Document:

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                                                                    EXHIBIT 10.3

                             KLA-TENCOR CORPORATION

                      2000 NONSTATUTORY STOCK OPTION PLAN

                           (AS AMENDED AUGUST 2, 2002)

        1. Purposes of the Plan. The purposes of this Nonstatutory Stock Option
Plan are:

               -  to attract and retain the best available personnel for
                  positions of substantial responsibility (other than Officers
                  and Directors),

               -  to provide additional incentive to Employees and Consultants,
                  and

               -  to promote the success of the Company's business.

               Options granted under the Plan will be Nonstatutory Stock
Options.

        2. Definitions. As used herein, the following definitions shall apply:

               (a) "Administrator" means the Board or any of its Committees as
shall be administering the Plan, in accordance with Section 4 of the Plan.

               (b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options are, or will be, granted under
the Plan.

               (c) "Board" means the Board of Directors of the Company.

               (d) "Code" means the Internal Revenue Code of 1986, as amended.

               (e) "Committee" means a committee of Directors appointed by the
Board in accordance with Section 4 of the Plan.

               (f) "Common Stock" means the Common Stock of the Company.

               (g) "Company" means KLA-Tencor Corporation.

               (h) "Consultant" means any person, including an advisor, engaged
by the Company or a Parent or Subsidiary to render services to such entity.

               (i) "Director" means a member of the Board.

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               (j) "Disability" means total and permanent disability as defined
in Section 22(e)(3) of the Code.

               (k) "Employee" means any person, including officers, employed by
the Company or any Parent or Subsidiary of the Company. A Service Provider shall
not cease to be an Employee in the case of (i) any leave of absence approved by
the Company or (ii) transfers between locations of the Company or between the
Company, its Parent, any Subsidiary, or any successor. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.

               (l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

               (m) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:

                      (i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system on
the date of determination, as reported in The Wall Street Journal or such other
source as the Administrator deems reliable;

                      (ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the date of determination, as
reported in The Wall Street Journal or such other source as the Administrator
deems reliable;

                      (iii) In the absence of an established market for the
Common Stock, the Fair Market Value shall be determined in good faith by the
Administrator.

               (n) "Notice of Grant" means a written or electronic notice
evidencing certain terms and conditions of an individual Option grant. The
Notice of Grant is part of the Option Agreement.

               (o) "Officer" means an Employee subject to Section 16 of the
Securities Exchange Act of 1934, as amended.

               (p) "Option" means a nonstatutory stock option granted pursuant
to the Plan, that is not intended to qualify as an incentive stock option within
the meaning of Section 422 of the Code and the regulations promulgated
thereunder.

               (q) "Option Agreement" means an agreement between the Company and
an Optionee evidencing the terms and conditions of an individual Option grant.
The Option Agreement is subject to the terms and conditions of the Plan.

                                      -2-
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               (r) "Optioned Stock" means the Common Stock subject to an Option.

               (s) "Optionee" means the holder of an outstanding Option granted
under the Plan.

               (t) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.

               (u) "Plan" means this 2000 Nonstatutory Stock Option Plan.

               (v) "Service Provider" means an Employee, Consultant or Director.

               (w) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.

               (x) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.

        3. Stock Subject to the Plan. Subject to the provisions of Section 12 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is seven million five hundred eighty-nine thousand one hundred
two (7,589,102) Shares. The Shares may be authorized, but unissued, or
reacquired Common Stock.

               If an Option expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated).

        4. Administration of the Plan.

               (a) Administration. The Plan shall be administered by (i) the
Board or (ii) a Committee, which Committee shall be constituted to satisfy
Applicable Laws.

               (b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:

                      (i) to determine the Fair Market Value of the Common
Stock;

                      (ii) to select the Service Providers to whom Options may
be granted hereunder;

                      (iii) to determine whether and to what extent Options are
granted hereunder;

                      (iv) to determine the number of shares of Common Stock to
be covered by each Option granted hereunder;

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                      (v) to approve forms of agreement for use under the Plan,
including the ability to approve forms of agreement allowing for early exercise
of stock options prior to vesting, subject to the Optionee entering into a form
of restricted stock purchase agreement;

                      (vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder. Such
terms and conditions include, but are not limited to, the exercise price, the
time or times when Options may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Option or the shares of Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;

                      (vii) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan;

                      (viii) to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating to
sub-plans established for the purpose of qualifying for preferred tax treatment
under foreign tax laws;

                      (ix) to modify or amend each Option (subject to Section
14(b) of the Plan), including the discretionary authority to extend the
post-termination exercisability period of Options longer than is otherwise
provided for in the Plan;

                      (x) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Option previously
granted by the Administrator;

                      (xi) to determine the terms and restrictions applicable to
Options;

                      (xii) to allow Optionees to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Option that number of Shares having a Fair Market
Value equal to the amount required to be withheld (but not more than the amount
required to be withheld). The Fair Market Value of the Shares to be withheld
shall be determined on the date that the amount of tax to be withheld is to be
determined. All elections by an Optionee to have Shares withheld for this
purpose shall be made in such form and under such conditions as the
Administrator may deem necessary or advisable; and

                      (xiii) to make all other determinations deemed necessary
or advisable for administering the Plan.

               (c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options.

        5. Eligibility. Options may be granted to Service Providers; provided,
however, that in no event may Options be granted hereunder to individuals who
are Officers or Directors.

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        6. Limitation. Neither the Plan nor any Option shall confer upon an
Optionee any right with respect to continuing the Optionee's relationship as a
Service Provider with the Company, nor shall they interfere in any way with the
Optionee's right or the Company's right to terminate such relationship at any
time, with or without cause.

        7. Term of Plan. The Plan shall become effective upon its adoption by
the Board. It shall continue in effect for ten (10) years, unless sooner
terminated under Section 14 of the Plan.

        8. Term of Option. The term of each Option shall be stated in the Option
Agreement.

        9. Option Exercise Price and Consideration.

               (a) Exercise Price. The per share exercise price for the Shares
to be issued pursuant to exercise of an Option shall be determined by the
Administrator.

               (b) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions which must be satisfied before the
Option may be exercised.

               (c) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. Such consideration may consist entirely of:

                      (i) cash;

                      (ii) check;

                      (iii) promissory note;

                      (iv) other Shares which (A) in the case of Shares acquired
upon exercise of an option, have been owned by the Optionee for more than six
months on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;

                      (v) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan;

                      (vi) such other consideration and method of payment for
the issuance of Shares to the extent permitted by Applicable Laws; or

                      (vii) any combination of the foregoing methods of payment.

        10. Exercise of Option.

               (a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such

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conditions as determined by the Administrator and set forth in the Option
Agreement. An Option may not be exercised for a fraction of a Share.

                      An Option shall be deemed exercised when the Company
receives: (i) written or electronic notice of exercise (in accordance with the
Option Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 12 of the Plan.

                      Exercising an Option in any manner shall decrease the
number of Shares thereafter available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option is
exercised.

               (b) Termination of Relationship as a Service Provider. If an
Optionee ceases to be a Service Provider, other than upon the Optionee's death
or Disability, the Optionee may exercise his or her Option, but only within such
period of time as is specified in the Option Agreement, and only to the extent
that the Option is vested on the date of termination (but in no event later than
the expiration of the term of such Option as set forth in the Option Agreement).
In the absence of a specified time in the Option Agreement, the Option shall
remain exercisable for three (3) months following the Optionee's termination.
If, on the date of termination, the Optionee is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option shall
revert to the Plan. If, after termination, the Optionee does not exercise his or
her Option within the time specified by the Administrator, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

               (c) Disability of Optionee. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option
Agreement, to the extent the Option is vested on the date of termination (but in
no event later than the expiration of the term of such Option as set forth in
the Option Agreement). In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for twelve (12) months following
the Optionee's termination. If, on the date of termination, the Optionee is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified herein,
the Option shall terminate, and the Shares covered by such Option shall revert
to the Plan.

