Document:

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                                                CONFIDENTIAL TREATMENT REQUESTED

                                                                    EXHIBIT 10.7

                           SOFTWARE LICENSE AGREEMENT

        This Software License Agreement is entered into by and between Palm
Computing, Inc., a subsidiary of 3Com Corporation (collectively, "3Com"), a
California corporation with a place of business at 1565 Charleston Road,
Mountain View, California 94043, and JD Technology, Inc. ("JD"), a California
corporation with a place of business at P.O. Box 7066, Menlo Park, California.
The effective date of this Agreement shall be the date last executed below
("Effective Date").

                                    RECITALS

        A. 3Com or its suppliers are the owners of software and other technology
related to the 3Com Palm Computing platform.

        B. JD is a developer, manufacturer and marketer of handheld computing
products.

        C. JD desires to obtain a license to certain 3Com software and
technology, as more particularly described in Exhibit A (Palm Software), in
order to develop, manufacture and market handheld computing products
incorporating such 3Com software and technology. 3Com is willing to grant JD
such a license upon the terms and conditions set forth below.

                                    AGREEMENT

        NOW, THEREFORE, the parties agree as follows:

1. DEFINITIONS

        1.1 "Confidential Information" means that information of either party
("Disclosing Party") which is disclosed to the other party ("Receiving Party")
pursuant to this Agreement, in written form and marked "Confidential,"
"Proprietary" or similar designation, or if disclosed orally, the Disclosing
Party shall indicate that such information is confidential at the time of
disclosure and send a written summary of such information to the Receiving Party
within thirty (30) days of disclosure and mark such summary "Confidential,"
"Proprietary" or similar designation. Confidential Information shall include,
but not be limited to, trade secrets, know-how, inventions, techniques,
processes, algorithms, software programs, schematics, designs, contracts,
customer lists, financial information, product plans, sales and marketing plans
and business information. References to a Receiving Party or a Disclosing Party
shall also include all present and future subsidiary and parent companies of
such party, subject to the restrictions contained in this Agreement.

        1.2 "JD Products" means any handheld computing products developed by JD,
or for JD by a third party, which contain Palm Software, in whole or part,
combined with JD's added value.

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        1.3 "JD Software" means any software developed or acquired by JD, or for
JD by a third party, for the JD Products.

        1.4 "Net Revenue" means monies received or receivable by JD in
connection with the sale, permitted licensing, distribution or other
exploitation of the JD Products, but shall exclude taxes, returns, rebates, and
separately stated shipping and handling costs or maintenance, support, and
engineering fees.

        1.5 [*]

        1.6 "Palm Device Applications" means the applications files described in
Exhibit A (Palm Software).

        1.7 "Palm Device Applications SDK" means 3Com's commercially available
software development kit for applications for the Palm Computing platform as
described in Exhibit A (Palm Software).

        1.8 "Palm Desktop Software" means the 3Com desktop software related to
the 3Com Product described in Exhibit A (Palm Software).

        1.9 "Palm Development Environment" means the development and debugging
tools relating to the Palm OS described in Exhibit A (Palm Software), including
a list of certain third-party development tools that are commercially available
relating to the Palm OS, provided that JD shall be responsible for obtaining any
necessary rights for such third-party development tools.

        1.10 "Palm End-User Documentation" means the end-user documentation
related to the Palm Software as described in Exhibit A (Palm Software).

        1.11 "Palm GUI" means the graphical user interface files for the Palm
Computing platform as described in Exhibit A (Palm Software).

        1.12 "Palm Installation CD Files" means the artwork, guided tour files,
and other files and related elements of the Palm installation CD as described in
Exhibit A (Palm Software).

        1.13 "Palm Materials" shall mean: (a) the Palm End-User Documentation,
Palm Technical Documentation, and any 3Com end user materials provided under
Section 7.3 below; and (b) all current and future foreign language versions
thereof, to the extent that 3Com has the right to grant JD rights to such
versions.

        1.14 "Palm OS" means the Palm operating system software files and build
tools described in Exhibit A (Palm Software), including: (a) software and
documentation provided by 3Com to JD pursuant to Section 6.1; and (b) the Palm
OS Drivers. All Palm OS software shall be provided in object code form only,
except as may be agreed by the parties pursuant to Section 6.2(b).

* 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.

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        1.15 "Palm OS Drivers" means the software drivers and sample extensions
for the Palm OS as described in Exhibit A (Palm Software).

        1.16 "Palm Software" shall mean: (a) the Palm Device Applications, Palm
Device Applications SDK, Palm Desktop Software, Palm GUI, Palm Installation CD
Files, Palm OS, Palm OS Drivers, and Palm Test Code; and (b) all current and
future foreign language versions thereof, to the extent that 3Com has the right
to grant JD rights to such versions.

        1.17 "Palm Technical Documentation" means the technical documentation,
repair manuals, service manual, engineering schematics, and other materials
relating to the Palm OS as described in Exhibit A (Palm Software).

        1.18 "Palm Test Code" means the software quality assurance and hardware
and production test code described in Exhibit A (Palm Software).

2. LICENSES

        2.1 Development and Documentation License.

             (a) 3Com Deliverables. Subject to the terms and conditions of this
Agreement, 3Com hereby grants to JD a limited, non-exclusive, non-transferable
(except as provided in Section 17.9), fully-paid license to use and reproduce
the Palm Development Environment, the Palm Software in object code form, and the
Palm Materials solely to develop, manufacture, test and support the JD Products.
Such license shall include the right to use any 3Com intellectual property
rights associated with or related to use of the Palm Development Environment,
Palm Software and/or Palm Materials, in connection with the development,
manufacturing, testing or support of such items solely within JD Products.

             (b) Derivative Works. Subject to the terms and conditions of this
Agreement, 3Com hereby grants to JD a limited, non-exclusive, non-transferable
(except as provided in Section 17.9), fully-paid license to create derivative
works based upon the Palm Materials and, to the extent permitted under Section
6.2 (OS Enhancements), the Palm OS (collectively, "Derivative Works") solely for
use within JD Products.

        2.2 Distribution License. Subject to the terms and conditions of this
Agreement, 3Com hereby grants to JD a limited, non-exclusive, non-transferable
(except as provided in Section 17.9), worldwide, royalty-bearing license to use,
reproduce, and distribute (directly and through third parties) solely for use
within JD Products: (i) the Palm Software in object code form only; (ii) the
Palm Materials (subject to Section 13); and (iii) Derivative Works. Such license
shall include the right to use any 3Com intellectual property rights associated
with or related to use of the Palm Development Environment, Palm Software and/or
Palm Materials, in connection with the distribution of such items within JD
Products. Such license shall also include the right to grant end user
sublicenses subject to the provisions of Section 10.4 below.

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        2.3 Compatibility and Trademark License.

             (a) Compatibility Testing. 3Com will finalize and provide to JD
compatibility test criteria for ensuring interoperability of third party add-on
software for the Palm OS and the JD Products ("Test Criteria") within ninety
(90) days of the Effective Date. JD and 3Com will agree on a reasonable time
period for compatibility testing of the JD Products by any of 3Com's independent
testing labs ("Test Period") which shall be incorporated into the Test Criteria.
When finalized, such Test Criteria shall be attached as Exhibit B (Test
Criteria) to this Agreement. 3Com shall use its reasonable discretion in
determining the contents of the Test Criteria; provided that, in the event JD
does not approve of the Test Criteria, as its sole and exclusive remedy JD may
terminate this Agreement immediately without liability within thirty (30) days
of its first receipt of the Test Criteria from 3Com. Prior to the release of any
and all JD Products, or any upgrade or new version thereof, JD shall submit the
JD Products at its expense to any of 3Com's approved independent compatibility
testing labs ("Approved Testing Lab") for compatibility testing in accordance
with the Test Criteria. If the Approved Testing Lab rejects the JD Products
because of a nonconformance with the Test Criteria, then such testing lab will
provide JD and 3Com a detailed written statement of the reasons for such
rejection. ("Statement of Errors"). Upon receipt of the Statement of Errors, JD
shall use reasonable efforts to modify the JD Products to conform to the Test
Criteria. The parties acknowledge that the contents of the Test Criteria may
need to be changed from time to time if major new functionality is added to the
Palm Software. 3Com shall use its reasonable discretion in determining new Test
Criteria for such Palm Software with such new functionality and will apply such
new Test Criteria to its internal customers and to JD and its other licensees.

             (b) Compatibility Certification Requirement. JD agrees that it
shall not release or distribute any JD Products which have not received
compatibility certification from an Approved Testing Lab in accordance with the
Test Criteria. Each version of a JD Product shall be required to pass the Test
Criteria only once, regardless of 3Com's subsequent modifications to the Palm
Software. However, in order to obtain compatibility certification for Palm
Software with new functionality and new Test Criteria as described in the last
paragraph of Section 2.3(a), JD may submit JD Products for compatibility testing
against such new Test Criteria in accordance with Section 2.3(a). JD may
indicate compatibility certification for JD Products only with respect to the
version(s) of the Test Criteria which the JD Products have passed.

             (c) Trademark License. Subject to subsections (a) and (b) above and
the other terms and conditions of this Agreement, 3Com hereby grants to JD a
limited, non-exclusive, nontransferable (except as provided in Section 17.9),
fully-paid license to use, subject to the guidelines set forth in 3Com's
Trademark Policy Guidelines attached hereto as Exhibit C, the "Palm Computing
Platform Compatible" trademark and such other 3Com trademarks and the respective
stylistic marks as may be mutually agreeable and the artwork for which has been
provided by 3Com to JD (collectively, the "3Com Trademarks") in connection with
the marketing and sale of JD Products that have received compatibility
certification in accordance with subsection (a) above. JD shall use such
trademarks in conjunction with the distribution, promotion, and marketing of any
JD Products that have received compatibility certification, consistent with the
guidelines set forth in Exhibit C. 3Com shall have the right to receive free

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samples of all advertising and promotional materials and reasonable numbers of
sample production units of the JD Products and related JD documentation on which
such trademarks are used to ensure that 3Com's quality standards are maintained.
The foregoing license shall be limited to use of the 3Com Trademarks for the
purposes of Section 8.3. JD shall have the right to permit its [*] for the JD
Products to use the 3Com Trademarks as set forth herein, provided that JD
contractually obligates such [*] to comply with the terms of Section 7.3 and
this Section 2.3, and provided further that 3Com reserves the right to enforce
and protect its trademark rights directly in the event of any failure to comply
with such terms.

        2.4    Right to Sublicense.

               (a) [*] Within thirty (30) days of the execution of each [*], JD
shall notify 3Com in writing of such execution and the identity of the [*]. Each
such [*] will contain provisions that protect 3Com's proprietary rights to no
less of an extent than such rights are protected by Sections 2.3 (Compatibility
and Trademark License), 2.5 (No Reverse Engineering), 2.6 (Inspection Rights),
8.3 (Branding), 10 (Proprietary Rights), 13 (Confidentiality), and 15 (Export
Regulations) of this Agreement. In the event of any failure by any [*] to comply
with the foregoing terms of their [*], JD shall use its reasonable efforts to
enforce and protect 3Com's intellectual property rights against such [*],
provided that 3Com reserves the right to enforce and protect its intellectual
property rights directly against such [*] with the cooperation of JD.

               (b) Subject to the requirements of Sections 2.5 and 13, JD shall
have the right to sublicense its rights under Section 2.1 to consultants and
contractors solely for the purpose of developing, manufacturing, testing, and
supporting JD Products for JD.

               (c) Except as specified in this Section 2.4, JD shall not have
the right to sublicense any of its rights under this Agreement.

        2.5 No Reverse Engineering. JD shall not reverse engineer, reverse
compile or disassemble any Palm Software, or otherwise attempt to derive the
source code to any Palm Software. The foregoing shall not apply to such
activities conducted in the ordinary course of technical support of JD Products
such as may occur through the use of debugging tools.

        2.6 Inspection Rights. 3Com shall have the right, upon reasonable
advance notice, to inspect JD's records and facilities, and its [*], with
respect to the manufacture of the JD Products hereunder and to receive sample
units thereof in order to verify that such manufacturing is within the scope of
this Agreement, and that there are appropriate security procedures to protect
3Com's Confidential Information. JD shall have similar rights with respect to
its contract manufacturers sublicensed under Section 2.4(b).

        2.7 No Other Licenses. The licenses granted under this Agreement are
specifically set forth herein, and no licenses are granted by 3Com to JD by
implication or estoppel.

* 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.

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        2.8 Limitations on Scope of Agreement. Notwithstanding the other terms
and conditions of this Agreement, the rights granted to JD under this Agreement
do not, and will not, include:

             (a) [*]

             (b) [*]

             (c) any right or license to sublicense any of the foregoing rights
to any OEMs, consultants, contractors, or other third parties.

3. DELIVERY AND SOURCING

        3.1 Delivery of Licensed Materials. Within forty-five (45) days
following the Effective Date, 3Com will deliver to JD a complete and current set
of the Palm Software, Palm Development Environment and Palm Materials.

        3.2 Third Party Sourcing. Exhibit D contains a list of custom components
("Components") that JD may wish to purchase from 3Com's third party component
suppliers and/or manufacturers ("Sources") for incorporation in JD Products.
3Com hereby grants JD the right to use such suppliers and procure such
Components during the term of this Agreement, and will notify such Sources of
the same. In the event that such Sources are unable to promptly fill all
Component orders from 3Com due to market demand, manufacturing delays, or other
factors, JD acknowledges and agrees that such Sources shall fulfill all orders
from 3Com before fulfilling orders from JD or JD's [*].

4 ROYALTIES, FEES, AND REPORTS

        4.1 Royalties. JD shall pay to 3Com royalties on its Net Revenues
("Royalties") as specified in Exhibit E (Royalties and Fees). Such royalties
shall be due and payable to 3Com regardless of whether JD collects payments for
the JD Products from JD's customers.

        4.2 Maintenance and Support Fees. JD shall pay to 3Com fees as specified
in Exhibit E (Royalties and Fees) for maintenance, support, updates, and
upgrades provided by 3Com to JD pursuant to Sections 6.1 and 7. Such fees shall
be due and payable to 3Com in advance beginning one year after the Effective
Date, regardless of whether JD collects payments for the JD Products or their
maintenance and support from JD's customers.

        4.3 Reports. JD shall keep adequate records to verify all reports and
payments to be made to 3Com pursuant to this Agreement for a period of two (2)
years following the date of

* 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.

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such reports and payments. 3Com shall have the right to select an independent
certified public accountant mutually agreeable to the parties to inspect no more
frequently than annually the records of JD on reasonable notice and during
regular business hours to verify the reports and payments required hereunder. If
such inspection should disclose any underreporting, JD shall pay 3Com such
amount within thirty (30) days of the conclusion of such inspection. The entire
cost of such inspection shall be borne by 3Com; provided, however, that if JD is
determined by such inspection to have underpaid royalties by five percent (5%)
or more, then the cost of such audit shall be borne by JD.

