voting power represented by the voting securities of
the Company or such surviving entity or its parent outstanding immediately after
such merger or consolidation; or
 
(iv)    A change in the composition of the Board occurring within a two-year
period, as a result of which fewer than a majority of the directors are
Incumbent Directors. “Incumbent Directors” shall mean directors who either (A)
are directors of the Company as of the date upon which this Agreement was
entered into, or (B) are elected, or nominated for election, to the Board with
the affirmative votes of at least a majority of those directors whose election
or nomination was not in connection with any transaction described in
subsections (i), (ii), or (iii) above, or in connection with an actual or
threatened proxy contest relating to the election of directors to the Company;
or
 
(e)    Disability.    “Disability” shall mean that the Employee has been unable
to perform his duties as an employee of the Company (or any subsidiary thereof
that employs the Employee at such time) as the result of his incapacity due to
physical or mental illness, and such in-ability, at least 26 weeks after its
commencement, is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Employee or the Employee’s
legal representative (such Agreement as to acceptability not to be unreasonably
withheld). Termination resulting from Disability may only be effected after at
least 30 days’ written notice by the Company (or any subsidiary thereof that
employs the Employee at such time) of its intention to terminate the Employee’s
employment. In the event that the Employee resumes the performance of
substantially all of his duties hereunder before the termination of his
employment becomes effective, the notice of intent to terminate shall
automatically be deemed to have been revoked.

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(f)    Former Subsidiary.    “Former Subsidiary” shall mean any former
subsidiary of the Company that ceases to be as such due to a Spin-Off.
 
(g)    Spin-Off.    “Spin-Off” shall mean the distribution of the securities of
a subsidiary of the Company to the Company’s stockholders at a time when the
Company owns at least 80% of such subsidiary’s securities.
 
(h)    Voluntary Termination for Good Reason.    “Voluntary Termination for Good
Reason” shall mean the Employee voluntarily resigns after the occurrence of any
of the following (i) without the Employee’s express written consent, a material
reduction of the Employee’s duties, title, authority or responsibilities,
relative to the Employee’s duties, title, authority or responsibilities as in
effect immediately prior to such reduction, or the assignment to Employee of
such reduced duties, title, authority or responsibilities; provided, however,
that a reduction in duties, title, authority or responsibilities solely by
virtue of the Company being acquired and made part of a larger entity (as, for
example, when the Senior Vice-President of a business unit of the Company
remains as such following a Change of Control) shall not by itself constitute
grounds for a “Voluntary Termination for Good Reason;” (ii) without the
Employee’s express written consent, a material reduction, without good business
reasons, of the facilities and perquisites (including office space and location)
available to the Employee immediately prior to such reduction; (iii) a reduction
by the Company in the base salary of the Employee as in effect immediately prior
to such reduction; (iv) a material reduction by the Company in the aggregate
level of employee benefits, including bonuses, to which the Employee was
entitled immediately prior to such reduction with the result that the Employee’s
aggregate benefits package is materially reduced (other than a reduction that
generally applies to Company employees); (v) the relocation of the Employee to a
facility or a location more than thirty-five (35) miles from the Employee’s then
present location, without the Employee’s express written consent; (vi) the
failure of the Company to obtain the assumption of this agreement by any
successors contemplated in Section 7(a) below; or (vii) any act or set of facts
or circumstances which would, under California case law or statute constitute a
constructive termination of the Employee.
 
6.    Non-Solicitation.    In consideration for the severance benefits Employee
is to receive herein, if any, Employee agrees that he or she will not, at any
time during the one year following his or her termination date, directly or
indirectly solicit any individuals to leave the Company’s (or any of its
subsidiaries’) employ for any reason or interfere in any other manner with the
employment relationships at the time existing between the Company (or any of its
subsidiaries) and its current or prospective employees.
 
7.    Assignment.
 
(a)    Company’s Successors / Former Subsidiary.    Any successor to the Company
(whether direct or indirect and whether by purchase, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company’s business
and/or assets or any Former Subsidiary shall assume the obligations under this
Agreement and agree expressly to perform the obligations under this Agreement in
the same manner and to the same extent as the Company would be required to
perform such obligations in the absence of a succession. For all purposes under
this Agreement, the term “Company” shall include (i) any such successor to the
Company’s business and/or assets which executes and delivers the assumption
agreement described in this Section 7(a) or which becomes bound by the terms of
this Agreement by operation of law, or (ii) a Former Subsidiary.

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(b)    Employee’s Successors.    The terms of this Agreement and all rights of
the Employee hereunder shall inure to the benefit of, and be enforceable by, the
Employee’s personal or legal representatives, executors, administrators,
successors, heirs, distributes, devisees and legatees.
 
8.    Notice.
 
(a)    General.    Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or one day following mailing via Federal Express or similar
overnight courier service. In the case of the Employee, mailed notices shall be
addressed to him at the home address which he most recently communicated to the
Company in writing. In the case of the Company, mailed notices shall be
addressed to its corporate headquarters, and all notices shall be directed to
the attention of its Secretary.
 
(b)    Notice of Termination.    Any termination of the Employee by the Company
(or any subsidiary thereof that employs the Employee at such time) for Cause or
by the Employee pursuant to a Voluntary Termination for Good Reason as
contemplated by Section 3(a) shall be communicated by a notice of termination to
the other party hereto given in accordance with Section 8(a) of this Agreement.
Such notice shall indicate the specific termination provision in this Agreement
relied upon, shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination under the provision so indicated, and
shall specify the termination date (which shall be not more than 30 days after
the giving of such notice). The failure by the Employee to include in the notice
any fact or circumstance which contributes to a showing of Voluntary Termination
for Good Reason shall not waive any right of the Employee hereunder or preclude
the Employee from asserting such fact or circumstance in enforcing his rights
hereunder.
 
9.    Miscellaneous Provisions.
 
(a)    No Duty to Mitigate.    The Employee shall not be required to mitigate
the value of any benefits contemplated by this Agreement, nor shall any such
benefits be reduced by any earnings or benefits that the Employee may receive
from any other source.
 
(b)    Waiver.    No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing
and signed by the Employee and by two authorized officers of the Company (other
than the Employee). No waiver by either party of any breach of, or of compliance
with, any condition or provision of this Agreement by the other party shall be
considered a waiver of any other condition or provision or of the same condition
or provision at another time.
 
(c)    Whole Agreement.    No agreements, representations or understandings
(whether oral or written and whether express or implied) which are not expressly
set forth in this Agreement have been made or entered into by either party with
respect to the subject matter hereof. This Agreement represents the entire
understanding of the parties hereto with respect to the subject matter hereof
and supersedes all prior arrangements and understandings regarding same,
including (but not limited to) the Management Retention Agreement dated [DATE]
between the Company and the Employee.

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(d)    Choice of Law.    The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California.
 
(e)    Severability.    The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision hereof, which shall remain in full force and effect.
 
(f)    Counterparts.    This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together will constitute one
and the same instrument.
 
 
[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Company by its duly authorized officer, as of the day and year set forth
below.
 
 
PALM, INC.
By:
 
/s/    ERIC BENHAMOU

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Title:
 
Chief Executive Officer
Date:
 
September 23, 2002

 
 
 
EMPLOYEE
By:
 
/s/    THEODORE THEOPHILOS

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Date:
 
August 3, 2002

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