                                      -6-
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               (d) Death of Optionee. If an Optionee dies while a Service
Provider, the Option may be exercised within such period of time as is specified
in the Option Agreement (but in no event later than the expiration of the term
of such Option as set forth in the Notice of Grant), by the Optionee's estate or
by a person who acquires the right to exercise the Option by bequest or
inheritance, but only to the extent that the Option is vested on the date of
death. In the absence of a specified time in the Option Agreement, the Option
shall remain exercisable for twelve (12) months following the Optionee's
termination. If, at the time of death, the Optionee is not vested as to his or
her entire Option, the Shares covered by the unvested portion of the Option
shall immediately revert to the Plan. The Option may be exercised by the
executor or administrator of the Optionee's estate or, if none, by the person(s)
entitled to exercise the Option under the Optionee's will or the laws of descent
or distribution. If the Option is not so exercised within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.

               (e) Leave of Absence. Options granted hereunder shall have their
vesting suspended during any unpaid leave of absence unless (i) the
Administrator provides otherwise in writing, or (ii) if otherwise required under
Applicable Laws.

        11. Transferability of Options. During the lifetime of the Optionee, an
Option shall be exercisable only by the Optionee or the Optionee's guardian,
legal representative or permitted transferees. Except as specified below, no
Option shall be assignable or transferable by the Optionee except by will or by
the laws of descent and distribution. At the sole discretion of the
Administrator, and subject to such terms and conditions as the Administrator
deems advisable, the Administrator may allow, by means of a writing to the
Optionee, for all or part of an Option to be assigned or transferred, during an
Optionee's lifetime, to a member of the Optionee's immediate family or to a
trust, LLC or partnership for the benefit of any one or more members of such
Optionee's immediate family. "Immediate family" as used herein means the spouse,
lineal descendants, father, mother, brothers and sisters of the Optionee. In
such case, the transferee shall receive and hold the Option subject to the
provisions of this Section 11, and there shall be no further assignation or
transfer of the Option. The terms of Options granted hereunder shall be binding
upon the transferees, purchasers, executors, administrators, heirs, successors
and assigns of the Optionee.

        12. Adjustments Upon Changes in Capitalization, Dissolution, Merger,
Asset Sale or Corporate Reorganization.

               (a) Changes in Capitalization. Subject to any required action by
the shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made

                                      -7-
<PAGE>

by the Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Option.

               (b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at the time and in
the manner contemplated. To the extent it has not been previously exercised, an
Option will terminate immediately prior to the consummation of such proposed
action.

               (c) Merger or Asset Sale. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option shall be assumed or an equivalent option
or right substituted by the successor corporation or a Parent or Subsidiary of
the successor corporation. In the event that the successor corporation refuses
to assume or substitute for the Option, the Optionee shall fully vest in and
have the right to exercise the Option as to all of the Optioned Stock, including
Shares as to which it would not otherwise be vested or exercisable. If an Option
becomes fully vested and exercisable in lieu of assumption or substitution in
the event of a merger or sale of assets, the Administrator shall notify the
Optionee in writing or electronically that the Option shall be fully vested and
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option shall terminate upon the expiration of such period. For the purposes
of this paragraph, the Option shall be considered assumed if, following the
merger or sale of assets, the option or right confers the right to purchase or
receive, for each Share of Optioned Stock, immediately prior to the merger or
sale of assets, the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the merger or sale of assets is not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option, for each Share of Optioned Stock to be
solely common stock of the successor corporation or its Parent equal in fair
market value to the per share consideration received by holders of Common Stock
in the merger or sale of assets.

        13. Date of Grant. The date of grant of an Option shall be, for all
purposes, the date on which the Administrator makes the determination granting
such Option, or such other later date as is determined by the Administrator.
Notice of the determination shall be provided to each Optionee within a
reasonable time after the date of such grant.

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        14. Amendment and Termination of the Plan.

               (a) Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Plan.

               (b) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to options granted under the
Plan prior to the date of such termination.

        15. Conditions Upon Issuance of Shares.

               (a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Option unless the exercise of such Option and the issuance and
delivery of such Shares shall comply with Applicable Laws and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.

               (b) Investment Representations. As a condition to the exercise of
an Option the Company may require the person exercising such Option to represent
and warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation is
required.

        16. Inability to Obtain Authority. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.

        17. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

                                      -9-<PAGE>
                                                                    EXHIBIT 10.8

                                                CONFIDENTIAL TREATMENT REQUESTED

                        STANDARD MANUFACTURING AGREEMENT
                              (SOLECTRON DE MEXICO)

This Standard Manufacturing Agreement ("Agreement") is entered into this 11th
day of June 2002 by and between Handspring, Inc. having its place of business
189 Bernardo Avenue, Mountain View, California 94043 USA ("Handspring"), and
Solectron, a Delaware Corporation, and its subsidiaries and affiliates,
including but not limited to Solectron Technology Singapore Ltd., Solectron
Technology Sdn Bhd, Solectron Netherlands BV and any other Offshore Business
Headquarters ("OBHQs"), hereafter "Solectron".

Handspring has created a market for Handspring handheld computer and wireless
communicator products (hereinafter "Products") and is solely responsible for the
sales and marketing of the Products. Solectron has developed processes and
practices for manufacturing products for many different electronic applications
and at Handspring's request desires to manufacture Handspring's Products in
accordance with Handspring's specifications. Handspring acknowledges that
Solectron's expertise is manufacturing and that Solectron's responsibility
related to the Handspring's Products is limited to this extent. The parties
agree as follows:

1.0 WORK, LICENSE

Solectron agrees to use reasonable commercial efforts to perform the Work (as
defined below) pursuant to purchase orders or changes thereto issued by or for
Handspring. "Work" shall mean to (1) procure components, materials, equipment
and other supplies, and (2) to manufacture, assemble, test and deliver Products
pursuant to detailed Specifications (as defined below), workmanship standards
and quality requirements (as set forth in Addendum C attached hereto) which are
provided by Handspring. For each Product or revision thereof, written
specifications shall include, but are not limited to, bills of materials,
schematics, assembly drawings, process documentation, test specifications,
current revision number, and approved vendor list (hereinafter, collectively
referred to as the "Specifications") as attached hereto.

Solectron is granted by Handspring a non-exclusive license during the term of
this Agreement to use all of Handspring's patents, trade secrets and other
intellectual property in the Products, solely in connection with and to the
extent required to perform Solectron's obligations under this Agreement.

2.0 FORECASTS, ORDERS, MATERIAL PROCUREMENT

2.1 FORECAST. Handspring shall use its diligent efforts to provide Solectron, on
a monthly basis, with a rolling twelve (12) month Product order forecast
(hereinafter "MPS"). The MPS shall be non-binding with respect to purchase of
product but shall be binding with respect to Handspring's liability for
materials pursuant to sections 3.2 and 3.3.

2.2 PURCHASE ORDERS. Handspring will issue, or have a designated 3rd party
distribution partner issue, written purchase orders that specify all Work to be
completed. Handspring's designated 3rd party distribution partners must meet
Solectron credit worthiness guidelines, or Handspring will guarantee purchase
orders according to the terms of this Agreement. Handspring will ensure purchase
orders cover a minimum one (1) month rolling time period. Purchase orders shall
be in accordance with the MPS and shall be deemed accepted by Solectron,
provided however that Solectron may reject any order that does not conform to
the lead-time, flexibility or cancellation terms of this Agreement. Solectron
shall notify Handspring of rejection of any purchase order within five (5)
working days of receipt of such order.

Handspring, or its designated 3rd party distribution partners, shall use its
standard purchase order form to release items, quantities, prices, schedules,
change notices, specifications, or other notice provided for hereunder. The
parties agree that the terms and conditions contained in this Agreement shall
prevail over any terms and conditions of any purchase order, acknowledgment form
or other instrument.

<PAGE>

2.3 MATERIAL PROCUREMENT. MPS updates issued by Handspring will constitute
authorization for Solectron to procure, using standard purchasing practices, the
components, subassemblies, materials and supplies necessary for the manufacture
of Products ("Inventory") with published lead times less than 90 days.