5. PAYMENT TERMS

        5.1 Payment. Royalties shall accrue upon shipment to a customer of JD
Products by JD and shall be payable within [*] after the end of each calendar
[*]. Each Royalty payment shall be accompanied by a statement setting forth in
sufficient detail the basis upon which royalties were calculated. Payments and
statements shall be sent to 3Com at the address set forth at the beginning of
this Agreement or such other address as 3Com may designate in writing.

        5.2 Royalty-Free Units of JD Products. JD shall have the right to
manufacture and distribute a commercially reasonable number of JD Products,
provided that it does not receive any revenue therefrom, for the following
purposes without incurring a Royalty obligation to 3Com: units for testing,
units with limited functionality for reseller point of purchase and
demonstration, units provided to 3Com, Palm, or other Palm licensees, units used
internally by employees or contractors of JD, and units given to press and
analysts.

        5.3 [*]. [*] Such option will be JD's sole and exclusive remedy for
3Com's breach of this Section 5.3. The parties acknowledge that 3Com's current
license agreements with [*] and [*] are exempt from the requirements of this
provision.

        5.4 Taxes. In addition to any other payments due under this Agreement,
JD agrees to reimburse and hold 3Com harmless from any sales, use, excise,
import or export, value added or similar tax or duty, any other tax not based on
3Com's net income, and any governmental permit and license fees, customs fees
and similar fees levied upon delivery of the deliverables and/or services
hereunder which 3Com may incur in respect of this Agreement.

6. UPDATE RESPONSIBILITIES AND OS ENHANCEMENTS

        6.1 Updates and Additions to Palm Software and Palm Materials. During
the term of this Agreement and subject to Section 9.4 (3Com Update and Support
Obligations), 3Com shall

* 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.

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deliver to JD all upgrades, bug fixes, modifications, enhancements and new
versions of the Palm Software and Palm Materials within ten (10) business days
after 3Com's internal beta releases or production releases. Upon such delivery,
the licenses granted to JD pursuant to Section 2 above shall be deemed to
include the items delivered pursuant to this Section 6.1. JD acknowledges that
during the term of this Agreement, in addition to delivering to JD the upgrades,
bug fixes, modifications, enhancements and new versions referred to above, 3Com.
expects to release separate modules and components for the Palm Computing
platform for which 3Com may elect to require that licensees pay separate
consideration and enter into separate agreements or amendments in order to have
any rights to such modules or components.

        6.2 OS Enhancements.

             (a) Approved OS Enhancements. In the event that JD requests in
writing that 3Com add new functionality to the Palm OS requiring enhancements to
the Palm OS source code, 3Com will consider such request in good faith and will
respond to JD in writing within thirty (30) days of its receipt of such request
(or within such longer time period as may be reasonably agreed by the parties)
with whether 3Com intends to implement such request and, if so, with a proposed
schedule for implementation. In the event 3Com approves such request under a
proposed schedule reasonably acceptable to JD ("Approved OS Enhancements"), 3Com
will use its reasonable commercial efforts to implement such enhancements within
the proposed schedule, whereupon such Approved OS Enhancements will be deemed
additional Palm OS software for all purposes of this Agreement. Upon delivery to
JD, the licenses granted to JD pursuant to Section 2 above shall be deemed to
include such Approved OS Enhancements. JD shall execute all assignments and
other documents as may be requested by 3Com to evidence and perfect 3Com's
ownership of the Approved OS Enhancements and the intellectual property rights
therein.

             (b) Implementation by JD. To the extent that 3Com rejects JD's
request for Palm OS enhancements, or if 3Com's proposed schedule is not
reasonably acceptable to JD, then JD may notify 3Com in writing that JD wishes
to implement such enhancements itself, whereupon the parties will negotiate in
good faith the terms under which JD will develop the enhancements, including:
(i) which Palm OS source code and tools JD will require; (ii) the limitations
that will be placed on JD's (and any contractors') use of such source code and
tools; (iii) the parties respective intellectual property rights in such
enhancements; (iv) 3Com's responsibility, if any, for support and maintenance of
such enhancement; and (v) JD's responsibility for any costs and expenses that
3Com may incur in connection with such implementation, support, and maintenance.

7. SUPPORT

        Subject to Section 9.4 (3Com Update and Support Obligation), 3Com shall
provide JD with the following support during the term of this Agreement in
accordance with the 3Com Support terms set forth in Exhibit F (3Com Support
Services).

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        7.1 Development Support. 3Com will provide JD with a reasonable level of
support by telephone, e-mail, fax or, if requested by JD, in person at 3Com's
Mountain View and/or Santa Clara, California site, during 3Com's normal business
hours (8:00 am - 5:00 pm California time, excluding holidays) in connection with
JD's use of the Palm Software to develop and support the JD Products, including
the use of reasonable commercial efforts: (i) to answer JD's questions regarding
the proper utilization and optimization of the Palm Software; and (ii) to
provide solutions, workarounds and/or patches to correct any reproducible error
in the Palm Software. JD shall designate up to two qualified individuals per
Designated Site to act as primary technical liaisons for communications with
3Com's technical support staff. 3Com shall designate two qualified individuals
to act as primary and secondary technical liaisons for communications with JD's
technical support staff.

        7.2 Customer Support Training. During the term of this Agreement, 3Com
shall, at its expense, provide JD with one (1) course per version of the Palm
Software of basic and advanced training as it relates to customer support for up
to six (6) JD employees engaged in the technical support of the JD Product. 3Com
shall further provide to JD, at 3Com's expense, similar training for
modifications or other revisions to the Palm Software, as it relates to customer
support. Training will be conducted at 3Com's facilities in Mountain View and/or
Santa Clara, California or such other mutually agreeable facility. Each training
course shall commence on a mutually agreed upon date. Such training shall cover
in detail, the installation, configuration, operation, trouble-shooting,
adjustment, test and maintenance of the Palm Software, as it relates to customer
support. JD shall provide a reasonable quantity of appropriate JD Product units
as training aids. 3Com shall provide copies of the student training guides, and
all other necessary materials to each trainee and to JD. All other training
requested by JD and provided by 3Com shall be billed at 3Com's standard rates.

        7.3 Customer Support. JD shall be solely responsible for First Level
Support and Second Level Support of the JD Products. The parties agree to work
together to develop and facilitate the call handling processes to provide
seamless customer support and technical service to resellers and end users of
the JD Product. In addition, 3Com will provide JD with Third Level Support
during the term of this Agreement. The definitions of First, Second And Third
Level Support shall be as set forth in Section 7.4 below. During the term of
this Agreement, 3Com shall permit JD to create hyperlinks to the 3Com Web site
and to display certain 3Com end user materials on JD's Web site for customer
support purposes, subject to 3Com's prior approval of each proposed use. During
the term of this Agreement, JD shall permit 3Com to create hyperlinks to the JD
Web site and to display certain JD end-user materials on 3Com's Web site for
customer support purposes, subject to JD's prior approval of each proposed use.

        7.4 Technical Support.

             (a) Technical Support Levels. For the purposes of Section 7.3
above, "Level" means a certain class of service provided for the JD Products.
Definitions are as follows:

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                  (i) "First Level Support" means first call support on all
customer calls; technical support staff answers technical inquiries regarding JD
Products, performs JD Product configuration support, if applicable, and provides
broad troubleshooting expertise.

                  (ii) "Second Level Support" means specialist level technical
support; technical support/escalation staff performs problem isolation and
replication, and implements a solution for a problem that is not the result of a
Palm Software program error. In the case of a Palm Software program error, the
technical staff is able to identify the source of the error, create a
reproducible test case, and document the details of the error for escalation to
3Com.

                  (iii) "Third Level Support" means backup technical support to
two representatives of JD's Second Level Support team (the "Authorized
Callers"). 3Com will identify to JD its technical support personnel for the Palm
Software (the "Designated Support Personnel"). The Authorized Callers and
Designated Support Personnel will be the primary contacts between 3Com's and
JD's technical support and/or escalation centers. JD will provide a list of
Authorized Callers including names, address, phone numbers, and Internet e-mail
address. 3Com will provide a similar list of Designated Support Personnel. These
lists will be reviewed quarterly and updated as required.

             (b) Support Timing. 3Com shall make Third Level Support available
via telephone, FAX or E-Mail solely to JD's Authorized Callers during 3Com's
normal business hours (8:00 am -- 5:00 pm California time, excluding holidays).
3Com. shall use reasonable commercial efforts to answer support questions within
the timeframes specified in Exhibit F (3Com Support Services). So long as 3Com
is using reasonable commercial efforts to answer such questions, 3Com's
inability to resolve answer such question shall not be deemed a material breach
of the Agreement.

             (c) Direct Customer Support. 3Com will not be obligated to provide
direct support of any kind to JD's customers or end users pursuant to this
Agreement. JD will provide sufficient information and/or training regarding the
JD Products to 3Com's Designated Support Personnel to enable 3Com to properly
assist JD in resolving problems.

8. MARKETING AND PUBLICITY

        8.1 Marketing. The parties agree to work together to identify areas
where joint marketing efforts would benefit both parties, and upon mutual
agreement shall implement such efforts.

        8.2 Publicity. Neither party shall disclose the terms of this Agreement
to any third party, other than its financial or legal advisors and current or
potential Non-Corporate Investors, or make any announcements regarding the
nature of the relationship between the parties without the prior approval of the
other party, except that a party may disclose the terms of this Agreement where
required by law, provided that such party uses reasonable effort to obtain
confidential treatment or similar protection to the fullest extent available to
avoid public disclosure of the terms of this Agreement. A party required by law
to make disclosure of the terms of this

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Agreement will promptly notify the other party and permit the other party to
review and participate in the application process seeking confidential
treatment. "Non-Corporate Investors" shall mean venture capital investors/funds
and investment banking investors/funds.

        8.3 Branding. JD and its [*] will use the 3Com Trademarks in
conjunction with the distribution of the JD Products and in their advertising,
promotional and printed materials for the JD Products and on the JD Products.

        8.4 Nonsolicitation. JD agrees that during the first year of the term of
this Agreement JD will not directly or indirectly, either for itself or any
other person or entity, solicit any individual who is engaged as an employee,
agent or independent contractor, by 3Com or 3Com's subsidiaries (including but
not limited to the Palm Computing subsidiary of 3Com) to terminate his or her
employment or engagement with 3Com or such subsidiary and/or to become an
employee, agent or independent contractor of JD or such other person or entity;
provided, however, that the foregoing limitation will not apply to any
solicitation that occurs after such individual either: (i) initiates contact
with JD regarding terminating his or her employment or engagement with 3Com or
such subsidiary and/or becoming an employee, agent or independent contractor of
JD or such other person or entity; or (ii) responds to advertisements of general
circulation (including general postings on Websites) placed by, or on behalf of,
JD or such other person or entity regarding terminating his or her employment or
engagement with 3Com or such subsidiary and/or becoming an employee, agent or
independent contractor of JD or such other person or entity. JD further agrees
that during the first year of the term of this Agreement it will not directly
solicit, either for itself, or any other person or entity, any strategic partner
of the Palm Computing subsidiary of 3Com to cease doing business with 3Com.

9. [*]

        9.1 [*]. Within thirty (30) days of the execution of this Agreement [*],
3Com agrees to [*] with a reputable, financially responsible,
industry-recognized party consented to by both parties to [*]. A fully executed
copy of the [*], together with a receipt [*], shall be delivered to JD within
five (5) days after the execution of the [*]. In addition, [*] such materials
shall become [*]. The [*] shall be borne by JD. The [*] will be authorized to
deliver the [*] to JD [*]

* 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.

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[*]. JD acknowledges and agrees that the [*] do not, and will not, contain any
[*] owned by third parties.

        9.2 Use. In the event JD [*] under this Section 9, JD shall have a
limited, nonexclusive, nontransferable (except as provided in Section 17.9)
license to use and modify the [*] at the Designated Sites solely to continue
developing, manufacturing, testing and supporting JD Products. The foregoing
license shall survive termination of this Agreement for a period of [*] from
such termination, subject to earlier termination if JD breaches its
confidentiality obligations with respect to the [*]. Upon termination of the
foregoing license, JD shall promptly: (i) return all [*], including but not
limited to all copies thereof in whole and in part, to 3Com; and (ii) destroy
all copies thereof, in whole and in part, residing within any computers in JD's
control. Except to consultants consistent with Section 13 (Confidentiality), JD
may not disclose any of the [*] to third parties under any circumstances. JD
shall own all proprietary rights in modifications made pursuant hereto, subject
to 3Com's underlying rights to the unmodified [*].

        9.3 [*] Dispute Resolution. In the event of a dispute regarding whether
3Com has materially breached Sections 6.1 or 7.1 of this Agreement and failed to
cure such breach within the applicable cure period, the parties shall submit the
matter for resolution pursuant to the arbitration procedure set forth in the
[*], in which case the [*] shall not be released to JD unless and until the
arbitrator finds that there has been such breach. Upon a finding of such breach
by the arbitrator, the [*] shall be released to JD immediately.

        9.4 3Com Update and Support Obligations. The parties agree that in the
event the [*], 3Com's obligations pursuant to Sections 6.1 (Updates and
Additions to 3Com Software and Materials) shall terminate upon the earlier to
occur of: (a) 3Com delivering to JD the next major version of the 3Com Software
and Palm Materials subsequent to the version contained in the [*]; or (b) [*]
following the date of such release. In addition, in the event of such release,
3Com's obligations pursuant to Section 7 (Support) shall terminate [*] following
the date of such release.

10. PROPRIETARY RIGHTS

        10.1 Title. JD acknowledges that the Palm Software and Palm Materials
are the valuable trade secrets of 3Com. 3Com shall be the sole and exclusive
owner of the Palm Software. Subject always to 3Com's ownership of the Palm
Software, JD shall be the sole and exclusive owner of the JD Products and JD
Software. Applications for the JD Products shall belong solely and exclusively
to the party developing such applications.

        10.2 Proprietary Rights Notices. JD agrees that it will not remove,
alter or otherwise obscure any proprietary rights notices appearing in the Palm
Software and Palm Materials. Further, JD agrees that it will cause to appear on
the container or label for each unit of the JD

* 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.

                                       12
<PAGE>   13

Products manufactured hereunder appropriate patent and copyright notices and
proprietary data legends as contained in the Palm Software delivered by 3Com or
as otherwise reasonably required by 3Com.

        10.3 U.S. Government Restricted Rights Legend. All 3Com technical data
and computer software is commercial in nature and developed solely at private
expense. Software is delivered as Commercial Computer Software as defined in
DFARS 252.227-7014 (June 1995) or as a commercial item as defined in FAR
2.101(a) and as such is provided with only such rights as are provided in 3Com's
standard commercial license for such software. Technical data is provided with
limited rights only as provided in DFARS 252.227-7015 (Nov. 1995) or FAR
52.227-14 (June 1987), whichever is applicable. JD will: (a) identify and
license the software developed by JD hereunder in all proposals and agreements
with the United States Government or any contractor therefor; and (b) legend or
mark such software provided pursuant to any agreement with the United States
Government or any contractor therefor in a form sufficient to obtain for 3Com
and its suppliers the protection intended by this Section 10.3 (U.S. Government
Restricted Rights Legend). JD agrees not to remove or deface any portion of any
legend on any software or documentation delivered to it under this Agreement.