2.4 LONG LEAD TIME COMPONENTS. As Handspring's strategic materials management
partner, Solectron may be required to purchase Long Lead Time Components in
order to achieve the schedule flexibility requirements identified in Section
3.2. For the purposes of this Agreement, "Long Lead Time Components" shall mean
components, subassemblies, materials and supplies with lead times greater than
ninety (90) days at the time an order is placed. During the term of this
Agreement, if any lead times for components, subassemblies, materials or
supplies exceed ninety (90) days due to changes in market conditions, Solectron
may, upon written approval directly from Handspring, reasonably purchase minimum
lot sizes from suppliers ("Minimum Order Inventory"), even if greater than the
amount necessary to meet the MPS, in order to ensure the schedule flexibility
requirements identified in Section 3.2 are achieved. Solectron will notify
Handspring in writing if lead times for any components, subassemblies, materials
or supplies exceed ninety (90) days and will quantify how much additional
cancellation liability Handspring will incur above and beyond the cancellation
liability terms defined in Section 3.3. If lead times for components,
subassemblies, materials or supplies do not exceed ninety (90) days during term
of this Agreement, or any extensions thereof, Solectron and Handspring agree to
abide by the reschedule flexibility and cancellation liability terms defined in
Sections 3.2 and 3.3.

3.0 SHIPMENTS, RESCHEDULE FLEXIBILITY, CANCELLATION

3.1 SHIPMENTS. All Products delivered pursuant to the terms of this Agreement
shall be suitably packed for shipment in accordance with Handspring's
Specifications, marked for shipment to Handspring's destination specified in the
applicable purchase order and delivered to a carrier or forwarding agent.
Shipment will be Exworks (Incoterms 2000) Solectron's Guadalajara, Mexico
facility per the delivery date defined on the purchase order, at which time risk
of loss and title will pass to Handspring or Handspring's designated 3rd party
distribution partners. All freight, insurance and other shipping expenses from
the Exworks point, will be paid by Handspring or its 3rd party distribution
partners.

Solectron is expected to achieve 100% on-time delivery performance to the
designated Exworks point. "On-time" delivery is defined as within 2 days early
and 0 days late of scheduled delivery date defined on MPS releases issued by
Handspring. If delivery of Product is early, Handspring or its designated 3rd
party distribution partners, may return said Product to Solectron for
re-delivery on the scheduled delivery date with Solectron bearing all cost of
Product return and re-delivery. If Product delivery is late due to the fault of
Solectron, Handspring may require Solectron to ship an emergency as needed
quantity of Products via premium air transportation to locations specified by
Handspring or its designated 3rd party distribution partners and Handspring's
sole liability to Solectron shall be limited to payment for the Products
received at the prices specified herein and standard surface freight charges.
Handspring will not unreasonably require Solectron to air ship product unless
Handspring needs Product to meet customer commitments. Solectron's on-time
delivery measurement will not be affected by late shipments that result from
delays by either Handspring or its 3rd party distribution partners in scheduled
pick up of finished goods.

Handspring's business model strives to minimize finished goods inventory in the
supply chain. Handspring will work with our 3rd party distribution partners and
Solectron to maintain an optimized logistics model for transportation in the
North American region.

3.2 QUANTITY INCREASES AND SHIPMENT SCHEDULE CHANGES. For any purchase order
issued in accordance to this Agreement, Handspring may (i) increase the quantity
of Products or (ii) reschedule the quantity of Products and their shipment date
as provided in the table below:

<PAGE>

Maximum Allowable Variance From Purchase Order Quantities/Shipment Dates

<TABLE>
<CAPTION>
               # of days before     Allowable      Maximum       Maximum
               Shipment Date        Quantity       Reschedule    Reschedule
               on Purchase Order    Increases      Quantity      Period
               -----------------    ---------      ----------    ----------
               <S>                  <C>            <C>           <C>
               0-30                 [*]            [*]           [*]
               31-60                [*]            [*]           [*]
               61-90                [*]            [*]           [*]
               91 +                 [*]            [*]           [*]
</TABLE>

Any purchase order quantities increased or rescheduled pursuant to this Section
may not be subsequently increased or rescheduled without the prior written
approval of Solectron. All other changes in quantity or shipment date require
Solectron's prior written consent. Solectron will use reasonable commercial
efforts to meet quantity increases. If there are extra costs to meet a schedule
increase in excess of the above limits, Solectron will inform Handspring for its
written approval in advance.

Handspring will be liable for on-hand Tier 1 material carrying costs in excess
of [*] demand created by a Handspring initiated change in the MPS (assuming Tier
1 materials have been purchased and/or canceled to lead time and MPS
requirements). [*]. Handspring agrees to disposition Tier 1 material in excess
of [*] demand. The methodology will be defined in an addendum to this Agreement
and will cover freight and cost of acquisition. Handspring will be liable for a
one-time carrying cost charge for any Tier 2 material excess of [*] of demand
created by a Handspring initiated change in the MPS (assuming Tier 2 materials
have been purchased and/or canceled to lead time and MPS requirements). [*].
Handspring and Solectron will negotiate a methodology, and attach as an addendum
to this Agreement, to cover inbound freight and cost of acquisition expenses.

3.3 CANCELLATION LIABILITY. In the event Handspring cancels any purchase orders,
or portions thereof, Handspring and Solectron agree to the following
cancellation terms:

<TABLE>
<CAPTION>
        # days from the
        day of notice        Handspring cancellation liability:
        ---------------      ----------------------------------
        <S>           <C>
        0 - 30 days   [*]

        31 - 60 days  [*]

        61 - 90 days  [*]

        91+           [*]
</TABLE>

Solectron will be responsible for managing, consuming or disposing of Tier 2
excess inventory at no cost to Handspring. Handspring will not write down any
inventory of industry-standard components. Handspring will be responsible for
negotiating prices and terms and conditions of Tier 1 suppliers. Handspring will
provide Solectron with the results of those negotiated terms.

If an open purchase order is re-scheduled within lead-time, the Handspring
cancellation liability terms apply to the originally scheduled delivery dates.

* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.

<PAGE>

4.0 ENGINEERING CHANGES

Handspring may request, in writing, that Solectron incorporate engineering
changes into the Product. Such request will include a description of the
proposed engineering change sufficient to permit Solectron to evaluate its
feasibility and cost. Solectron's evaluation shall be in writing and shall state
the costs and time of implementation and the impact on the delivery schedule and
pricing of the Product. Solectron will not be obligated to proceed with the
engineering change until the parties have agreed in writing upon the changes to
the Product's Specifications, delivery schedule and Product pricing and upon the
implementation costs to be borne by the Handspring including, without
limitation, the cost of Inventory on-hand and on-order that becomes obsolete.

As Handspring's strategic manufacturing engineering partner, Solectron is
expected to make recommendations to Product design that would make Product more
manufacturable, reduce material costs and/or improve quality. Handspring will
evaluate such recommendations and incorporate such recommendations into Product
design as appropriate. Without the prior written authorization from Handspring,
Solectron will not make any changes to Product design. Without the prior written
authorization from Handspring, Solectron also will not make any changes to
manufacturing processes which affect the form, fit, function, performance or
reliability of the Product.

5.0 TOOLING, NON-RECURRING EXPENSES, SOFTWARE LICENSE, PROPERTY

5.1 TOOLING. Solectron shall provide non-Product specific tooling at its
expense. Handspring shall pay for or obtain and consign to Solectron any Product
specific tooling and other reasonably necessary non-recurring expenses, to be
set forth in Solectron's quotation.

5.2 SOFTWARE LICENSE. All software that Handspring provides to Solectron is and
shall remain the property of Handspring. Handspring grants Solectron a license
to copy, modify and use such software solely in connection with and to the
extent required to perform Solectron's obligations under this Agreement. All
software developed by Solectron to support the process tooling or otherwise
shall be and remain the property of Solectron.

5.3 HANDSPRING PROPERTY. Unless otherwise agreed in writing, all tooling,
equipment or material of every description furnished to Solectron by Handspring
or specifically paid for by Handspring and held by Solectron, and any
replacements thereof or any materials affixed or attached thereto, shall be and
remain the personal property of Handspring and shall be clearly labeled as
Handspring equipment and safely stored. Solectron shall not use such property
except in filling Handspring's Purchase Orders unless otherwise authorized in
writing by Handspring. Such property while in Solectron's custody or control
shall be held at Solectron's risk, shall be maintained in operable condition,
subject to normal tool life expectancies, kept insured by Solectron at
Solectron's expense in an amount equal to the replacement cost with loss payable
to Handspring and will be subject to removal at Handspring's written request.

6.0 PRODUCT ACCEPTANCE AND WARRANTIES

6.1 PRODUCT ACCEPTANCE. The Product shall be deemed to be successfully completed
only at such time as Handspring has received, inspected and accepted the
Product. Within ten (10) calendar days after Product receipt at Handspring or
one of its 3rd party distribution partners, Handspring or its 3rd party
distribution partner shall either notify Solectron that it has rejected the
Product and request corrections or revisions, or the Product shall be deemed
automatically accepted.

6.2 PRODUCT QUALITY. Solectron is expected to deliver 100% quality Product in
conformance to all Product Specifications, workmanship standards and quality
requirements set forth in Addendum C. As Handspring's strategic quality partner,
Solectron is expected to institute appropriate quality controls at the factory
to stop any defective Product from shipping to Handspring or its designated 3rd
party distribution partners. Handspring's intent is not to inspect each shipment
coming from Solectron, however, Handspring reserves the right to audit
Solectron's facilities, conduct source inspection and/or inspect Product at
designated distribution or field repair centers. Handspring and Solectron will
work together to jointly determine if Product is defective. Handspring, or its
designated 3rd party, may return defective Products, freight collect, after
obtaining a return material authorization number from Solectron to be displayed
on the shipping container and completing a failure report. Solectron will not

<PAGE>

unreasonably withhold such return material authorization numbers. Rejected
Products will be promptly repaired or replaced, at Solectron's option, and
returned freight pre-paid.

6.3 EXPRESS LIMITED WARRANTY. Solectron warrants that the Products will conform
to Handspring's applicable Specifications and will be free from defects in
workmanship for a period of [*] from the date of shipment. Materials are
warranted to the same extent that the original manufacturer warrants the
materials. This express limited warranty does not apply to (a) materials
consigned or supplied by Handspring to Solectron; (b) defects resulting from
Handspring's design of the Products; (c) Product that has been abused, damaged,
altered or misused by any person or entity after title passes to Handspring.
With respect to first articles, prototypes, pre-production units, test units or
other similar Products, Solectron makes no representations or warranties
whatsoever. Notwithstanding anything else in this Agreement, Solectron assumes
no liability for or obligation related to the performance, accuracy,
specifications, failure to meet specifications or defects of or due to tooling,
designs, operating system software, or instructions produced or supplied by
Handspring and Handspring shall be liable for costs or expenses incurred by
Solectron related thereto. Upon any failure of a Product to comply with the
above warranty, Solectron's sole obligation, and Handspring's sole remedy, is
for Solectron, at Solectron's option, to promptly repair or replace such unit
and return it to Handspring freight prepaid. Solectron will bear all costs of
repairing defective Product within warranty. Handspring shall return Products
covered by the warranty freight collect after completing a failure report and
obtaining a return material authorization number from Solectron to be displayed
on the shipping container.

6.4 EPIDEMIC CONDITION. An Epidemic Condition exists when failure reports or
statistical samplings show that five percent (5%) or more of the same Product
installed or shipped during any one month contain an identical, repetitive
defect in Solectron supplied material and/or workmanship. If during that
warranty period of [*], the same Product shows evidence of an Epidemic
Condition, Handspring shall have the right, pending correction of the Epidemic
Condition, to postpone further shipments of such Product by giving written
notice of such postponement to Solectron. Such postponement shall temporarily
relieve Solectron of its shipment liability and Handspring of any shipment
liability for such postponed shipments. Both parties shall work together to
prepare and propose a corrective action plan addressing implementation and
procedure milestones for remedying such Epidemic Condition(s). Both parties
shall use diligent efforts to implement the remedy in accordance with the agreed
upon schedule.

In the event of Epidemic Failure Solectron will:

    a.  Incorporate the remedy in the affected Product in accordance with
        Handspring engineering change order procedures;

    b.  Ship all subsequent Products incorporating the required remedy; and

    c.  Shall pay the direct costs of implementing the remedy on Products
        evidencing the Epidemic Condition within the warranty period if caused
        by Solectron, provided that said costs shall not exceed the total price
        paid by Handspring for the affected Products less Solectron's actual
        cost for the components incorporated into the affected Products.

SOLECTRON MAKES NO OTHER WARRANTIES OR CONDITIONS ON THE PRODUCTS, EXPRESS,
IMPLIED, STATUTORY, OR IN ANY OTHER PROVISION OF THIS AGREEMENT OR COMMUNICATION
WITH HANDSPRING, AND SOLECTRON SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OR
CONDITION OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

7.0     PAYMENT TERMS, ADDITIONAL COSTS AND PRICE CHANGES

* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.

<PAGE>

7.1 PRICE AND PAYMENT TERMS. The price for Products to be manufactured is set
forth in Addendum A and may be changed from time to time through purchase orders
issued by Handspring and accepted by Solectron. All pricing changes must be
mutually agreed to by both parties in writing. Solectron is expected to cut in
material cost reductions negotiated by either Handspring or Solectron in
accordance with established material lead-times. All prices quoted are exclusive
of federal, state and local excise, sales, use and similar taxes, and any
duties, and Handspring shall be responsible for all such items. Payment for any
Products, services or other costs to be paid by Handspring or its designated 3rd
party hereunder is [*] days net from the date of invoice and shall be made in
lawful U.S. currency Handspring will, in good faith, continue to try to
establish [*] terms with the Tier 1 suppliers. On a quarterly basis, Handspring
will report to Solectron the progress made in extending these terms with these
suppliers.

7.2 ADDITIONAL COSTS. Handspring is responsible for (a) any expediting charges
reasonably necessary because of a change in Handspring's requirements, if such
changes do not conform to established flexibility terms defined in section 3.2
which charges are pre-approved (b) any reasonable overtime or downtime charges
incurred as a result of delays in the normal production or interruption in the
workflow process and caused by: (1) Handspring's change in the Specifications;
or (2) Handspring's failure to provide sufficient quantities or a reasonable
quality level of consigned materials where applicable to sustain the production
schedule.

7.3 PRICE CHANGES. The price of Products to Handspring may be increased by
Solectron if Solectron can demonstrate by verifiable written proof (a) the
market price of fuels, materials, raw materials, equipment, labor and other
production costs, increase beyond normal variations in pricing and (b) the
parties agree in writing to the increase after good faith negotiation (a
"Justified Price Increase"). The price of Products to Handspring may be
decreased at the request of Handspring if Handspring can demonstrate by
verifiable written proof (a) the market price of fuels, materials, raw
materials, equipment, labor and other production costs, decrease beyond normal
variations in pricing and (b) the parties agree in writing to the decrease after
good faith negotiation (a "Justified Price Decrease"). Solectron agrees to
provide Handspring with true, accurate and current actual costs for all
components, in addition to other information as defined by the Materials
Management Program outlined in Addendum B, in the event Solectron believes a
Justified Price Increase is warranted.

7.4 COST REDUCTIONS. Solectron agrees to seek ways to reduce the cost of
manufacturing Products by methods such as elimination of components, obtaining
alternate sources of materials, negotiation of preferred terms with component
suppliers, redefinition of Specifications, and improved assembly or test
methods. Cost reduction requirements and the process for allocating cost savings
are set forth in Addendum A. If Solectron does not deliver the required cost
reduction for any given quarter, Solectron will provide Handspring with
verifiable written proof of the price paid by Solectron for fuels, materials,
raw materials, equipment, labor and other production costs. Any reconciliation
of unplanned cost changes within a quarter will take place at the next regular
quarterly pricing review.