        10.4 End-User Licensing. JD agrees that each copy of the software
distributed by JD hereunder will be accompanied by a copy of JD's standard end
user software license; provided, however, that the terms of such license will be
drafted so as to apply to the Palm Software and shall be at least as protective
of the Palm Software as: (i) the terms and conditions JD uses for its own
software products; (ii) the minimum terms and conditions set forth in Exhibit G
(Minimum Terms and Conditions of End User License); and (iii) the terms and
conditions governing this Agreement. JD agrees to enforce the terms and
conditions applicable to the Palm Software contained in such license.

11. WARRANTY

        11.1 3Com Warranty. 3Com warrants that for a period of ninety (90) days
after receipt by JD of the Palm Software and Palm Materials (the "Warranty
Period") the media on which 3Com delivers the Palm Software and Palm Materials
to JD shall be free of defects in material and workmanship, and the Palm
Software will perform substantially in accordance with the Palm End-User
Documentation. As JD's sole and exclusive remedy for any breach of such
warranty, 3Com shall replace any such defective media and/or correct any such
performances problems in accordance with Sections 6.1 and 7 promptly following
receipt of written notice from JD of such defects during the Warranty Period.
EXCEPT FOR THE LIMITED WAS SET FORTH IN THIS SECTION 11, 3COM MAKES NO
WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO ANY MATTER WHATSOEVER. IN
PARTICULAR, ANY AND ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE ARE EXPRESSLY EXCLUDED.

        11.2 JD Product Warranty. JD shall be solely responsible for customer
warranty of any and all products manufactured by JD pursuant to this Agreement.

                                       13
<PAGE>   14

        11.3 Year 2000 Warranty.

             (a) 3Com warrants to JD that the Palm Software will continue
performing properly with regard to date-data on and after January 1, 2000,
provided that all other products used by JD in connection or combination with
the Palm Software accurately exchange date-data with the Palm Software. 3Com
makes no certification regarding the performance of any other 3Com products with
regard to date-data.

             (b) If it appears that any Palm Software does not perform properly
with regard to date-data on and after January 1, 2000, and JD notifies 3Com
thereof before April 1, 2000, 3Com shall, at its option and expense, provide JD
with a software update which would effect the proper performance of the Palm
Software or deliver to JD equivalent software to replace the Palm Software. Any
such software update or equivalent software will be warranted pursuant to
subsection (a) above for ninety (90) days or until April 1, 2000, whichever is
later.

12. INDEMNIFICATION

        12.1 By 3Com. 3Com shall, at its own expense, defend and indemnify JD
for damages and reasonable costs incurred in any suit, claim or proceeding
brought against JD alleging that the Palm Software, Palm Materials or 3Com
Trademarks licensed pursuant to this Agreement infringe (i) any patents in the
U.S., Canada, Japan, or the European Community, (ii) any copyrights worldwide,
or (iii) any trademarks in any countries in which 3Com markets products in
connection with the 3Com Trademarks, or misappropriate any trade secrets,
provided that 3Com is promptly notified, rendered reasonable assistance by JD as
required, and permitted to direct the defense or settlement negotiations. 3Com
shall have no liability for any infringement arising from: (a) the integration
or combination of the Palm Software, Palm Materials or Com, Trademarks together
with other software, materials or products not integrated or combined by 3Com,
if the infringement would have been avoided in the absence of such integration
or combination; (b) the use of other than a current unaltered release of the
software available from 3Com, if the infringement would have been avoided by the
use of the then-current release, and if 3Com has provided such current release
to JD; or (c) modifications to the Palm Software or Palm Materials requested by
JD.

        12.2 Remedies. In the event 3Com reasonably believes that the use or
distribution of any Palm Software, Palm Materials or 3Com Trademarks is likely
to be enjoined, 3Com may, at its option, either: (i) substitute functionally
equivalent non-infringing Palm Software or Palm Materials, as the case may be;
(ii) modify the infringing item so that it no longer infringes but remains
functionally equivalent; (iii) obtain for JD, at 3Com's expense, the right to
continue use of such item; or (iv) if none of the foregoing is feasible, 3Com
may take back such infringing item or items and terminate only that portion of
the license associated with respect to such item or items, subject to a mutually
satisfactory equitable reduction in the Royalty and fees payable under this
Agreement. Should the use or distribution of any Palm Software, Palm Materials
or 3Com Trademarks be enjoined, 3Com shall, at its option, either: (i)
substitute functionally equivalent non-infringing Palm Software or Palm
Materials, as the case may be; (ii) modify the infringing item so that it no
longer infringes but remains functionally equivalent; (iii) obtain for

                                       14
<PAGE>   15

JD, at 3Com's expense, the right to continue use of such item; or (iv) if none
of the foregoing is feasible, 3Com may take back such infringing item or items
and terminate only that portion of the license associated with respect to such
item or items, subject to a mutually satisfactory equitable reduction in the
Royalty and fees payable under this Agreement. Notwithstanding the foregoing, JD
acknowledges that 3Com may undertake to obtain patent licenses from third
parties relating to the Palm Software, and in such event the royalty obligation
for the JD Products arising from such patent licenses shall be passed through
to, and paid at the direction of 3Com by JD; provided, however, that the
per-unit royalty obligation payable by JD shall not exceed the per-unit or
percentage royalty obligation (whichever is less) payable by 3Com for products
similar to the JD Products, and shall not in any event exceed [*]. SECTIONS 12.1
and 12.2 STATE JD'S SOLE AND EXCLUSIVE REMEDY WITH RESPECT TO CLAIMS OF
INFRINGEMENT OF PROPRIETARY RIGHTS OF ANY KIND, AND ALL WARRANTIES OF
NON-INFRINGEMENT, EXPRESS OR IMPLIED, ARE SPECIFICALLY DISCLAIMED AND EXCLUDED.

        12.3 By JD. JD shall, at its own expense, defend and indemnify 3Com for
damages and reasonable costs incurred in any suit, claim or proceeding brought
against Palm Computing Inc., 3Com Corporation or its and their subsidiaries
alleging that the JD Products, JD Software and/or related materials infringe (i)
any patents in the U.S., Canada, Japan, or the European Community, (ii) any
copyrights worldwide, or (iii) any trademarks in any countries in which JD
markets products in connection with the 3Com Trademarks, or misappropriate any
trade secrets, provided that JD is promptly notified, rendered reasonable
assistance by 3Com as required, and permitted to direct the defense or
settlement negotiations. JD shall have no liability for any infringement arising
from: (a) the integration or combination of the JD Products or JD Software
together with other software, materials or products not integrated or combined
by JD, if the infringement would have been avoided in the absence of such
integration or combination; or (b) use or distribution of Palm Software or Palm
Materials. SECTION 12.3 STATES 3COM'S SOLE AND EXCLUSIVE REMEDY WITH RESPECT TO
CLAIMS OF INFRINGEMENT OF PROPRIETARY RIGHTS OF ANY KIND, AND ALL WARRANTIES OF
NONINFRINGEMENT, EXPRESS OR IMPLIED, ARE SPECIFICALLY DISCLAIMED AND EXCLUDED.

        12.4 Other Indemnity. Each party shall indemnify and defend the other
against all claims, suits, losses, expenses and liabilities (including
reasonable attorneys' fees) for bodily injury, personal injury, death and
tangible property damage as a result of the negligence, intentional wrongful
acts or omissions, or misrepresentations of the indemnifying party or any person
for whose actions it is legally liable, provided that the indemnifying party is
promptly notified, rendered reasonable assistance by the indemnified party as
required, and permitted to direct the defense or settlement negotiations.

13. CONFIDENTIALITY

        13.1 Confidential Information. Each party acknowledges that in the
course of the performance of this Agreement, it may obtain the Confidential
Information of the other party. The Receiving Party (as defined in Section 1.1
(Confidential Information)) shall, at all times,

* 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.

                                       15
<PAGE>   16

both during the term of this Agreement and thereafter for a period of three (3)
years keep in confidence and trust all of the Disclosing Party's (as defined in
Section 1.1 (Confidential Information)) Confidential Information received by it
(except for source code, which shall be kept in confidence and trust in
perpetuity). The Receiving Party shall not use the Confidential Information of
the Disclosing Party other than as expressly permitted under the terms of this
Agreement. The Receiving Party shall take reasonable steps to prevent
unauthorized disclosure or use of the Disclosing Party's Confidential
Information and to prevent it from falling into the public domain or into the
possession of unauthorized persons. The Receiving Party shall not disclose
Confidential Information of the Disclosing Party to any person or entity other
than its officers, employees, contractors, and consultants who need access to
such Confidential Information in order to effect the intent of this Agreement
and who have entered into confidentiality agreements which protect the
Confidential Information of the Disclosing Party sufficient to enable the
Receiving Party to comply with this Section 13.1 (Confidential Information). The
Receiving Party shall immediately give notice to the Disclosing Party of any
unauthorized use or disclosure of Disclosing Party's Confidential Information.
The Receiving Party agrees to assist the Disclosing Party to remedy such
unauthorized use or disclosure of its Confidential Information.

        13.2 Exceptions to Confidential Information. The obligations set forth
in Section 13.1 (Confidential Information) shall not apply to the extent that
Confidential Information includes information which is: (a) now or hereafter,
through no unauthorized act or failure to act on the Receiving Party's part, in
the public domain; (b) known to the Receiving Party without an obligation of
confidentiality at the time the Receiving Party receives the same from the
Disclosing Party, as evidenced by written records; (c) hereafter furnished to
the Receiving Party by a third party as a matter of right and without
restriction on disclosure; (d) furnished to others by the Disclosing Party
without restriction on disclosure; or (e) independently developed by the
Receiving Party without use of the Disclosing Party's Confidential Information.
Nothing in this Agreement shall prevent the Receiving Party from disclosing
Confidential Information to the extent the Receiving Party is legally compelled
to do so by any governmental investigative or judicial agency pursuant to
proceedings over which such agency has jurisdiction; provided, however, that
prior to any such disclosure, the Receiving Party shall (i) assert the
confidential nature of the Confidential Information to the agency; (ii)
immediately notify the Disclosing Party in writing of the agency's order or
request to disclose; and (iii) cooperate fully with the Disclosing Party in
protecting against any such disclosure and/or obtaining a protective order
narrowing the scope of the compelled disclosure and protecting its
confidentiality.

        13.3 Other Palm Software Source Code Restrictions. Except as permitted
in this Agreement, JD shall not use, make, have made, distribute or disclose any
copies of the source code of the Palm Software, in whole or in part, or the
information contained therein without the prior written authorization of 3Com.
JD shall inform its employees having access to such source code of JD's
limitations, duties and obligations regarding nondisclosure and copying of such
source code and shall obtain or have obtained their written agreement to comply
with such limitations, duties and obligations. JD shall maintain records of its
employees having access to such source code, and upon reasonable notice 3Com may
audit such records.

                                       16
<PAGE>   17

14. LIMITATION OF LIABILITY

        EXCEPT FOR LIABILITY FOR BREACH OF SECTION 13 (CONFIDENTIALITY) AND
EXCEPT AS SPECIFICALLY PROVIDED IN SECTION 12 (INDEMNIFICATION): (A) NEITHER
PARTY SHALL HAVE ANY LIABILITY FOR INCIDENTAL, CONSEQUENTIAL, INDIRECT, SPECIAL
OR PUNITIVE DAMAGES OF ANY KIND OR FOR LOSS OF REVENUE OR LOSS OF BUSINESS
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, REGARDLESS OF THE FORM OF
THE ACTION, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT PRODUCT
LIABILITY OR OTHERWISE, EVEN IF ANY REPRESENTATIVE OF A PARTY HERETO HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; AND (B) IN NO EVENT SHALL 3COM'S
LIABILITY UNDER THIS AGREEMENT EXCEED THE AMOUNTS PAID BY JD TO 3COM UNDER THIS
AGREEMENT.

15. EXPORT REGULATIONS

        Neither party shall export, directly or indirectly, any technical data
or software acquired under this Agreement or the direct product of any such
technical data or software to any country for which the United States Government
or any agency thereof, at the time of export, requires an export license or
other government approval, without first obtaining such license or approval.
With respect to any export transactions under this Agreement, both parties will
cooperate in any reasonable manner to effect compliance with all applicable
export regulations.

16. TERM AND TERMINATION

        16.1 Term. This Agreement shall be effective from the Effective Date for
a period of five (5) years ("Specified Term"), unless earlier terminated in
accordance with its terms. Thereafter, this Agreement may be renewed on its
anniversary dates for successive one (1) year terms if each party agrees to do
so by written notice to the other party no later than sixty (60) days prior to
any such anniversary date.

        16.2 Termination Due to Bankruptcy, etc. In the event a party: (i)
becomes insolvent; (ii) voluntarily files or has filed against it a petition
under applicable bankruptcy or insolvency laws which such party fails to have
released within thirty (30) days after filing; (iii) proposes any dissolution,
composition or financial reorganization with creditors or if a receiver,
trustee, custodian or similar agent is appointed or takes possession with
respect to all or substantially all property or business of such party; or (iv)
such party makes a general assignment for the benefit of creditors, the other
party may terminate this Agreement by giving a termination notice, which
termination shall become effective ten (10) days after mailing.

        16.3 Right to Terminate; [*] Termination.

             (a) Either party shall have the right to terminate this Agreement
if the other party is in material breach of any term or condition of this
Agreement and fails to remedy such

* 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.

                                       17
<PAGE>   18

breach within thirty (30) days after receipt of written notice of such breach
given by the nonbreaching party.

             (b) 3Com's obligations and JD's rights under Section 9 [*] shall
terminate if there is a material change in the ownership or control of JD such
that more than twenty percent (20%) or more of the voting equity stock of JD is
owned and/or controlled (directly or indirectly) by one or more Competitors.
"Competitor" means any entity or entities that develops, manufactures, markets,
and/or distributes handheld operating systems software that is licensed to third
parties on a stand-alone basis.

        16.4 Effect of Termination. Upon the termination or expiration of this
Agreement: (i) the licenses and other provisions of this Agreement shall be
terminated and JD shall discontinue the use, manufacture, reproduction,
distribution and sublicensing of the JD Products, Palm Software, Palm Materials
and 3Com trademarks, except as specified in this Section 16; (ii) JD's
obligation to pay all sums due hereunder shall be accelerated and all such sums
shall be due and payable within forty-five (45) days of the end of the calendar
quarter in which the date of termination or expiration occurred; and (iii) the
Receiving Party shall, within fifteen (15) days of receipt of a written request
by the Disclosing Party to do so, return to the Disclosing Party or destroy all
full or partial copies, in whatever media, of any and all confidential materials
in the Receiving Party's possession which had been furnished to the Receiving
Party by the Disclosing Party pursuant to this Agreement, and the Receiving
Party shall warrant in writing to the Disclosing Party within thirty (30) days
after termination or expiration that all such materials have been returned to
the Disclosing Party or destroyed. In addition, upon any expiration or
termination (other than for JD's breach), JD may elect to retain the licenses
specified in Section 2 for two (2) years following such expiration or
termination for the versions of the Palm Software and the Palm Materials that
have been delivered to JD prior to such expiration or termination, on the
following terms: (a) the Royalty rates specified in Exhibit E will be [*]; (b)
3Com's obligations under Sections 6, 7 and 9, and JD's obligations under Section
4.2, will [*]; and (c) the remaining provisions of this Agreement will remain in
effect with regard to the JD Products for such two-year period.