8.0 TERM AND TERMINATION

8.1 TERM. The term of this Agreement shall commence on the date hereof above and
shall continue for one (1) year thereafter unless terminated earlier as provided
in Section 8.2 or 10.8. After the expiration of the initial term hereunder
(unless this Agreement has been terminated) this Agreement shall be
automatically renewed for separate but successive one-year terms.

8.2 TERMINATION. This Agreement may be terminated by either party (a) for any
reason upon one hundred eighty (180) days written notice to the other party, or
(b) if the other party defaults in any payment to the terminating party and such
default continues without a cure for a period of thirty (30) days after the
delivery of written notice thereof by the terminating party to the other party,
or (c) if the other party defaults in the performance of any other material term
or condition of this Agreement and such default continues un-remedied for a
period of thirty (30) days after the delivery of written notice thereof by the
terminating party to the other party. Any purchase orders shall be fulfilled by
Solectron unless cancelled as provided in section 3.3. Notwithstanding
termination of this Agreement, Sections 3.1, 3.3, 5.0, 6.0, 7.1, 7.2, 8.2, 9.0,
and 10.0 shall survive said termination.

* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.

<PAGE>

9.0 LIABILITY LIMITATION

9.1 PATENTS, COPYRIGHTS, TRADE SECRETS, OTHER PROPRIETARY RIGHTS. Handspring
shall defend, indemnify and hold harmless Solectron from all costs, judgments
and attorney's fees arising from any claim that Solectron's manufacture of the
Products under this Agreement directly infringes any third party United States
patent rights, copyrights or trade secrets. Solectron shall promptly notify
Handspring in writing of the initiation of any such claims, give Handspring sole
control of any defense or settlement, and provide Handspring reasonable
information and assistance in resolving such claim. The preceding indemnity
shall not apply, however, to any claims arising from the use by Solectron of any
materials, components or manufacturing processes not expressly specified by
Handspring.

THE FOREGOING STATES THE ENTIRE LIABILITY OF HANDSPRING CONCERNING INFRINGEMENT
OF PATENT, COPYRIGHT, TRADE SECRET OR OTHER INTELLECTUAL PROPERTY RIGHTS.

9.2 PRODUCT LIABILITY. Handspring agrees that, if notified promptly in writing
and given sole control of the defense and all related settlement negotiations,
it will defend Solectron from any claim or action and will hold Solectron
harmless from any third party loss, damage or injury, including death, which
arises from any alleged defect of Handspring's design of any Products.
Similarly, Solectron agrees that, if notified promptly in writing and given sole
control of the defense and all related settlement negotiations, it will defend
Handspring from any claim or action and will hold Handspring harmless from any
third party loss, damage, or injury, including death, which arises from any
alleged workmanship defect of any Products.

9.3 AUTHORIZED MANUFACTURING PARTNER; INDEMNIFICATION. Handspring hereby
designates Solectron as its "Authorized Manufacturing Partner" under its
supplier purchase agreements, and as such Solectron is authorized to issue to
supplier purchase orders of its own in accordance with the MPS or against a
purchase order issued by Handspring, or Handspring's designated 3rd party
distribution partners, to Solectron. Solectron shall defend, hold harmless and
indemnify Handspring from any and all third party claims, suits, losses and
expenses, including attorneys fees, due to Solectron issuing a purchase order in
excess of the MPS or a Handspring purchase order, or for cancelled or suspended
purchase orders, except for any canceled or suspended purchase orders that are
canceled or suspended at Handspring's request.

9.4 NO OTHER LIABILITY. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER
FOR ANY INCIDENTAL, CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES OF ANY KIND OR
NATURE ARISING OUT OF THIS AGREEMENT OR THE SALE OF PRODUCTS, WHETHER SUCH
LIABILITY IS ASSERTED ON THE BASIS OF CONTRACT, TORT (INCLUDING THE POSSIBILITY
OF NEGLIGENCE OR STRICT LIABILITY), OR OTHERWISE, EVEN IF THE PARTY HAS BEEN
WARNED OF THE POSSIBILITY OF ANY SUCH LOSS OR DAMAGE, AND EVEN IF ANY OF THE
LIMITED REMEDIES IN THIS AGREEMENT FAIL OF THEIR ESSENTIAL PURPOSE.

10.0 MISCELLANEOUS

10.1 CONFIDENTIALITY. In the course of enabling Solectron to manufacture and
deliver Products under this Agreement, the parties acknowledge that they will
exchange confidential and proprietary information ("Confidential Information").
Confidential Information includes, but is not limited to, Product drawings,
development plans, models and design details; Specifications; inventions,
know-how and processes; software programs; information related to current,
future and proposed products and services; procurement requirements; customer
lists; forecasts; sales and marketing plans; financial information; and the
terms and conditions of this Agreement. The party that receives such
Confidential Information agrees not to disclose it directly or indirectly to any
third party, or to use it for any purpose other than as required under this
Agreement, without the prior written consent of the disclosing party.
Confidential Information disclosed pursuant to this Agreement shall be
maintained confidential for a period of three years after the disclosure
thereof.

10.2 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the Parties with respect to the transactions contemplated hereby and supersedes
all prior agreements and understandings between the parties relating to such
transactions. Both parties shall hold the existence and terms of this Agreement
confidential, unless it

<PAGE>

obtains the other party's express written consent otherwise. In all respects,
this Agreement shall govern, and any other documents including, without
limitation, preprinted terms and conditions on Handspring's purchase orders and
Solectron acknowledgements shall be of no effect.

10.3 AMENDMENTS. This Agreement may be amended only by written consent of both
parties.

10.4 INDEPENDENT CONTRACTOR. Neither party shall, for any purpose, be deemed to
be an agent of the other party nor the relationship between the parties shall
only be that of independent contractors. Neither party shall have any right or
authority to assume or create any obligations or to make any representations or
warranties on behalf of any other party, whether express or implied, or to bind
the other party in any respect whatsoever.

10.5 EXPENSES. In the event a dispute between the parties hereunder with respect
to this Agreement must be resolved by litigation or other proceeding, the
prevailing party shall be entitled to receive reimbursement for all associated
reasonable attorneys fees from the other party.

10.6 GOVERNING LAW. This Agreement shall be governed by and construed under the
laws of the State of California, excluding its choice of law principles. The
parties consent to the exclusive jurisdiction of the state and Federal courts in
Santa Clara County, California.

10.7 SUCCESSORS, ASSIGNMENT. This Agreements shall be binding upon and inure to
the benefit of the parties hereto and their respective successors, assigns and
legal representatives. Neither party shall have the right to assign or otherwise
transfer its rights or obligations under this Agreement except with the prior
written consent of the other party, not to be unreasonably withheld.

10.8 FORCE MAJEURE. In the event that either party is prevented from performing
or is unable to perform any of its obligations under this Agreement (other than
a payment obligation) due to any Act of God, fire, casualty, flood, earthquake,
war, strike, lockout, epidemic, destruction of production facilities, riot,
insurrection, material unavailability, or any other cause beyond the reasonable
control of the party invoking this section, and if such party shall have used
its commercially reasonable efforts to mitigate its effects, such party shall
give prompt written notice to the other party, its performance shall be excused,
and the time for the performance shall be extended for the period of delay or
inability to perform due to such occurrences. Regardless of the excuse of Force
Majeure, if such party is not able to perform within ninety (90) days after such
event, the other party may terminate the Agreement. Termination of this
Agreement shall not affect the obligations of either party that exist as of the
date of termination.

ACCEPTED AND AGREED TO:

HANDSPRING, INC.:                            SOLECTRON Corporation

/s/ Michael Gallucci                         /s/ Joe Regan
--------------------------------------       -----------------------------------
By: Michael Gallucci                         By: Joe Regan
   -----------------------------------          --------------------------------
Title: Vice President, Manufacturing         Title: Corporate V.P.
      --------------------------------             -----------------------------

<PAGE>

                                                CONFIDENTIAL TREATMENT REQUESTED
--------------------------------------------------------------------------------

MANUFACTURING AGREEMENT ADDENDUMS

<TABLE>
<S>        <C>                                                                <C>
   A.      Pricing.............................................................2
   B.      Materials Management................................................7
   C.      Quality............................................................10
   D.      Virtual Manufacturing Team.........................................11
   E.      Planning...........................................................12
   F.      Reporting and data sharing.........................................13
</TABLE>

<PAGE>

                                                CONFIDENTIAL TREATMENT REQUESTED
--------------------------------------------------------------------------------

A.  PRICING

    1.  VALUE-ADD: Solectron's price to Handspring will be based upon the
        following model and rates. On a quarterly basis, unit pricing will be
        calculated for each product with three cost components. Material markup
        and freight costs will be calculated by multiplying Tier 1 and Tier 2
        components cost, as mutually agreed to by both parties, by Tier 1
        Markup, Tier 2 Markup and Inbound Freight rates for the applicable
        Monthly Dollar Spend. PCB assembly cost will be calculated by
        multiplying total component count by PCBA Placement Cost for the given
        Average Monthly Placements. Final Assembly and Test Cost will be
        calculated by multiplying Final Assembly and Test Shop Rates by the
        Final Assembly and Test Labor Standards, as mutually agreed to by both
        parties, for the applicable Average Monthly Volume. In the event that
        the average monthly dollar spend, placements, or volume are higher or
        lower than the values set in the forward quarterly pricing, a
        corresponding variance to align pricing with the correct level will be
        paid by Handspring or Solectron to the other party at the end of the
        affected quarter.

<TABLE>
<CAPTION>
    ----------------------------------------------------------------------------
     AVERAGE MONTHLY
       DOLLAR SPEND     MARKUP ON TIER 1     MARKUP ON TIER 2    INBOUND FREIGHT
    ----------------------------------------------------------------------------
    <S>               <C>                 <C>                  <C>
    [*]               [*]                 [*]                  [*]
    ----------------------------------------------------------------------------
    [*]               [*]                 [*]                  [*]
    ----------------------------------------------------------------------------
    [*]               [*]                 [*]                  [*]
    ----------------------------------------------------------------------------
    [*]               [*]                 [*]                  [*]
    ----------------------------------------------------------------------------
    [*]               [*]                 [*]                  [*]
    ----------------------------------------------------------------------------
    [*]               [*]                 [*]                  [*]
    ----------------------------------------------------------------------------
    NOTES:
    1.  Average Monthly Dollar Spend is computed based on the total volume of
        all handheld products manufactured within Handspring's quarter.
    ----------------------------------------------------------------------------
</TABLE>

* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.

<PAGE>

                                                CONFIDENTIAL TREATMENT REQUESTED
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
    ----------------------------------------------------------------------------
     AVERAGE MONTHLY    PCBA PLACEMENT COST
        PLACEMENTS         ($/PLACEMENT)
    <S>                 <C>                   <C>
    -----------------------------------------
    [*]                 [*]                   NOTES:

    ----------------------------------------- 1.  PCBA Placement Cost will be
    [*]                 [*]                       directly multiplied by the #
                                                  of PCBA components in each
    -----------------------------------------     viewer to calculate the cost
    [*]                 [*]                       of the total PCBA assembly.
                                              2.  Placements represent a
    -----------------------------------------     combination of tape and reel,
    [*]                 [*]                       pick and place, mechanical,
                                                  hand placed and other PCBA
    -----------------------------------------     components.
    [*]                 [*]                   3.  Average Monthly Placements is
                                                  computed based on the total
    -----------------------------------------     volume of all handheld
    [*]                 [*]                       products manufactured within
                                                  Handspring's quarter.
    ----------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
    ---------------------------------------------------------------------------------------
                       ASSEMBLY
                       AND TEST
    AVERAGE MONTHLY    SHOP RATE
    VOLUME             ($/HOUR)
    ------------------------------
<S>                   <C>          <C>
    [*]               [*]          NOTES:
    ------------------------------ 1.  Average Monthly Volume is computed based on the
    [*]               [*]              total volume of all handheld products manufactured
    ------------------------------     within Handspring's quarter
    [*]               [*]
    ------------------------------
    [*]               [*]
    ------------------------------
    [*]               [*]
    ------------------------------
    [*]               [*]
    ------------------------------
    [*]               [*]
    ---------------------------------------------------------------------------------------
</TABLE>

    2.  COST REDUCTION: Solectron will provide a cost reduction on Tier 2
        components and in Transformation cost each quarter based on the agreed
        upon pricing for the previous quarter. Cost reduction for Tier 2
        components and Transformation cost will be volume dependant per the
        following table. In the event that the average monthly volume is higher
        or lower than the value set in the forward quarterly pricing, a
        corresponding variance to align cost reductions with the correct volume
        level will be paid by Handspring or Solectron to the other party at the
        end of the affected quarter.

* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.

<PAGE>

                                                CONFIDENTIAL TREATMENT REQUESTED
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
    ----------------------------------------------------------------------------------
                                                 TRANSFORMATION      TIER 2 MATERIALS
    MONTHLY VOLUME (UNITS)  QUARTERLY AVERAGE    COST REDUCTION       COST REDUCTION
    ----------------------------------------------------------------------------------
    <S>                    <C>                 <C>                 <C>
    [*]                    [*]                 [*]                 [*]
    ----------------------------------------------------------------------------------
    [*]                    [*]                 [*]                 [*]
    ----------------------------------------------------------------------------------
    [*]                    [*]                 [*]                 [*]
    ----------------------------------------------------------------------------------
    [*]                    [*]                 [*]                 [*]
    ----------------------------------------------------------------------------------
    [*]                    [*]                 [*]                 [*]
    ----------------------------------------------------------------------------------
    [*]                    [*]                 [*]                 [*]
    ----------------------------------------------------------------------------------
    [*]                    [*]                 [*]                 [*]
    ----------------------------------------------------------------------------------
</TABLE>

    3 PPVS will be submitted monthly, and all supporting documents will be
    available for review upon Handspring's request.

    4. QUOTES: During development and before Production, Handspring will request
    frequent Costed BOM and Transformation quotes, following design changes.
    Handspring expects quotes within 5 business days of the request.

    5. QUOTE CONFIRMATION: Full (Material + Transformation) quotes will be
    confirmed formally (for ex. by e-mail) by an authorized representative from
    the CM.

    6. PROTOTYPE BUILDS AND NRE: Solectron's price to Handspring will be based
    upon the following model and rates. For each prototype build, Handspring
    will specify the number of units that will be built. Breaking down the build
    into specific unit quantities (including an initial First Article Inspection
    build) will allow the Handspring and Solectron teams to properly evaluate
    designs and processes and to make necessary improvements prior to the start
    of the next build. It is assumed that a prototype build will span 5 days as
    described in the pricing model below. It is assumed that DFx input will be
    provided at no cost to Handspring as part of Solectron's standard NPI
    service. Tooling, fixtures and testers will be quoted by Solectron on a
    case-by-case basis. Handspring will pay Solectron a one-time setup fee for
    each prototype (DVT/PVT) build. Handspring will pay Solectron a material
    markup to cover cost of acquisition and inbound freight. Value add pricing
    will be determined by the quantity of units in the prototype build.

* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.