        16.5 Survival. Neither the termination or expiration of this Agreement
shall relieve either party from its obligations to pay the other any sums
accrued hereunder. The parties agree that their respective rights, obligations
and duties under Sections 4 (Royalties, Fees and Reports), 5.4 (Taxes), 8.2
(Publicity), 10 (Proprietary Rights), 11 (Warranty), 12 (Indemnification), 13
(Confidentiality), 14 (Limitation of Liability), 15 (Export Regulations), 16
(Term and Termination) and 17 (Miscellaneous), as well as any rights,
obligations and duties which by their nature extend beyond the termination or
expiration of this Agreement shall survive any termination or expiration and
remain in effect for a period of three (3) years thereafter or the period
specified in this Agreement, if longer.

17. MISCELLANEOUS

        17.1 Notices. Any notice provided for or permitted under this Agreement
will be treated as having been given when (a) delivered personally, (b) sent by
confirmed telex or fax, (c)

* 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.

                                       18
<PAGE>   19

sent by commercial overnight courier with written verification of receipt, or
(d) mailed postage prepaid by certified or registered mail, return receipt
requested, to the party to be notified, at the address set forth below, or at
such other place of which the other party has been notified in accordance with
the provisions of this Section 17.1 (Notices).

     If to 3Com:     Palm Computing, Inc.,
                     a subsidiary of 3Com Corporation
                     1565 Charleston Road
                     Mountain View, CA 94043
                     Attention: Vice President Strategic Alliances and Platform
                            Development
                     Fax: (650) 968-9791

     with copies to: 3Com Corporation
                     5400 Bayfront Plaza
                     Santa Clara, CA 95052
                     Attention: General Counsel
                     Fax: (408) 326-6434

     If to JD:       JD Technology, Inc.
                     P.O. Box 7066
                     Menlo Park, CA 94026
                     Attention: Donna Dubinsky
                     Fax: (650) 470-0943

Such notice will be treated as having been received upon the earlier of actual
receipt or five (5) days after posting.

        17.2 Amendment: Waiver. This Agreement may be amended or supplemented
only by a writing that is signed by duly authorized representatives of both
parties. No term or provision hereof will be considered waived by either party,
and no breach excused by either party, unless such waiver or consent is in
writing signed on behalf of the party against whom the waiver is asserted. No
consent by either party to, or waiver, of, a breach by either party, whether
express or implied, will constitute a consent to, waiver of, or excuse of any
other, different, or subsequent breach by either party.

        17.3 Severability. If any provision of this Agreement is held invalid or
unenforceable for any reason, the remainder of the provision shall be amended to
achieve as closely as possible the economic effect of the original term and all
other provision shall continue in full force and effect.

        17.4 Governing Law. This Agreement shall be governed by and construed
under the laws of the United States and the State of California as applied to
agreements entered into and to be performed entirely within California between
California residents. The parties agree that the

                                       19
<PAGE>   20

United Nations Convention on Contracts for the International Sale of Goods is
specifically excluded from application to this Agreement.

        17.5 Choice of Forum. The parties hereby submit to the jurisdiction of,
and waive any venue objections against, the United States District Court for the
Northern District of California, San Jose Branch and the Superior and Municipal
Courts of the State of California, Santa Clara County, in any litigation arising
out of the Agreement.

        17.6 Injunctive Relief. The copying, disclosure, or use of the Palm
Software in a manner inconsistent with any provision of this Agreement may cause
irreparable injury to 3Com for which 3Com may not have an adequate remedy at
law. 3Com may be entitled to equitable relief in court, including but not
limited to temporary restraining orders, preliminary injunctions and permanent
injunctions.

        17.7 Attorneys' Fees. In any action to enforce this Agreement, the
prevailing party shall be awarded all court costs and reasonable attorneys' fees
incurred, including such costs and attorneys' fees incurred in enforcing and
collecting any judgment.

        17.8 Force Majeure. Except for the payment of money, neither party will
be liable for any failure or delay in performance under this Agreement due to
fire, explosion, earthquake, storm, flood or other weather, unavailability of
necessary utilities or raw materials, war, insurrection, riot, act of God or the
public enemy, law, act, order, proclamation, decree, regulation, ordinance, or
instructions of Government or other public authorities, or judgment or decree of
a court of competent jurisdiction (not arising out of breach by such party of
this Agreement) or any other event beyond the reasonable control of the party
whose performance is to be excused.

        17.9 Assignment. 3Com may assign this Agreement without restriction,
provided the assignee agrees in writing to be bound by the terms of this
Agreement. JD may not assign this Agreement, whether by operation of law or
otherwise, without the prior written consent of 3Com, except after one year from
the Effective Date to a purchaser of substantially all the stock or assets of JD
who: (i) agrees in writing to be bound by the terms of this Agreement; (ii) is
not a Competitor (as defined in Section 16.3(b)); and (iii) uses the Palm
Software under this Agreement solely in the JD Products of JD Technology, Inc.
or its successor operations within such purchaser; and any attempt to do so
without such consent will be void. This Agreement will bind and inure to the
benefit of the parties and their respective successors and permitted assigns.

        17.10 Relationship of the Parties. The parties to this Agreement are
independent contractors. There is no relationship of agency, partnership, joint
venture, employment, or franchise between the parties. Neither party has the
authority to bind the other or to incur any obligation on its behalf.

        17.11 Allocation of Risk. The sections on limitation of liability,
warranties and disclaimer of warranties allocate the risks in the Agreement
between the parties. This allocation is an essential element of the basis of the
bargain between the parties.

                                       20
<PAGE>   21

        17.12 Construction of Agreement. This Agreement has been negotiated by
the respective parties hereto and their attorneys and the language hereof shall
not be construed for or against any party. The titles and headings herein are
for reference purposes only and shall not in any manner limit the construction
of this Agreement, which shall be considered as a whole.

        17.13 Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed an original, but both of which together shall
constitute one and the same instrument. If this Agreement is executed in
counterparts, no signatory hereto shall be bound until both the parties named
below have duly executed or caused to be duly executed a counterpart of this
Agreement.

        17.14 Entire Agreement. This Agreement, including all Exhibits to this
Agreement, constitutes the entire agreement between the parties relating to this
subject matter and supersedes all prior or simultaneous representations,
discussions, negotiations, and agreements, whether written or oral.

        IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the dates set forth below effective as of the Effective Date.

PALM COMPUTING, INC.                    JD TECHNOLOGY, INC.
a subsidiary of 3Com Corporation

By:      /s/ Janice M. Roberts          By:     /s/ Donna L. Dubinsky
   --------------------------------        --------------------------------

Name:       Janice M. Roberts           Name:        Donna L. Dubinsky
     ------------------------------          ------------------------------

Title:  SV President                    Title:         CEO
      -----------------------------           -----------------------------

Date:          9/24/98                  Date:          9/18/98
     ------------------------------          ------------------------------

<TABLE>
<CAPTION>
List of Exhibits
----------------
<S>     <C>
A       Palm Software
B       Test Criteria
C       3Com Trademark Policy Guidelines
D       Third Party Components
E       Royalties and Fees
F       3Com Support Services
G       Minimum Terms and Conditions of End User License
</TABLE>

                                       21
<PAGE>   22

                                    EXHIBIT A

                                  PALM SOFTWARE

                                      [*]

* 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.

                                       22
<PAGE>   23
                                      [*]

* 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.

                                       23
<PAGE>   24

                                    EXHIBIT B

                                  TEST CRITERIA

                                      [*]

* 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.

                                       24
<PAGE>   25

                                    EXHIBIT C

                        3COM TRADEMARK POLICY GUIDELINES

                                [to be attached]

                                       25
<PAGE>   26

                                    EXHIBIT D

                             THIRD PARTY COMPONENTS

[*] contained in the current [*] product and in 3Com's first shipped [*]
product.

* 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.

                                       26
<PAGE>   27

                                    EXHIBIT E

                               ROYALTIES AND FEES

                                      [*]

* 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.

                                       27
<PAGE>   28

                                    EXHIBIT F

3COM SUPPORT SERVICES 1. Definitions.

"Severity One" Support is defined as-support required to address a fatal program
error in the Palm Software which has a critical business impact and precludes
significant useful work from being done or, significantly precludes developer
and/or end-user operations.

"Severity Two" Support is defined as support required to address a program error
in the Palm Software which has a significant business impact where important
features are unavailable with no acceptable workaround and development
operations are seriously impaired.

"Severity Three" Support is defined as support required to address a program
error in the Palm Software with some business impact, such as important features
unavailable but a workaround is available or less significant features are
unavailable with no reasonable workaround.

2. Support Response Times. The parties shall promptly agree in good faith to
share any information and/or documentation which may be required to permit 3Com
to identify and resolve any development support requests. The support response
period begins after 3Com (a) has enough information to profile the reported
error and (b) can recreate the reported error or has access to a facility where
the error can be recreated ("Start Date"). 3Com agrees to use commercially
reasonable efforts to recreate the reported error and respond based on the
following timetable:

        "Severity One" Support. 3Com shall use reasonable commercial efforts to
resolve or reduce the severity via workaround and/or patch within two (2)
business days of the Start Date, or if unable to resolve such problem within
such timeframe, 3Com shall provide its action plan within such timeframe and
provide regular status updates. A final resolution shall be identified in the
action plan. 3Com and JD problem managers shall review incident after two (2)
business days and every two (2) business days thereafter until the error has
been resolved.

        "Severity Two" Support. 3Com shall use reasonable commercial efforts to
resolve or reduce the severity via workaround and/or patch within five (5)
business days of the Start Date, or if unable to resolve such problem within
such timeframe, 3Com shall provide its action plan within such timeframe and
provide regular status updates. 3Com and JD problem managers shall review
incident after five (5) business days. A final engineering resolution shall be
identified in the action plan.

        "Severity Three" Support. 3Com shall use reasonable commercial efforts
to acknowledge the error within ten (10) business days of receipt of notice.
3Com shall provide a final engineering resolution within three (3) months or
next scheduled release, whichever is sooner.

        So long as 3Com is using reasonable commercial efforts to recreate
reported errors and resolve or reduce Severity One and Severity Two problems in
accordance with the action plan provided, 3Com's inability to resolve such
problems within the timeframes stated herein or the action plan shall not be
deemed a material breach of Section 6.1 the Agreement. The prescribed support
response times above may be extended as mutually agreed, such agreement not to
be unreasonably withheld, e.g., if resolution of the problem requires timely
hardware certification or test, or if resolution represents significant risk to
the essential functions. Any support requests that are attributable to any
matters other than errors in the unmodified Palm Software provided by 3Com to JD
hereunder are subject to billing at 3Com's standard time and materials rates.

        3. Support Evaluation. The parties will attempt in good faith to
promptly resolve any controversy or claim relating to performance of the
technical support assistance provided by 3Com under this Agreement. Each party
may request the other party to involve appropriate senior executives of such
other party who shall have the authority to resolve the matter.

                                       28
<PAGE>   29

                                    EXHIBIT G

                MINIMUM TERMS AND CONDITIONS OF END USER LICENSE

        1. JD Technology, Inc. ("JD") grants the end user ("End User") a
nonexclusive license to use the software accompanying the JD Product
("Software"). With respect to the JD Product Desktop Software, End User may
reproduce and provide one (1) copy of such Software for each personal computer
or JD Product on which such Software is used as permitted hereunder. With
respect to the JD Product Device Software, End User may use such Software only
on one (1) JD Product. End User may assign its right under the End User License
Agreement to an assignee of all of End User's rights and interest to the
Software only if End User transfers all copies of the Software subject to the
End User License Agreement to such assignee and such assignee agrees in writing
to be bound by all the terms and conditions of the End User License Agreement.

        2. End User agrees not to reverse engineer, decompile or disassemble the
Software. End User will not copy the Software except as necessary to use it in
accordance with this End User License Agreement. End User agrees that any such
copies of the Software shall contain the same proprietary notices which appear
on and in the original copy of the Software.

        3. Except as stated above, the End User License Agreement does not grant
End User any rights (whether by license, ownership or otherwise) in or to
intellectual property with respect to the Software.

        4. End User will not export or re-export the Software without all
appropriate United States and other foreign government licenses.

        5. Title to and ownership of the Software and any copy thereof shall
remain with JD and its suppliers.

        6. If the Software is licensed for a proposal or agreement with the
United States Government or any contractor therefor, the Software must be
legended, marked and licensed as described in Section 10.3 of the Agreement.

                                       29
<PAGE>   30

                                 AMENDMENT NO. 1
                                       TO
                           SOFTWARE LICENSE AGREEMENT

        This Amendment No. 1 ("Amendment") is entered into by and between Palm
Computing, Inc., a subsidiary of 3Com Corporation (collectively, "3Com"), a
California corporation with a place of business at 1565 Charleston Road,
Mountain View, California 94043, and Handspring, Inc. ("Licensee"), a California
corporation with a place of business at 299 California Avenue, Palo Alto,
California 94306. The effective date of this Amendment shall be September 24,
1998 ("Effective Date").

                                    RECITALS

        A. Effective as of September 24, 1998, 3Com and Licensee entered into a
Software License Agreement ("License Agreement"; capitalized terms used herein
and not defined shall have the meanings set forth in the License Agreement) with
regard to Licensee's developing, manufacturing and marketing handheld computing
products incorporating specified 3Com software and technology related to the
3Com Palm Computing platform.

        B. Following the effective date of the License Agreement, Licensee
changed its corporate name from "JD Technology, Inc." to "Handspring, Inc."

        C. Licensee has received, and hopes to receive in the future, from 3Com
certain source code for the Palm Software so that Licensee may examine such
source code to assist Licensee in developing products within the scope of the
License Agreement.

        D. 3Com is willing to provide such source code to Licensee as specified
in this Amendment pursuant to the terms and conditions of the License Agreement.

                                    AGREEMENT

        NOW, THEREFORE, the parties hereby amend the License Agreement as
follows:

1 SOURCE CODE DELIVERABLES. The following is added to Section 3 of the License
Agreement:

        "3.3 Delivery of Palm Source Code. 3Com has provided, and may at its
sole option from time to time elect to provide, JD with certain source code for
certain Palm Software ("Palm Source Code".)"

        "3.4 Delivery of Palm Source Code Documentation. 3Com may, at its
option, from time to time elect to provide JD with technical documentation
relating to the Palm Source Code ("Palm Source Code Documentation")."