<PAGE>

                                                CONFIDENTIAL TREATMENT REQUESTED
--------------------------------------------------------------------------------
                      DVT/PVT STANDARD BUILD PRICING MODEL

<TABLE>
                      DVT/PVT STANDARD BUILD PRICING MODEL
<S>                                              <C>                  <C>

PRE-BUILD SMT\LINE SET-UP                        [*]

MATERIAL MARKUP                                  [*]

VALUE ADD

               Build                             Quantity              Total Lot Charge
               -----                             --------              ----------------
First Article Inspection (FAI) Build             [*]                   [*]
Build Balance*                                   [*]                   [*]

NUMBER OF UNITS

                                                                          Unit cost    Extended cost
Material BOM Cost                                                           $ --            $ --
Markup                                                                     #VALUE!        #VALUE!
                                                                                       --------------
Total Material Cost                                                                         $ --

Total Value Add                                                                              [*]

TOTAL DVT COST                                                                              $ --
</TABLE>

ASSUMPTIONS

1)  Timeline for a Standard Pre-Production build is as follows:

<TABLE>
-----------------------------------------------------------------------------------------------------
DAY 1            DAY 2                      DAY 3                  DAY 4             DAY 5
-----------------------------------------------------------------------------------------------------
<S>              <C>          <C>           <C>                    <C>               <C>
Pre-Build Set-up
-----------------
                 -------------
                 SMT FAI (0-25)
                 -------------
                              --------------
                              FA&T FAI (0-25)
                              --------------
                                            ------------
                                            SMT (26-100)
                                            ------------
                                                  -------------
                                                  FA&T (26-100)
                                                  -------------
                                                        ---------------------
                                                             SMT Balance
                                                        ---------------------
                                                                   ---------------------
                                                                        FA&T Balance
                                                                   ---------------------
                                                                                     ----------------
                                                                                     Wrap up and Ship
                                                                                     ----------------
</TABLE>

    2)  Pre-production build plan and schedule will be agreed to by Handspring
        and Solectron prior to build start.

    3)  Handspring will release balance builds based on quality of the previous
        day's build.

    4)  Additional costs to the original schedule due to Handspring caused
        delays shall be priced at [*]/day for SMT and [*]/day for Final
        Assembly & Test. This will occur only with the concurrence of the
        Handspring MPM.

    5)  Final costs using this model shall be submitted by the Solectron PM
        within one week of build completion.

* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.

<PAGE>

                                                CONFIDENTIAL TREATMENT REQUESTED
--------------------------------------------------------------------------------

7. TIMING OF EVENTS: Handspring's fiscal year is from July to June (Fiscal Q1
covers the months of July, August and September). Each quarter is divided into
three Fiscal Months, with a 4-wk, 4-wk, and 5-wk duration respectively.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
                           Fiscal Month 1    Fiscal Month 2     Fiscal Month 3
                    Month  --------------    --------------   --------------------
                     Week  1    2   3   4    5   6   7    8   9   10  11  12   13
----------------------------------------------------------------------------------
<S>                        <C>  <C> <C> <C>  <C> <C> <C>  <C> <C> <C> <C> <C>  <C>

----------------------------------------------------------------------------------
Solectron submits          X                 X                X
Weighted-average costs
----------------------------------------------------------------------------------
Solectron submits Labor                                           X
Standards (HPU) for
following Quarter's
Transformation quote
----------------------------------------------------------------------------------
Solectron submits Costed   X                 X                X
BOM
----------------------------------------------------------------------------------
Solectron submits PPV           X                X                X
for previous month
----------------------------------------------------------------------------------
Solectron submits NRE,          X                X                X
NPI costs
----------------------------------------------------------------------------------
</TABLE>

<PAGE>

                                                CONFIDENTIAL TREATMENT REQUESTED
--------------------------------------------------------------------------------

B.  MATERIALS MANAGEMENT

    1.  TIER 1 & 2 DEFINITION: Agile BOMs will be the reference for Tier 1 /
        Tier 2 information for each part.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
                          TIER 1 (HANDSPRING HAS PRIMARY     TIER 2 (SOLECTRON HAS PRIMARY
                             COMMODITY RESPONSIBILITY)         COMMODITY RESPONSIBILITY)
---------------------------------------------------------------------------------------------
<S>                      <C>                                <C>
COMMODITIES              Rechargeable Batteries             Resistors
                         Microprocessors                    Capacitors
                         LCD & related (EL Power Supply,    Inductors *
                         Touch Panel, Touch Panel IC)       Crystals *
                         Sheet Metal and Castings           Diodes
                         (housings, hinges, styli)          Misc. Standard Hardware
                         Plastics, IMD, Paint, Shielding    Industry Standard Connectors
                         Masked Rom, OTP                    Industry Standard IC's
                         Memory -- DRAM/Flash               Industry Standard Speakers *
                         Connectors -- Custom               Industry Standard Switches
                         PCBs                               Fuses
                         Snap Domes                         Resonators *
                         Power Supply IC's (Linear Tech)
                         Custom Speakers Assemblies
                         Vibrator Motors
                         IR Devices
                         USB Chip
                         Microphone Assemblies
                         Antenna
                         RF Chipsets
                         Misc. Custom HW
                         Crystals *
                         Industry Standard Speakers *
                         Inductors *
                         Resonators *

---------------------------------------------------------------------------------------------
STRATEGIC MANAGEMENT     Handspring                         Solectron
(*)
---------------------------------------------------------------------------------------------
TACTICAL MANAGEMENT (*)  Solectron                          Solectron
---------------------------------------------------------------------------------------------
VMI OPERATIONS           Solectron                          Solectron
---------------------------------------------------------------------------------------------
SECOND SOURCING, LEAD    Handspring                         Solectron
TIME REDUCTIONS
---------------------------------------------------------------------------------------------
AVL CONTROL              Handspring                         Handspring
---------------------------------------------------------------------------------------------
COST REDUCTION           Handspring                         Solectron
---------------------------------------------------------------------------------------------
E&O RESPONSIBILITY       Handspring                         Solectron
---------------------------------------------------------------------------------------------
</TABLE>

* NOTE: Commodities listed with * could be classified as either Tier 1 or Tier
2. Prior to production release of any new product, Handspring and Solectron will
jointly review the components classified under these * commodities and formally
agree on the proper Tier designation.

STRATEGIC MANAGEMENT includes: supplier evaluation, selection, qualification,
contract negotiation, cost reduction, performance management, cycle time /
flexibility improvement, lead-time reduction, quality problem escalation,
technology roadmap discussions and quarterly supply reviews. This also includes

<PAGE>

                                                CONFIDENTIAL TREATMENT REQUESTED
--------------------------------------------------------------------------------

contract negotiation and implementation of VMI. Quality Problem Escalation could
include requiring problematic suppliers to perform source inspection prior to
shipment to SLR.

TACTICAL MANAGEMENT includes: running MRP, place / change / cancel POs for
ongoing fulfillment of production requirements, resolve day-to-day quality
problems, including issuing debit memos/corrective action reports, and will
provide monthly supplier performance information such as delivery, quality,
cost.

    2.  DFX INPUT: Solectron is expected to regularly present their Preferred
        Supplier list for Tier 2 parts to Handspring's Engineering department,
        in order to optimize future products' designs and component choices.

    3.  QUALIFICATION: Solectron will implement Handspring's process to qualify
        new components:
        Agile document # 80-0051-00, Procedure, First Article,
        Agile document # 80-0087-00, Procedure, Guidelines for Component
        Substitution for Compatible Parts "Better Than Procedure"

    4.  MATERIAL RESPONSIBILITY: Solectron will be responsible for managing,
        consuming or disposing of Tier 2 excess inventory at no cost to
        Handspring. Handspring will not write down any inventory of
        industry-standard components. Handspring will be responsible for
        negotiating prices and terms and conditions of Tier 1 suppliers.
        Handspring will provide Solectron with the results of those negotiated
        terms.

    5.  PHYSICAL INVENTORIES: The CM will conduct a Physical Inventory annually
        and report the results to Handspring. Handspring reserves the right to
        conduct Physical Inventories on a list of selected parts, if the need
        arises. For consigned inventory, the CM is responsible for the full
        purchase value of the consigned inventory if damaged or lost. Handspring
        agrees to reimburse damage insurance with all applicable receipts and
        justification.

    6.  OPEN BOOK PRICING: Solectron will provide open book pricing to
        Handspring for Tier 2 components. On a monthly basis, Solectron will
        provide Handspring both weighted average pricing for each Tier 1 and
        Tier 2 component (accounting for on-hand and on-order inventory) and
        actual (unburdened)component pricing by supplier for each supplier used.
        Handspring will have the right to audit Tier 1 and Tier 2 material
        pricing subject to supplier and customer confidentiality agreements.
        Solectron will also report lead times by part number on a monthly basis
        for all components.

    7.  INVENTORY CARRYING COST: Handspring will be liable for On-Hand Tier 1
        material carrying costs in excess of [*] demand created by a Handspring
        initiated change in the MPS (assuming Tier 1 materials have been
        purchased and/or canceled to lead time and MPS requirements). Carrying
        charges will be set at [*] for Tier 1 materials. Handspring agrees to
        disposition Tier 1 material in excess of [*] demand. The methodology
        will be defined in the proposed agreement and will cover freight and
        cost of acquisition. Handspring will be liable for a [*] of demand
        created by a Handspring initiated change in the MPS (assuming Tier 2
        materials have been purchased and/or canceled to lead time and MPS
        requirements). [*] Handspring and Solectron will negotiate a
        methodology in the agreement to cover inbound freight and cost of
        acquisition expenses.

    8.  MATERIAL TRANSFER: In the case of any Material transfer between 2
        Handspring Partners, the price used will be the Handspring supplied
        costed BOM price (usually the selling partner's BOM price). Handspring
        will pay PPV if the seller's weighted average actual cost is more than
        the Handspring supplied costed BOM price. Freight will be paid by the
        buying partner. Handspring will reimburse inbound freight costs to the
        selling partner separately.

    * Confidential treatment has been requested for certain portions of this
    document pursuant to an application for confidential treatment sent to the
    Securities and Exchange Commission. Such portions are omitted from this
    filing and filed separately with the Securities and Exchange Commission.

<PAGE>

                                                CONFIDENTIAL TREATMENT REQUESTED
--------------------------------------------------------------------------------

    9.  VENDOR MANAGED INVENTORY: Handspring and Solectron will work together in
        good faith to bring Tier 1 and Tier 2 component suppliers into a vendor
        managed inventory (VMI) program, and to agree to share any cost savings
        generated as a result of reduced inventory holding by Solectron.

    10. TIMING OF EVENTS:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
                           Fiscal Month 1    Fiscal Month 2     Fiscal Month 3
                    Month  ---------------- ----------------- --------------------
                     Week  1    2   3   4    5   6   7    8   9   10  11  12   13
----------------------------------------------------------------------------------
<S>                        <C>  <C> <C> <C>  <C> <C> <C>  <C> <C> <C> <C> <C>  <C>
----------------------------------------------------------------------------------
Solectron submits               X                X                X
Carrying Costs for
previous month
----------------------------------------------------------------------------------

----------------------------------------------------------------------------------

----------------------------------------------------------------------------------
</TABLE>

<PAGE>

                                                CONFIDENTIAL TREATMENT REQUESTED
--------------------------------------------------------------------------------

C.  QUALITY

    1.  SPECIFICATIONS AND PROCEDURES: The Contract Manufacturer will apply all
        Quality procedures created by Handspring. Current procedures documented
        in Agile include:

            -   80-0028-00, Procedure, Manufacturing Supplier Quality

            -   80-0096-00, Specification, Cosmetics for Injection Molded Parts,
                1994 Edition

            -   80-0105-00, Specification, Cosmetics for Sheet Metal Parts

            -   80-0083-00, Procedure, Solder Assembly Attachment Materials,
                Handspring Approved

            -   80-0179-00, Procedure, Cosmetic Inspection Criteria
                StandardWarranty, RMA management

    2.  WARRANTY: Solectron warrants that products will conform to Handspring's
        available specifications and will be free from defects in workmanship
        for a period of [*] from the date of shipment.

    3.  RMA, REPAIR: Solectron will execute timely RMA repairs (both in- and
        out-of warranty) with Solectron Global Services (for Handspring's
        communicator products), other Handspring's Service partners and with
        material suppliers.

* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.

<PAGE>

                                                CONFIDENTIAL TREATMENT REQUESTED
--------------------------------------------------------------------------------

D.  VIRTUAL MANUFACTURING TEAM

    1.  VMT EXPECTATIONS: With initial input from our CM partners, Handspring
        has formalized our expectations of the CM's roles and responsibilities
        during an entire Product Life Cycle (from Concept to End Of Life) in the
        document 80-0189-00. This document also includes Handspring's
        responsibilities during the Product Life Cycle.

    2.  ECO RESPONSES: Upon release of an Engineering Change Order, the CM
        partner will respond back to Handspring within 2 business days,
        specifying the action plan to implement the ECO:

            -   Confirmation of ECO implementation date in production

            -   Confirmation of quantity and cost of parts that become obsolete
                by the ECO

            -   List of actions to be taken with suppliers to procure new parts,
                if needed

            -   List of actions to be taken with suppliers to cancel / restock
                old parts, if needed

            -   If required, immediately order new parts upon formal approval
                from Handspring.

<PAGE>

                                                CONFIDENTIAL TREATMENT REQUESTED
--------------------------------------------------------------------------------

E.  PLANNING

    1.  HANDSPRING MPS: Under the current process, Handspring issues a MPS once
        per month, representing a 12-month rolling non-binding forecast.

            -   The CM partner should acknowledge immediately the receipt of the
                new plan.

            -   The CM partner should formally commit to a new Master Production
                Schedule (MPS) by providing written confirmation to Handspring
                within 2 business days of its release by Handspring. This commit
                will list any material constraints or capacity constraints.

            -   For MPS increases, the CM partner should execute any material
                purchase orders and/or changes and provide written confirmation
                to Handspring within 5 business days of a new MPS.

            -   For MPS decreases, the CM partner should execute any material
                cancellations within 2 business days of a new MPS.

            -   As indicated in the Material Management section, Lead Times and
                MPS changes define Handspring's Tier 1 material liability.

    2.  APS SYSTEM: APS is the acronym for Handspring's Advanced Planning and
        Scheduling System. This IT system will be used by Handspring to
        centralize all business data on Forecasts, Sales, Production, Shipments,
        and generate our MPS. The CM partner will support the implementation,
        testing and operation of Handspring's Advanced Planning and Scheduling
        System.

<PAGE>

                                                CONFIDENTIAL TREATMENT REQUESTED
--------------------------------------------------------------------------------

F.  REPORTING AND DATA SHARING

    1.  DAILY REPORTS

        -   Production, Shipment & POD Report

        -   Quality Summary

        -   Constraints Status, as required

    2.  WEEKLY REPORTS

        -   Weekly Production Schedule

        -   Delivery Performance to prior week's schedule

        -   CM On-Hand/On-Order Inventory -- Including Consigned Inventory at $0
            value

        -   QIP & Yield Reports, weekly, monthly, quarterly and if required,
            daily

        -   CIT Update

        -   RMA Status -- Warranty Returns

        -   Accounts Receivable Report (Aging)

        -   Action Item Report

    3.  MONTHLY REPORTS

        -   CM P/O Action Report

        -   Costed BOM / Material Price Quote Worksheet

        -   E&O Status/Performance

        -   Commodity Lead Times

        -   Long Lead Time Material Authorization Request

        -   2nd Source Update

        -   Program Management Report

        -   Tier 1 Supplier On Time Delivery and Quality Metrics

    4.  QUARTERLY REPORTS

        -   QBR scorecard and next quarter goals

    5.  REPORT FORMATS: Solectron and Handspring will agree on suitable formats,
        distribution lists and communication medium for each of the daily,
        weekly, monthly and quarterly reports.

    6.  AGILE DOCUMENTATION SYSTEM: Agile Documentation system: The CM partner
        will use Handspring's Agile system to access all information on parts,
        bills of material, engineering changes and other procedures or
        documentations.

    7.  INFORMATION EXCHANGE: Handspring and Solectron will in good faith
        implement business system tools to share information and facilitate
        ongoing business activity, including but not limited to Advanced
        Planning and Scheduling (APS) System, Cost of Goods System (COGS), and
        other electronic data interfaces.

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