                                       1
<PAGE>   31

2. LICENSES. The following is added to Section 2 of the License Agreement:

        "2.9 Source Code License.

             (a) Right to Use. Subject to the terms and conditions of this
Agreement, 3Com hereby grants to JD a limited, non-exclusive, non-transferable,
fully-paid license to examine the Palm Source Code and the Palm Source Code
Documentation for the sole purpose of assisting JD in developing JD Products
within the scope of the License Agreement and to reproduce no more than three
(3) copies of the Palm Source Code and Palm Source Code Documentation.

             (b) Limitations of License. JD shall not have the right to: (i)
sublicense any of its rights under this Section 2.9 to any third party; (ii)
incorporate any Palm Source Code or Palm Source Code Documentation in any
technology or products of JD or of any third party; (iii) disclose any Palm
Source Code or Palm Source Code Documentation to any third party; (iv) use or
reproduce any Palm Source Code or Palm Source Code Documentation other than as
permitted by subsection (a) above; or (iv) modify or distribute any Palm Source
Code or Palm Source Code Documentation in any manner.

             (c) Inspection Rights. 3Com shall have the right, upon reasonable
advance notice, to inspect JD's records and facilities with respect to the use
of the Palm Source Code and Palm Source Code Documentation in order to verify
that such use is within the scope of this Agreement, and that there are
appropriate security procedures in place to protect the Palm Source Code and
Palm Source Code Documentation (including, but not limited to, the procedures
set forth in Section 13.3 below).

             (d) No Other Licenses. The licenses granted under this Section 2.9
are specifically set forth herein, and no licenses are granted by 3Com to JD by
implication or estoppel to the Palm Source Code or Palm Source Code
Documentation."

3 SUPPORT. The following is added to Section 7 of the License Agreement:

        "7.5 Source Code Support. 3Com shall have no obligation to provide JD
with any support or maintenance of any kind for the Palm Source Code or Palm
Source Code Documentation at any time."

4 PROPRIETARY RIGHTS. The following is added to Section 10 of the License
Agreement:

        "10.5 Source Code. JD acknowledges that the Palm Source Code and Palm
Source Code Documentation are the valuable trade secrets and Confidential
Information of 3Com. 3Com shall be the sole and exclusive owner of the Palm
Source Code and Palm Source Code Documentation. JD agrees that it will not
remove, alter or otherwise obscure any proprietary rights notices appearing in
the Palm Source Code or Palm Source Code Documentation."

                                       2
<PAGE>   32

5 WARRANTY. The following is added to Section 11 of the License Agreement:

        "11.4 Source Code Warranty Disclaimer. 3COM MAKES NO WARRANTIES,
EXPRESS, IMPLIED OR STATUTORY, WHATSOEVER AS TO THE PALM SOURCE CODE OR PALM
SOURCE CODE DOCUMENTATION. IN PARTICULAR, ANY AND ALL WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT, AND YEAR
2000 COMPLIANCE THEREFOR ARE EXPRESSLY EXCLUDED."

6 CONFIDENTIALITY. The following is added to the end of Section 13.3 of the
License Agreement after the period:

        "In the event that 3Com provides JD with a copy of the [*] (the [*])
which contains all, substantially all or a significant portion of the Palm
Software in source code form, JD agrees to the following additional obligations
with respect to the [*] notwithstanding any other provision of this Agreement:
(i) JD shall only be entitled to use two (2) copies of the [*], (ii) JD shall
not make any additional copies of the [*], (iii) JD shall only use the [*] on
two (2) PC's at any one time, (iv) the following named individuals shall be the
only persons permitted to use or access the [*]: [*], and [*], (v) each copy of
the [*] shall be kept in a locked room or file cabinet when not in use, and (vi)
use of the [*] shall be password protected. JD shall have the right to change
the named individuals upon fifteen (15) days written notice to 3Com. Except as
otherwise set forth in this Section 13.3, the provisions of this Agreement that
apply to the Palm Source Code shall apply to the source code contained in the
[*]."

6 INJUNCTIVE RELIEF. The following is added to Section 17 of the License
Agreement:

        "17.15 Injunctive Relief. The copying, disclosure, or use of the Palm
Source Code or Palm Source Code Documentation in a manner inconsistent with any
provision of this Agreement will cause irreparable injury to 3Com for which 3Com
will not have an adequate remedy at law. 3Com will be entitled to equitable
relief in court, including but not limited to temporary restraining orders,
preliminary injunctions and permanent injunctions."

7 ENTIRE AGREEMENT. The parties agree that this Amendment constitutes the entire
agreement between the parties relating to its subject matter and supersedes all
prior or simultaneous representations, discussions, negotiations, and
agreements, whether written or oral; provided, however, that the License
Agreement, except as modified by this Amendment, remains in full force and
effect. The parties acknowledge that the terms and conditions of the License
Agreement, including but not limited to Sections 2.8 (Limitations on Scope of
Agreement), 8.2 (Publicity), 13 (Confidentiality), 14 (Limitation of Liability),
15 (Export Regulations), and 16.5 (Survival) of the License Agreement, will
apply to the Palm Source Code or Palm Source Code Documentation.

* 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.

                                       3
<PAGE>   33

IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the dates
set forth below effective as of the Effective Date.

PALM COMPUTING, INC.,                  HANDSPRING, INC.
a subsidiary of 3Com Corporation

By:          /s/ Mark Bercow           By:          /s/  Donna Dubinsky
   --------------------------------       ---------------------------------
Name:        Mark Bercow               Name:        Donna Dubinsky
     ------------------------------         -------------------------------
Title:     VP                          Title:         CEO
      -----------------------------          ------------------------------
Date:         1/14/99                  Date:          1/8/99
     ------------------------------         -------------------------------

                                       4
<PAGE>   34

                                 AMENDMENT NO. 2
                                       TO
                           SOFTWARE LICENSE AGREEMENT

        This Amendment No. 2 ("Amendment") is entered into by and between Palm
Computing, Inc., a subsidiary of 3Com Corporation (collectively, "3Com"), a
California corporation with a place of business at 5400 Bayfront Plaza,
California 95052, and Handspring, Inc. ("Licensee"), a California corporation
with a place of business at 299 California Avenue, Palo Alto, California 94306.
The effective date of this Amendment shall be March 9, 1999 ("Effective Date").

                                    RECITALS

        A. Effective as of September 24, 1998, 3Com and Licensee entered into a
Software License Agreement, as amended ("License Agreement"; capitalized terms
used herein and not defined shall have the meanings set forth in the License
Agreement) with regard to Licensee's developing, manufacturing and marketing
handheld computing products incorporating specified 3Com software and technology
related to the 3Com Palm Computing platform.

        B. Licensee has received, and hopes to receive in the future, from 3Com
certain source code for the Palm Software so that Licensee may modify certain
portions of such source code as specified in this Amendment pursuant to the
terms and conditions of the License Agreement.

                                    AGREEMENT

        NOW, THEREFORE, the parties hereby amend the License Agreement as
follows:

        1 DEFINITION. Each reference in the License Agreement to "JD" shall be
deleted and replaced with the word "Licensee."

        2 SOURCE CODE MODIFICATION. The following is added to Section 2 of the
License Agreement:

        "2.10 Source Code Modification License. Subject to the terms and
conditions of this Agreement, 3Com hereby grants to Licensee a limited,
non-exclusive, non-transferable (subject to Section 17.9), fully-paid license to
(i) modify those portions of the Palm Source Code as identified in an Attachment
hereto (the "Modifiable Source Code") but only for the limited purpose(s) set
forth in such Attachment with respect to such Modifiable Code, and (ii) use,
reproduce and distribute such modifications (the "Modifications") in object code
form to the same extent as Licensee is permitted to do so with respect to
Derivative Works pursuant to Section 2.2 above. For each set of Modifiable Code,
the parties shall execute separate sequentially numbered Attachments (e.g.
Attachment No. 1, Attachment No. 2, etc.). Licensee shall have no right to (a)
sublicense the rights granted in subsection (i) above to any third party, (b)
modify any Palm Source Code other than the Modifiable Source Code, or (c) modify
the Modifiable Source Code for any purpose other than as expressly set forth in
the applicable

                                       1
<PAGE>   35

Attachment. The licenses granted under this Section 2.10 are specifically set
forth herein, and no licenses are granted by 3Com to Licensee by implication or
estoppel to the Modifiable Source Code."

3 OWNERSHIP. The following is added to the end of Section 10.1 of the License
Agreement:

        "Subject always to 3Com's ownership of the Palm Software and the
restrictions set forth in Section 2 above, Licensee shall be the sole and
exclusive owner of the Modifications and the Modifications shall be deemed
"Licensee Software" for purposes of this Agreement. Licensee agrees to provide
3Com, upon 3Com's request, copies of all Modifications. Licensee hereby grants
to 3Com a worldwide, nonexclusive, fully paid, royalty free, perpetual and
irrevocable license to use, reproduce, modify, display and distribute the
Modifications in source code and/or executable form, including the right to
sublicense such rights through single or multiple tiers of distribution."

4 TERMINATION. Except as expressly provided in this Section 4, this Amendment,
and all rights and obligations under this Amendment, shall terminate and be of
no further force or effect if there is a material change in the ownership or
control of Licensee such that more than twenty percent (20%) or more of the
voting equity stock of Licensee is owned and/or controlled (directly or
indirectly) by one or more Competitors. In the event of such termination,
Licensee shall promptly (i) cease all modification of the Palm Source Code, (ii)
return all Modifiable Source Code to the extent such source code has not
previously been provided to Licensee under Amendment No. l to the License
Agreement, including, but not limited to, all copies thereof in whole and in
part, to 3Com, and (iii) destroy all copies thereof, in whole and in part,
residing within any computers in Licensee's control. Notwithstanding the
foregoing, in the event of termination of this Amendment pursuant to this
Section 4, in no event shall such termination affect Licensee's rights to
reproduce and distribute in object code form Modifications existing as of the
effective date of such termination pursuant to Section 2.10(ii).

5 ENTIRE AGREEMENT. The parties agree that this Amendment and any Attachments
made effective pursuant to this Agreement constitute the entire agreement
between the parties relating to its subject matter and supersedes all prior or
simultaneous representations, discussions, negotiations, and agreements, whether
written or oral; provided, however, that the License Agreement, except as
modified by this Amendment, remains in full force and effect.

                                       2
<PAGE>   36

        IN WITNESS WHEREOF, the parties hereto have executed this Amendment on
the dates set forth below effective as of the Effective Date.

PALM COMPUTING, INC.,                  HANDSPRING, INC.
a subsidiary of 3Com Corporation

By:          /s/ Mark Bercow           By:              /s/ Donna Dubinsky
   --------------------------------       ---------------------------------
Name:             Mark Bercow          Name:                Donna Dubinsky
     ------------------------------         -------------------------------
Title:                    VP           Title:               CEO
      -----------------------------          ------------------------------

                                       3
<PAGE>   37

                                ATTACHMENT NO. 1

This Attachment No. 1 is an attachment to Amendment No.2 to the Software License
Agreement between Palm Computing, Inc., a subsidiary of 3Com Corporation and
Handspring, Inc.

[*]

[*]

PALM COMPUTING, INC.,                  HANDSPRING, INC.
a subsidiary of 3Com Corporation

By:    /s/ Gabriel Aroste-Lopez        By:       /s/ Donna Dubinsky
   --------------------------------       ---------------------------------
Name:  Gabriel Aroste-Lopez            Name:        Donna Dubinsky
     ------------------------------         -------------------------------
Title: Director Platform Development   Title:       CEO
       Services
      -----------------------------          ------------------------------
Date:        3-16-99                   Date:           3/9/99
     ------------------------------         -------------------------------

* 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.

                                       4
<PAGE>   38

                                ATTACHMENT NO. 2

This Attachment No.2 is an attachment to Amendment No.2 to the Software License
Agreement between Palm Computing, Inc., a subsidiary of 3Com Corporation and
Handspring, Inc.

[*]

[*]

AMENDMENT TO AMENDMENT NO.2: For purposes of this Attachment No.2 only, the
following two sentences are deleted from Section 3 of Amendment No.2 with
respect to Modifications made by Licensee pursuant to this Attachment No.2:

        "Licensee agrees to provide 3Com, upon 3Com's request, copies of all
        Modifications. Licensee hereby grants to 3Com a worldwide, nonexclusive,
        fully paid, royalty free, perpetual and irrevocable license to use,
        reproduce, modify, display and distribute the Modifications in source
        code and/or executable form, including the right to sublicense such
        rights through single or multiple tiers of distribution."

Except as modified by this Attachment No.2 with respect to this Attachment No.2,
Amendment No.2 shall remain in full force and effect.

PALM COMPUTING, INC.,                 HANDSPRING, INC.
a subsidiary of 3Com Corporation

By:              /s/ Mark Bercow      By:             /s/ Donna Dubinsky
   --------------------------------      ----------------------------------
Name:             Mark Bercow         Name:               Donna Dubinsky
     ------------------------------        --------------------------------
Title:         VP                     Title:          CEO
      -----------------------------         -------------------------------
Date:          3/9/99                 Date:              3/9/99
     ------------------------------        --------------------------------

* 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.

                                       5
<PAGE>   39

                                ATTACHMENT NO. 3

This Attachment No.3 is an attachment to Amendment No.2 to the Software License
Agreement between Palm Computing, Inc., a subsidiary of 3Com Corporation and
Handspring, Inc.

[*]

[*]

AMENDMENT TO AMENDMENT NO.2: For purposes of this Attachment No.3 only, the
following two sentences are deleted from Section 3 of Amendment No.2 with
respect to Modifications made by Licensee pursuant to this Attachment No.3:

        "Licensee agrees to provide 3Com, upon 3Com's request, copies of all
        Modifications. Licensee hereby grants to 3Com a worldwide, nonexclusive,
        fully paid, royalty free, perpetual and irrevocable license to use,
        reproduce, modify, display and distribute the Modifications in source
        code and/or executable form, including the right to sublicense such
        rights through single or multiple tiers of distribution."

Except as modified by this Attachment No.3 with respect to this Attachment No.3,
Amendment No.2 shall remain in full force and effect.

PALM COMPUTING, INC.,                HANDSPRING, INC.
a subsidiary of 3Com Corporation

By:            /s/ Mark Bercow       By:          /s/ Donna Dubinsky
   --------------------------------     -----------------------------------
Name:            Mark Bercow         Name:          Donna Dubinsky
     ------------------------------       ---------------------------------
Title:            VP                 Title:            CEO
      -----------------------------        --------------------------------
Date:             4/28/99            Date:                 3/25/99
     ------------------------------       ---------------------------------

* 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>   40

                                 AMENDMENT NO. 3
                                       TO
                           SOFTWARE LICENSE AGREEMENT

        This Amendment No. 3 ("Amendment") is entered into by and between Palm
Computing, Inc., a subsidiary of 3Com Corporation (collectively, "3Com"), a
California corporation with a place of business at 5400 Bayfront Plaza, Santa
Clara, California 95052, and Handspring, Inc. ("Licensee"), a California
corporation with a place of business at 299 California Avenue, Palo Alto,
California 94306. The effective date of this Amendment shall be 4/8, 1999
("Effective Date").

                                    RECITALS

        A. Effective as of September 24, 1998, 3Com and Licensee entered into a
Software License Agreement, as amended ("License Agreement"; capitalized terms
used herein and not defined shall have the meanings set forth in the License
Agreement) with regard to Licensee's developing, manufacturing and marketing
handheld computing products incorporating specified 3Com software and technology
related to the 3Com Palm Computing platform.

        B. The parties desire to amend the License Agreement as set forth in
this Amendment.

The parties hereby amend the License Agreement as follows:

1 CONFIDENTIALITY. The following phrases are deleted from Section 13.3 of the
License Agreement:

        "(iv) the following named individuals shall be the only persons
permitted to use or access the [*]: [*] and [*]"

        "Licensee shall have the right to change the named individuals upon
fifteen (15) days written notice to 3Com."

2 ENTIRE AGREEMENT. The parties agree that this Amendment constitutes the entire
agreement between the parties relating to its subject matter and supersedes all
prior or simultaneous representations, discussions, negotiations, and
agreements, whether written or oral; provided, however, that the License
Agreement, except as modified by this Amendment, remains in full force and
effect.

* 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.

                                       1
<PAGE>   41

        IN WITNESS WHEREOF, the parties hereto have executed this Amendment on
the dates set forth below effective as of the Effective Date.

PALM COMPUTING, INC.,                HANDSPRING, INC.
a subsidiary of 3Com Corporation

By:         /s/ Mark Bercow          By:         /s/ Donna Dubinsky
   --------------------------------     -----------------------------------
Name:           Mark Bercow          Name:          Donna Dubinsky
     ------------------------------       ---------------------------------
Title:         VP                    Title:         CEO
      -----------------------------        --------------------------------
Date:            4/28/99             Date:             4/8/99
     ------------------------------       ---------------------------------

                                       2
<PAGE>   42

                                 AMENDMENT NO. 4
                                       TO
                           SOFTWARE LICENSE AGREEMENT

        This Amendment No. 4 ("Amendment") is entered into by and between Palm
Computing, Inc., a subsidiary of 3Com Corporation (collectively, "3Com"), a
California corporation with a place of business .at 5400 Bayfront Plaza, Santa
Clara, California 95052, and Handspring, Inc. ("Licensee"), a California
corporation with a place of business at 299 California Avenue, Palo Alto,
California 94306. The effective date of this Amendment shall be _______________,
1999 ("Effective Date").

                                    RECITALS

        A. Effective as of September 24, 1998, 3Com and Licensee entered into a
Software License Agreement, as amended ("License Agreement"; capitalized terms
used herein and not defined shall have the meanings set forth in the License
Agreement) with regard to Licensee's developing, manufacturing and marketing
handheld computing products incorporating specified 3Com software and technology
related to the 3Com Palm Computing platform.

        B. The parties desire to amend the License Agreement as set forth in
this Amendment.

The parties hereby amend the License Agreement as follows:

1 CONFIDENTIALITY. The last two sentences of 13.3 of the License Agreement are
deleted in their entirety and restated as follows:

        "In the event that 3Com, from time to time, provides Licensee with a
copy of one or more CDs which contain all, substantially all or a significant
portion of the Palm Software in source code form, including any updates,
upgrades or new versions thereof (the "Palm Software CD"), Licensee agrees to
the following additional obligations with respect to the Palm Software CD
notwithstanding any other provision of this Agreement: (i) Licensee shall only
be entitled to use two (2) copies of the Palm Software CD, (ii) Licensee shall
not make any additional copies of the Palm Software CD, (iii) Licensee shall
only use the Palm Software CD on two (2) PC's at any one time, (iv) each copy of
the Palm Software CD shall be kept in a locked room or file cabinet when not in
use, and (v) use of the Palm Software shall be password protected. Except as
otherwise set forth in this Section 13.3, the provisions of this Agreement that
apply to the Palm Source Code shall apply to the source code contained in the
Palm Software CD."

2 ENTIRE AGREEMENT. The parties agree that this Amendment constitutes the entire
agreement between the parties relating to its subject matter and supersedes all
prior or simultaneous representations, discussions, negotiations, and
agreements, whether written or oral; provided, however, that the License
Agreement, except as modified by this Amendment, remains in full, force and
effect.

                                       1
<PAGE>   43

        IN WITNESS WHEREOF, the parties hereto have executed this Amendment on
the dates set forth below effective as of the Effective Date.

PALM COMPUTING, INC.,                 HANDSPRING, INC.
a subsidiary of 3Com Corporation

By:       /s/ Daniel S. Keller        By:       /s/ Donna Dubinsky
   --------------------------------      ----------------------------------
Name:        Daniel S. Keller         Name:       Donna Dubinsky
     ------------------------------        --------------------------------
Title:    VP, Platform Engineering    Title:       CEO
      -----------------------------         -------------------------------
Date:         12/9/99                 Date:          12/8/99
     ------------------------------        --------------------------------

                                       2<PAGE>   1
                                                                    EXHIBIT 10.8

                    SUBORDINATED LOAN AND SECURITY AGREEMENT

        THIS AGREEMENT (the "Agreement"), dated as of June 10, 1999, is entered
into by and between Handspring, Inc., a California corporation, with its chief
executive office and principal place of business located at 299 California
Avenue, Suite 300, Palo Alto, CA 94306 (the "Borrower") and Comdisco, Inc., a
Delaware corporation, with its principal place of business located at 6111 North
River Road, Rosemont, Illinois 60018 (the "Lender" or sometimes, "Comdisco"). In
consideration of the mutual agreements contained herein, the parties hereto
agree as follows:

                                    RECITALS

        WHEREAS, Borrower has requested Lender to make available to Borrower a
loan or loans up to an aggregate principal amount of SIX MILLION DOLLARS
($6,000,000) (as the same may from time to time be amended, modified,
supplemented or restated, individually or collectively referred to as the
"Loan(s)"), which would be evidenced by Subordinated Promissory Note(s) executed
by Borrower substantially in the form of EXHIBIT A hereto (as the same may from
time to time be amended, modified, supplemented or restated, the "Note(s)");

        WHEREAS, Lender is willing to make the Loan(s) on the terms and
conditions set forth in this Agreement;

        WHEREAS, Lender and Borrower agree any Loan(s) hereunder shall be
subordinate to Senior Debt (as defined herein) to the extent set forth in the
Subordination Agreement (as defined herein); and

        WHEREAS, Borrower has also given Lender certain rights to purchase the
Borrower's Preferred Stock under terms and conditions set forth in this
Agreement.

                                    AGREEMENT

        NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, Borrower and Lender hereby agree as follows:

SECTION 1. DEFINITIONS

        Unless otherwise defined herein, the following capitalized terms shall
have the following meanings (such meanings being equally applicable to both the
singular and plural form of the terms defined);

        1.1 "ACCOUNT" means any "account" as such term is defined in Section
9-106 of the UCC, now owned or hereafter acquired by Borrower or in which
Borrower now holds or hereafter acquires any interest and, in any event, shall
include, without limitation, all accounts receivable, book debts and other forms
of obligations (other than forms of obligations evidenced by Chattel Paper,
Documents or Instruments) now owned or hereafter received or acquired by or
belonging or owing to Borrower (including, without limitation, under any trade
name, style or division thereof) whether arising out of goods sold or services
rendered by Borrower or from any other transaction, whether or not the same
involves the sale of goods or services by Borrower (including, without
limitation, any such obligation which may be characterized as an

<PAGE>   2

account or contract right under the UCC) and all of Borrower's rights in, to and
under all purchase orders or receipts now owned or hereafter acquired by it for
goods or services, and all of Borrower's rights to any goods represented by any
of the foregoing (including, without limitation, unpaid seller's rights of
rescission, replevin, reclamation and stoppage in transit and rights to
returned, reclaimed or repossessed goods), and all monies due or to become due
to Borrower under all purchase orders and contracts for the sale of goods or the
performance of services or both by Borrower (whether or not yet earned by
performance on the part of Borrower or in connection with any other
transaction), now in existence or hereafter occurring, including, without
limitation, the right to receive the proceeds of said purchase orders and
contracts, and all collateral security and guarantees of any kind given by any
Person with respect to any of the foregoing.

        1.2 "ACCOUNT DEBTOR" means any "account debtor," as such term is defined
in Section 9-105(1)(a) of the UCC.

        1.3 "ADVANCE" means each installment made by the Lender to Borrower
pursuant to the Loan to be evidenced by the Note(s) secured by the Collateral.

        1.4 "ADVANCE DATE" means the funding date of any Advance of the Loan.

        1.5. "ADVANCE REQUEST" means the request by Borrower for an Advance
under the Loan, each to be substantially in the form of EXHIBIT B attached
hereto, as submitted by Borrower to Lender from time to time.

        1.6 "CHATTEL PAPER" means any "chattel paper," as such term is defined
in Section 9-105(1)(b) of the UCC, now owned or hereafter acquired by Borrower
or in which Borrower now holds or hereafter acquires any interest.

        1.7 "CLOSING DATE" means the date hereof.

        1.8 "COLLATERAL" shall have the meaning assigned to such term in Section
3 of this Agreement.

        1.9 "CONTRACTS" means all contracts, undertakings, franchise agreements
or other agreements (other than rights evidenced by Chattel Paper, Documents or
Instruments) in or under which Borrower may now or hereafter have any right,
title or interest, including, without limitation, with respect to an Account,
any agreement relating to the terms of payment or the terms of performance
thereof.

        1.10 "COPYRIGHTS" means all of the following now owned or hereafter
acquired by Borrower or in which Borrower now holds or hereafter acquires any
interest: (i) all copyrights, whether registered or unregistered, held pursuant
to the laws of the United States, any State thereof or of any other country;
(ii) registrations, applications and recordings in the United States Copyright
Office or in any similar office or agency of the United States, any state
thereof or any other country; (iii) any continuations, renewals or extensions
thereof; and (iv) any registrations to be issued in any pending applications.

                                       2
<PAGE>   3

        1.11 "COPYRIGHT LICENSE" means any written agreement granting any right
to use any Copyright or Copyright registration now owned or hereafter acquired
by Borrower or in which Borrower now holds of hereafter acquires any interest.

        1.12 "DOCUMENTS" means any "documents," as such term is defined in
Section 9-105(1)(f) of the UCC, now owned or hereafter acquired by Borrower or
in which Borrower now holds or hereafter acquires any interest.

        1.13 "EQUIPMENT" means any "equipment," as such term is defined in
Section 9-109(2) of the UCC, now or hereafter owned or acquired by Borrower or
in which Borrower now holds or hereafter acquires any interest and any and all
additions, substitutions and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto.

        1.14 "EXCLUDED AGREEMENTS" means the Master Lease Agreement dated as of
June 10, 1999 between Borrower, as lessee, and Lender, as lessor, including,
without limitation, any Equipment Schedules and Summary Equipment Schedules to
the Master Lease Agreement executed or delivered by Borrower pursuant thereto
and any other modifications or amendments thereof, whereby Borrower (as lessee)
leases equipment, software, or goods from Lender (as lessor) to Borrower (as
lessee).

        1.15 "FACILITY FEE" means one percent (1.0%) of the Maximum Available
Loan. which shall be and due to Lender on the Closing Date, plus a transaction
fee of $7,500.

        1.16 "FIXTURES" means any "fixtures," as such term is defined in Section
9-313(1)(a) of the UCC, now or hereafter owned or acquired by Borrower or in
which Borrower now holds or hereafter acquires any interest and, now or
hereafter attached or affixed to or constituting a part of, or located in or
upon, real property wherever located, together with all right, title and
interest of Borrower in and to all extensions, improvements, betterments,
renewals, substitutes, and replacements of, and all additions and appurtenances
to any of the foregoing property, and all purchases of the security constituted
thereby, immediately upon any acquisition or release thereof or any such
purchase, as the case may be.

        1.17 "GENERAL INTANGIBLES" means any "general intangibles," as such term
is defined in Section 9-106 of the UCC, now owned or hereafter acquired by
Borrower or in which Borrower now holds or hereafter acquires any interest and,
in any event, shall include, without limitation, all right, title and interest
which Borrower may now or hereafter have in or under any contract, all customer
lists, Copyrights, Trademarks, Patents, rights to Intellectual Property,
interests in partnerships, joint ventures and other business associations,
Licenses, permits, trade secrets, proprietary or confidential information,
inventions (whether or not patented or patentable), technical information,
procedures, designs, knowledge, know-how, software, data bases, data, skill,
expertise, recipes, experience, processes, models, drawings, materials and
records, goodwill (including, without limitation, the goodwill associated with
any Trademark, Trademark registration or Trademark licensed under any Trademark
License), claims in or under insurance policies, including unearned premiums,
uncertificated securities, cash and other forms of money or currency, deposit
accounts (including as defined in Section 9-105(e) of the UCC), rights to sue
for past, present and future infringement of Copyrights, Trademarks and Patents,
rights to receive tax refunds and other payments and rights of indemnification.

                                       3
<PAGE>   4

        1.18 "INITIAL PUBLIC OFFERING" means an initial public offering of
Borrower's securities.

        1.19 "INSTRUMENTS" means any "instrument," as such term is defined in
Section 9-105(1)(i) of the UCC, now owned or hereafter acquired by Borrower or
in which Borrower now holds or hereafter acquires any interest.

        1.20 "INTELLECTUAL PROPERTY" means all Copyrights, Trademarks, Patents,
trade secrets, source codes, customer lists, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
skill, expertise, experience, processes, models, drawings, materials and
records.

        1.21 "INVENTORY" means any "inventory," as such term is defined in
Section 9-109(4) of the UCC, wherever located, now or hereafter owned or
acquired by Borrower or in which Borrower now holds or hereafter acquires any
interest, and, in any event, shall include, without limitation, all inventory,
goods and other personal property which are held by or on behalf of Borrower for
sale or lease or are furnished or are to be furnished under a contract of
service or which constitute raw materials, work in process or materials used or
consumed or to be used or consumed in Borrower's business, or the processing,
packaging, promotion, delivery or shipping of the same, and all furnished goods
whether or not such inventory is listed on any schedules, assignments or reports
furnished to Lender from time to time and whether or not the same is in transit
or in the constructive, actual or exclusive occupancy or possession of Borrower
or is held by Borrower or by others for Borrower's account, including, without
limitation, all goods covered by purchase orders and contracts with suppliers
and all goods billed and held by suppliers and all inventory which may be
located on premises of Borrower or of any carriers, forwarding agents, truckers,
warehousemen, vendors, selling agents or other persons.

        1.22 "LICENSE" means any Copyright License, Patent License, Trademark
License or other license of rights or interests now held or hereafter acquired
by Borrower or in which Borrower now holds or hereafter acquires any interest
and any renewals or extensions thereof.

        1.23 "LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment for security, security interest, encumbrance, levy, lien or charge of
any kind, whether voluntarily incurred or arising by operation of law or
otherwise, against any property, any conditional sale or other title retention
agreement, any lease in the nature of a security interest, and the filing of any
financing statement (other than a precautionary financing statement with respect
to a lease that is not in the nature of a security interest) under the UCC or
comparable law of any jurisdiction.

        1.24 "LOAN DOCUMENTS" shall mean and include this Agreement, the
Note(s), and any other documents executed in connection with the Secured
Obligations or the transactions contemplated hereby, as the same may from time
to time be amended, modified, supplemented or restated, provided, that the Loan
Documents shall not include any of the Excluded Agreements.

        1.25 "MATERIAL ADVERSE EFFECT" means a material adverse effect upon: (i)
the business, operations, properties, prospects, assets or conditions (financial
or otherwise) of Borrower; or (ii) the ability of Borrower to perform, the
Secured Obligations.

                                       4
<PAGE>   5

        1.26 "MATURITY DATE" means the date thirty-six (36) months from the
Advance Date of each installment of the Loan.

        1.27 "MAXIMUM LOAN AMOUNT" means Six Million and No/100 Dollars
($6,000,000.00).

        1.28 "MERGER EVENT" means a (i) capital reorganization of the shares of
the Borrower's stock (other than a stock split, reverse stock split,
combination, reclassification, exchange, subdivision of shares or change of
state of incorporation), or (ii) a merger or consolidation of the Borrower with
or into another corporation (whether or not the Borrower is the surviving
corporation) in which the shareholders of the Borrower immediately before such
merger or consolidation own less than a majority of the surviving or resulting
entity's outstanding voting stock immediately thereafter, or (iii) the sale of
all or substantially all of the Borrower's properties and assets to any other
person.

        1.29 "NEXT EVENT" means (i) a private equity financing of at least Five
Million Dollars ($5,000,000.00), (ii) a Merger Event, or (iii) Borrower's
Initial Public Offering.

        1.30 "PATENT LICENSE" means any written agreement granting any right
with respect to any invention on which a Patent is in existence now owned or
hereafter acquired by Borrower or in which Borrower now holds or hereafter
acquires any interest.

        1.31 "PATENTS" means all of the following now owned or hereafter
acquired by Borrower or in which Borrower now holds or hereafter acquires any
interest: (a) letters patent of, or rights corresponding thereto in, the United
States or any other country, all registrations and recordings thereof, and all
applications for letters patent of, or rights corresponding thereto in the
United States or any other country, including, without limitation,
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country; (b) all reissues, continuations,
continuations-in-part or extensions thereof; (c) all petty patents, divisionals,
and patents of addition; and (d) all patents to issue in any such applications.

        1.32 "PERMITTED LIENS" means any and all of the following:

             (i)    liens in favor of Lender;

             (ii)   liens related to, or arising in connection with, Senior
                    Debt;

             (iii)  liens for taxes, assessments or governmental charges or
                    claims, the payment of which are not, at the time,
                    delinquent or are being contested in good faith, if such
                    reserve or other appropriate provision, if any, as shall be
                    required by generally accepted accounting principles shall
                    have been made therefor;

             (iv)   statutory liens of landlords and liens of carriers,
                    warehousemen, mechanics and materialmen and other liens
                    imposed by law incurred in the ordinary course of business
                    for sums not yet delinquent or that are being contested in
                    good faith, if such reserve or other appropriate provision,
                    if any, as shall be required by generally accepted
                    accounting principles shall have been made therefor;

                                       5
<PAGE>   6

             (v)    liens incurred or deposits made in the ordinary course of
                    business in connection with workers' compensation,
                    unemployment insurance and other types of social security,
                    or to secure the performance of tenders, statutory
                    obligations, surety and appeal bonds, bids, leases,
                    government contracts, trade contracts, performance and
                    return-of-money bonds and similar obligations (exclusive of
                    obligations for the payment of borrowed money);

             (vi)   liens securing purchase money debt if the only collateral
                    for such purchase money debt is the assets acquired
                    therewith;

             (vii)  leases or subleases granted to others not interfering in any
                    material respect with the ordinary conduct of business;

             (viii) any interest or title of a lessor or sublessor under any
                    lease;

             (ix)   liens arising from filing Uniform Commercial Code financing
                    statements relating solely to leases;

             (x)    liens in favor of customs and revenue authorities arising as
                    a matter of law to secure payment of customs duties in
                    connection with the importation of goods; and

             (xi)   liens existing on the date of this Agreement, as disclosed
                    to Lender.

        1.33 "PREFERRED STOCK" means the Borrower's Series A Preferred Stock.

        1.34 "PROCEEDS" means "proceeds," as such term is defined in Section
9-306(1) of the UCC and, in any event, shall include, without limitation, (a)
any and all Accounts, Chattel Paper, Instruments, cash or other forms of money
or currency or other proceeds payable to Borrower from time to time in respect
of the Collateral, (b) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to Borrower from time to time with respect to any
of the Collateral, (c) any and all payments (in any form whatsoever) made or due
and payable to Borrower from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any governmental authority (or any Person acting under color of
governmental authority), (d) any claim of Borrower against third parties (i) for
past, present or future infringement of any Copyright, Patent or Patent License
or (ii) for past, present or future infringement or dilution of any Trademark or
Trademark License or for injury to the goodwill associated with any Trademark,
Trademark registration or Trademark licensed under any Trademark License and (e)
any and all other amounts from time to time paid or payable under or in
connection with any of the Collateral.

        1.35 "PURCHASE OPTION" shall have the meaning assigned to such term in
Section 8 of this Agreement.

        1.36 "RECEIVABLES" shall mean and include all of the Borrower's
accounts, instruments, documents, chattel paper and general intangibles whether
secured or unsecured, whether now existing or hereafter created or arising, and
whether or not specifically sold or assigned to Lender hereunder.

        1.37 "SECURED OBLIGATIONS" shall mean and include all principal,
interest, fees, costs, or other liabilities or obligations for monetary amounts
owed by Borrower to Lender, whether due or to become due, matured or unmatured,
liquidated or unliquidated, contingent or non-contingent,

                                       6
<PAGE>   7

and all covenants and duties regarding such amounts, of any kind of nature,
present or future, arising under this Agreement, the Note(s), or any of the
other Loan Documents, whether or not evidenced by any Note(s), Agreement or
other instrument, as the same may from time to time be amended, modified,
supplemented or restated, provided, that the Secured Obligations shall not
include any indebtedness or obligations of Borrower arising under or in
connection with the Excluded Agreements.

        1.38 "SENIOR CREDITOR" means a creditor identified to Lender in
accordance with the Subordination Agreement, that provides Senior Debt financing
to Borrower; provided, that a Senior Creditor shall not include any officer,
director, shareholder, venture capital investor, or insider of Borrower, or any
affiliate of the foregoing persons, except upon the express written consent of
Lender.

        1.39 "SENIOR DEBT" means any and all indebtedness and obligations for
borrowed money (including, without limitation, principal, premium (if any),
interest, fees, charges, expenses, costs, professional fees and expenses, and
reimbursement obligations) at any time owing by Borrower to a Senior Creditor
under Senior Loan Documents, including, but not limited to, such amounts as may
accrue or be incurred before or after default or workout or the commencement of
any liquidation, dissolution, bankruptcy, receivership or reorganization by or
against Borrower in an amount that shall not, without Lender's consent, exceed
One Million Dollars ($1,000,000.00) in aggregate principal amount outstanding at
any one time. Notwithstanding the foregoing, so long as Lender receives prior
written notice from Borrower, Lender agrees to allow the following additional
debt of Borrower to Imperial Bank or a similar bank or institutional lender (not
to exceed Borrower's line of credit with Imperial Bank or a similar bank or
institutional lender) constituting: (i) account receivable lines of financing
not to exceed 80% of eligible receivables, (ii) inventory financing not to
exceed 80% of inventory, and (iii) merchant card financing not to exceed 80% of
merchant card debt.

        1.40 "SENIOR LOAN DOCUMENTS" means the loan or other agreement between
Borrower and a Senior Creditor and any other agreement, security agreement,
document, promissory note, UCC financing statement, or instrument executed by
Borrower in favor of a Senior Creditor pursuant to or in connection with the
Senior Debt or such loan or other agreement, as the same may from time to time
be amended, modified, supplemented, extended, renewed, restated or replaced.

        1.41 "SUBORDINATION AGREEMENT" means the Subordination Agreement of even
date herewith, entered into between Borrower and Lender for the benefit of
Senior Creditor.

        1.42 "TRADEMARK LICENSE" means any written agreement granting any right
to use any Trademark or Trademark registration now owned or hereafter acquired
by Borrower or in which Borrower now holds or hereafter acquires any interest.

        1.43 "TRADEMARKS" means any of the following now owned or hereafter
acquired by Borrower or in which Borrower now holds or hereafter acquires any
interest: (a) any and all trademarks, tradenames, corporate names, business
names, trade styles, service marks, logos, other source or business identifiers,
prints and labels on which any of the foregoing have appeared or appear, designs
and general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and any applications in
connection therewith, including, without limitation, registrations, recordings
and applications in the United

                                       7
<PAGE>   8

States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any political
subdivision thereof and (b) any reissues, extensions or renewals thereof.

        1.44 "UCC" shall mean the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of Illinois. Unless otherwise defined
herein, terms that are defined in the UCC and used herein shall have the
meanings given to them in the UCC.

SECTION 2. THE LOANS

        2.1 Lender agrees to lend to Borrower a principal amount not to exceed
Six Million Dollars ($6,000,000) in the aggregate at any one time outstanding
for the purposes and upon the terms and subject to the conditions contained in
this Agreement.

        2.2 The Loan(s) shall be available in minimum Advances of Five Hundred
Thousand Dollars ($500,000). Each Advance made by Lender to Borrower shall be
evidenced by a Note in the original principal amount of such Advance. The
principal balance of each Note shall bear interest thereon precomputed at the
rate of ten percent (10%) per annum, and each such Note shall be due and payable
in monthly installments of interest only, until the earlier of (i) the
completion of Borrower's Initial Public Offering, or (ii) eighteen (18) months
from the Advance Date, payable on the first day of each month, which shall be
followed by eighteen (18) equal monthly installments of principal and interest,
payable on the first day of each month, to and including the Maturity Date
(each, a "Payment Date"). If any payment under a Note shall be payable on a day
other than a business day, then such payment shall be due and payable on the
next succeeding business day.

        2.3 In order to obtain an Advance under the Loans, Borrower shall
complete, sign and deliver an Advance Request to Lender. Each Advance Request
shall identify an Advance Date which is no less than five (5) business days from
the date of such notice. Upon receipt of an Advance Request, Lender shall verify
the information contained in the Advance Request and if Lender determines to
fund such Advance it shall deliver a Note dated the Advance Date evidencing such
Advance to Borrower for signature. Upon receipt of the signed Note, Lender will
fund the Advance in the manner requested by the Advance Request. Borrower agrees
that Lender may rely on any notice given by any Person it reasonably believes to
be an authorized officer of Borrower without the necessity of independent
investigation.

        2.4 (a) Notwithstanding any provision in this Agreement, the Note(s), or
any other Loan Document, it is not the parties' intent to contract for, charge
or receive interest at a rate that is greater than the maximum rate permissible
by law which a court of competent jurisdiction shall deem applicable hereto
(which under the laws of the State of Illinois shall be deemed to be the laws
relating to permissible rates of interest on commercial loans) (the "Maximum
Rate"). If the Borrower actually pays Lender an amount of interest, chargeable
on the total aggregate principal Secured Obligations of Borrower under this
Agreement and the Note(s) (as said rate is calculated over a period of time from
the date of this Agreement through the end of time that any principal is
outstanding on the Note(s)), which amount of interest exceeds interest
calculated at the Maximum Rate on said principal chargeable over said period of
time, then such excess interest actually paid by Borrower shall be applied
first, to the payment of principal outstanding on the Note(s); second, after all
principal is repaid, to the payment of Lender's out of pocket costs, expenses,
and professional fees which are owed by

                                       8
<PAGE>   9

Borrower to Lender under this Agreement or the Loan Documents; and third, after
all principal, costs, expenses, and professional fees owed by Borrower to Lender
are repaid, the excess (if any) shall be refunded to Borrower, and the effective
rate of interest will be automatically reduced to the Maximum Rate.

             (b) In the event any interest is not paid when due hereunder,
delinquent interest shall be added to principal and shall bear interest on
interest, compounded at the rate set forth in Section 2.2.

             (c) Upon and during the continuation of an Event of Default
hereunder, all Secured Obligations, including principal, interest, compounded
interest, and professional fees, shall bear interest at a rate per annum equal
to the rate set forth in Section 2.2 plus five percent (5%) per annum ("Default
Rate").

SECTION 3. SECURITY INTEREST

        As security for the prompt, complete and indefeasible payment when due
(whether at stated payment dates or otherwise) of all the Secured Obligations
and in order to induce Lender to make the Loan(s) upon the terms and subject to
the conditions of the Note(s), Borrower hereby conveys, mortgages, pledges,
hypothecates and transfers to Lender for security purposes only, and hereby
grants to Lender a security interest in all of Borrower's right, title and
interest in, to and under each of the following (all of which being hereinafter
collectively called the "Collateral"):

        (a) All Receivables;

        (b) All Equipment;

        (c) All Fixtures;

        (d) All General Intangibles;

        (e) All Inventory;

        (f) All other goods and personal property of Borrower whether tangible
or intangible and whether now or hereafter owned or existing, leased, consigned
by or to, or acquired by, Borrower and wherever located; and

        (g) To the extent not otherwise included, all Proceeds of each of the
foregoing and all accessions to, substitutions and replacements for, and rents,
profits and products of each of the foregoing;

provided, however, the Collateral shall not include that certain Software
License Agreement, dated as of September 24, 1998, among 3Com Corporation and JD
Technology, Inc. as Borrower's predecessor in interest therein, and any License,
Equipment lease, real property lease, Chattel Paper or Contract to which
Borrower is or becomes a party as licensee, lessee other otherwise, to the
extent that (a) such License, Equipment lease, real property lease, Chattel
Paper or Contract or property subject thereto is not assignable or capable of
being encumbered as a matter of law or under the terms of the License, lease or
other agreement

                                       9
<PAGE>   10

applicable thereto (but solely to the extent that any such restriction shall be
enforceable under applicable law), without the consent of the licensor or lessor
thereof or other applicable party thereto and (b) such consent has not been
obtained; nevertheless, the foregoing grant of security interest shall extend
to, and the term "Collateral" shall include, (i) any and all proceeds of such
License, Equipment lease, real property lease, Chattel Paper or Contract and
property subject thereto to the extent that the assignment or encumbering of
such proceeds is not so restricted and (ii) upon the consent of any such
licensor, lessor or other applicable party with respect to any such otherwise
excluded License, Equipment lease, real property lease, Chattel Paper or
Contract being obtained (which consent shall be required only at Lender's
request following an Event of Default hereunder), thereafter such License,
Equipment lease, real property lease, Chattel Paper or contract and property
subject thereto as well as any and all proceeds thereof that might theretofore
have been excluded from such grant of a security interest shall be included
within the term "Collateral".

SECTION 4. CONDITIONS PRECEDENT TO LOAN

        The obligations of the Lender to make Loans hereunder are subject to the
satisfaction by Borrower, or waiver by Lender, of the following conditions:

        4.1 Borrower, on or prior to the Closing Date, shall have delivered to
Lender the following:

             (a) executed originals of the Agreement, the Subordination
        Agreement, and any other documents reasonably required by Lender to
        effectuate the liens of Lender with respect to all Collateral;

             (b) certified copy of resolutions of Borrower's board of directors
        evidencing approval of the borrowing and other transactions evidenced by
        the Loan Documents;

             (c) certified copies of the Articles of Incorporation and the
        Bylaws, as amended through the Closing Date, of Borrower;

             (d) certificate of good standing for Borrower from its state of
        incorporation and similar certificates from all other jurisdictions in
        which it does business and where the failure to be qualified would have
        a Material Adverse Effect;

             (e) payment of the Facility Fee; and

             (f) such other documents as Lender may reasonably request in
        writing prior to the Closing Date.

        4.2 On each Advance Date:

             (a) The Lender shall have received (i) an Advance Request for such
        Advance as required by Section 2.3, (ii) an executed Note evidencing
        such Advance and (iii) any other documents Lender may reasonably request
        in writing prior to such Advance Date.

                                       10
<PAGE>   11

             (b) The representations and warranties set forth in Section 5
        hereof shall be true and correct in all material respects on and as of
        the Advance Date with the same effect as though made on and as of such
        date, except to the extent such representations and warranties expressly
        relate to an earlier date.

             (c) The Borrower shall be in material compliance with all the terms
        and provisions set forth herein and in each other Loan Document on its
        part to be observed or performed, and at the time of and immediately
        after such Advance no Event of Default shall have occurred and be
        continuing.

Each Advance Request shall be deemed to constitute a representation and warranty
by the Borrower on the Advance Date as to the matters specified in paragraphs
(b) and (c) of this Section 4.2.

        4.3 PERFECTION OF SECURITY INTERESTS. Borrower shall have taken or
caused to be taken such actions requested by Lender to grant Lender a first
priority perfected security interest in the Collateral, subject only to
Permitted Liens. Such actions shall include, without limitation, the delivery to
Lender of all appropriate financing statements, executed by Borrower, as to the
Collateral granted by Borrower for all jurisdictions as may be necessary or
desirable to perfect the security interest of Lender in such Collateral.

        4.4 ABSENCE OF EVENTS OF DEFAULTS. As of the Closing Date or the Advance
Date, as applicable, no fact or condition exists that would (or would, with the
passage of time, the giving of notice, or both) constitute an Event of Default
under this Agreement or any of the Loan Documents and no fact or condition
exists that would (or would, with the passage of time, the giving of notice, or
both) constitute a material default under the Senior Loan Documents between
Borrower and Senior Creditor.

        4.5 MATERIAL ADVERSE EFFECT. As of the Closing Date or the Advance Date,
as applicable, no event which has had or could reasonably be expected to have a
Material Adverse Effect has occurred and is continuing.

        4.6 TERMINATION DATE. Notwithstanding anything in this Agreement to the
contrary, Lender's obligations to provide the Loan(s) shall terminate on the
earlier of (i) June 10, 2000 or (ii) the occurrence of an Event of Default
pursuant to Section 9, and no Advance Requests shall be accepted after such
date.

SECTION 5. REPRESENTATIONS AND WARRANTIES OF BORROWER

        The Borrower represents, warrants and agrees that:

        5.1 Borrower owns all right, title and interest in and to the
Collateral, free of all liens, security interests, encumbrances and claims
whatsoever, except for Permitted Liens.

        5.2 Borrower has the full power and authority to, and does hereby grant
and convey to the Lender, (and when the appropriate UCC Financing Statements are
properly filed) a perfected security interest in the Collateral as security for
the Secured Obligations, free of all liens, security interests, encumbrances and
claims, other than Permitted Liens and shall execute such Uniform Commercial
Code financing statements in connection herewith as the

                                       11
<PAGE>   12

Lender may reasonably request. Except for Permitted Liens, no other lien,
security interest, adverse claim or encumbrance has been created by Borrower or
is known by Borrower to exist with respect to any Collateral.

        5.3 Borrower is a corporation duly organized, legally existing and in
good standing under the laws of the State of California, and is duly qualified
as a foreign corporation in all jurisdictions in which the nature of its
business or location of its properties require such qualifications and where the
failure to be qualified would have a Material Adverse Effect.

        5.4 Borrower's execution, delivery and performance of the Note(s), this
Agreement, all financing statements, all other Loan Documents, required to be
delivered or executed in connection herewith, have been duly authorized by all
necessary corporate action of Borrower, the individual or individuals executing
the Loan Documents were duly authorized to do so; and the Loan Documents
constitute legal, valid and binding obligations of the Borrower, enforceable in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization or other similar laws generally affecting the
enforcement of the rights of creditors (and rules of law concerning equitable
remedies).

        5.5 This Agreement and the other Loan Documents do not and will not
violate any provisions of Borrower's Articles of Incorporation, bylaws or any
material contract, material agreement, law, regulation, order, injunction,
judgment, decree or writ to which the Borrower is subject, or result in the
creation or imposition of any lien, security interest or other encumbrance upon
the Collateral, other than those created by this Agreement.

        5.6 The execution, delivery and performance of this Agreement and the
other Loan Documents do not require the consent or approval of any other person
or entity including, without limitation, any regulatory authority or
governmental body of the United States or any state thereof or any political
subdivision of the United States or any state thereof.

        5.7 No event which has had a Material Adverse Effect has occurred and is
continuing.

        5.8 No fact or condition exists that would (or would, with the passage
of time, the giving of notice, or both) constitute a material default under the
Senior Loan Documents.

        5.9 (a) There are no actions, suits or proceedings at law or in equity
or by or before any governmental authority now pending or, to the knowledge of
the Borrower, threatened against or affecting the Borrower or any business,
property or rights of the Borrower (i) which involve any Loan Document or (ii)
as to which there is a reasonable possibility of an adverse determination and
which, if adversely determined, could, individually or in the aggregate, result
in a Material Adverse Effect.

             (b) The Borrower is not in violation of any law, rule or
regulation, or in default with respect to any judgment, writ, injunction or
decree of any governmental authority, where such violation or default could
result in a Material Adverse Effect.

        5.10 (a) The Borrower is not a party to any agreement or instrument or
subject to any corporate restriction that has resulted in a Material Adverse
Effect.

                                       12
<PAGE>   13

             (b) The Borrower is not in default in any manner under any
provision of any indenture or other agreement or instrument evidencing
indebtedness, or any other material agreement or instrument to which it is a
party or by which it or any of its properties or assets are or may be bound,
where such default could result in a Material Adverse Effect.

        5.11 No information, report, financial statement, exhibit or schedule
furnished by or on behalf of the Borrower to the Lender in connection with the
negotiation of any Loan Document or included therein or delivered pursuant
thereto contained or contains any material misstatement of fact or omitted or
omits to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were or are made, not
misleading.

        5.12 All issued and outstanding shares of Common Stock, Preferred Stock
or any other securities of the Company have been duly authorized and validly
issued and are fully paid and nonassessable. All outstanding shares of Common
Stock, Preferred Stock and any other securities were issued in full compliance
with all Federal and state securities laws. In addition:

             (i) As of the date of this Agreement, the authorized capital stock
        of the Company consists of 35,000,000 shares of Common Stock, no par
        value (the "Common Stock"), of which [15,350,385] shares shall be issued
        and outstanding, and 8,200,000 shares of Preferred Stock, no par value,
        all of which shares shall have been designated as Series A Preferred
        Stock of which 8,076,924 shares of are issued and outstanding. All of
        the issued and outstanding shares of Preferred Stock have been duly
        authorized and validly issued and are fully paid and nonassessable. All
        of the issued and outstanding shares of Preferred Stock have been duly
        authorized and validly issued and are fully paid and nonassessable. All
        of the issued and outstanding shares of Common Stock have been duly
        authorized and validly issued and are fully paid and nonassessable. As
        of the date of this Agreement there are 4,846,154 shares of Common Stock
        reserved for issuance under the Company's 1998 Equity Incentive Plan, of
        which 1,350,385 shares have been issued upon the exercise of options,
        2,008,923 shares are subject to outstanding options and 1,486,846 shares
        remain available for issuance. Except as set forth in this Agreement,
        (i) no subscription, warrant, option, convertible security or other
        right (contingent or otherwise) to purchase or acquire any shares of
        capital stock of the Company is authorized or outstanding, (ii) the
        Company has no obligation (contingent or otherwise) to issue any
        subscription, warrant, option, convertible security or other such right
        or to issue or distribute to holders of a share of its capital stock any
        evidences of indebtedness or assets of the Company, and (iii) the
        Company has no obligation (contingent or otherwise) to purchase, redeem
        or otherwise acquire any shares of its capital stock or any interest
        therein or to pay any dividend to make any other distribution in respect
        thereof. All of the issued and outstanding securities or the Company
        have been offered, issued and sold by the Company is compliance with
        applicable federal and state securities laws.

             (ii) In accordance with the Company's Articles of Incorporation, no
        shareholder of the Company has preemptive rights to purchase new
        issuances of the Company's capital stock (with the exception of certain
        shareholders who are signatories to that certain Investors' Rights
        Agreement dated as of October 22, 1998).

                                       13
<PAGE>   14

        5.13 Borrower has filed and will file all tax returns, federal, state
and local, which it is required to file and has duly paid or fully reserved for
all taxes or installments thereof (including any interest or penalties) as and
when due, which have or may become due pursuant to such returns or pursuant to
any assessment received by Borrower for the three (3) years preceding the
Closing Date, if any (including any taxes being contested in good faith and by
appropriate proceedings).

SECTION 6. INSURANCE

        6.1 So long as there are any Secured Obligations outstanding, Borrower
shall cause to be carried and maintained commercial general liability insurance
against risks customarily insured against in Borrower's line of business. Such
risks shall include, without limitation, the risks of death, bodily injury and
property damage. So long as there are any Secured Obligations outstanding,
Borrower shall also cause to be carried and maintained insurance upon the
Collateral and Borrower's business, covering casualty, hazard and such other
property risks in amounts equal to the full replacement cost of the Collateral.
Borrower shall deliver to Lender lender's loss payable endorsements (Form BFU
438 or equivalent) naming Lender as loss payee and additional insured. Borrower
shall use commercially reasonable efforts to cause all policies evidencing such
insurance to provide for at least thirty (30) days prior written notice by the
underwriter or insurance company to Lender in the event of cancellation or
expiration. Such policies shall be issued by such insurers and in such amounts
as are reasonably acceptable to Lender.

        6.2 Borrower shall and does hereby indemnify and hold Lender, its agents
and shareholders harmless from and against any and all claims, costs, expenses,
damages and liabilities (including, without limitation, such claims, costs,
expenses, damages and liabilities based on liability in tort, including without
limitation, strict liability in tort), including reasonable attorneys' fees,
arising out of the disposition or utilization of the Collateral by Borrower,
other than claims arising out of or caused by Lender's gross negligence or
willful misconduct.

SECTION 7. COVENANTS OF BORROWER

        Borrower covenants and agrees as follows at all times while any of the
Secured Obligations remain outstanding:

        7.1 Borrower shall furnish to Lender the financial statements listed
hereinafter, each prepared in accordance with generally accepted accounting
principles consistently applied (the "Financial Statements"):

             (a) as soon as practicable (and in any event within forty-five (45)
        days) after the end of each fiscal quarter (except the last quarter of
        Borrower's fiscal year), unaudited interim financial statements
        (prepared on a consolidated and consolidating basis, if applicable),
        including balance sheet and related statements of income and cash flows
        accompanied by a report detailing any material contingencies (including
        the commencement of any material litigation by or against Borrower) or
        any other occurrence that could reasonably be expected to have a
        Material Adverse Effect, all certified by Borrower's Chief Executive
        Officer or Chief Financial Officer to be true and correct;

                                       14
<PAGE>   15

             (b) as soon as practicable (and in any event within ninety (90)
        days) after the end of each fiscal year, unqualified audited financial
        statements as of the end of such year (prepared on a consolidated and
        consolidating basis, if applicable), including balance sheet and related
        statements of income and cash flows, and setting forth in comparative
        form the corresponding figures for the preceding fiscal year, certified
        by a firm of independent certified public accountants selected by
        Borrower and reasonably acceptable to Lender, accompanied by any
        management report from such accountants;

             (c) promptly after the sending or filing thereof, as the case may
        be, copies of any proxy statements or financial statements which
        Borrower has made available to its shareholders and copies of any
        regular, periodic and special reports or registration statements which
        Borrower files with the Securities and Exchange Commission or any
        governmental authority which may be substituted therefor, or any
        national securities exchange; and

             (d) promptly, any additional financial information, (including, but
        not limited, to tax returns and names of principal creditors) as is
        reasonably necessary for Lender to evaluate Borrower's continuing
        ability to meet its financial obligations.

        7.2 Borrower shall permit any authorized representative of Lender and
its attorneys and accountants on reasonable notice to inspect, examine and make
copies and abstracts of the books of account and records of Borrower reasonably
related to Lender's security interest in the Collateral at reasonable times
during normal business hours. In addition, such representative of Lender and its
attorneys and accountants shall have the right to meet with management and
officers of the Borrower at reasonable times during normal business hours to
discuss such books of account and records.

        7.3 Borrower will from time to time execute, deliver and file, alone or
with Lender, any financing statements, security agreements or other documents
reasonably requested by Lender; procure any instruments or documents as may be
reasonably requested by Lender; and take all further action that may be
necessary or desirable that Lender may reasonably request, to confirm, perfect,
preserve and protect the security interests intended to be granted hereby, and
in addition, and for such purposes only, Borrower hereby authorizes Lender to
execute and deliver on behalf of Borrower and to file such financing statements,
security agreement and other documents without the signature of Borrower either
in Lender's name or in the name of Borrower as agent and attorney-in-fact for
Borrower. The parties agree that a carbon, photographic or other reproduction of
this Agreement shall be sufficient as a financing statement and may be filed in
any appropriate office in lieu thereof.

        7.4 Borrower shall protect and defend Borrower's title as well as the
interest of the Lender against all persons claiming any interest adverse to
Borrower or Lender and shall at all times keep the Collateral free and clear
from any legal process, liens or encumbrances whatsoever (except any placed
thereon by Lender and Permitted Liens) and shall give Lender immediate written
notice thereof.

        7.5 Without Lender's prior written consent, Borrower shall not (a) grant
any material extension of the time of payment of any of the Receivables
involving an amount owing to Borrower in excess of $100,000, (b) to any material
extent, compromise, compound or settle the same for less than the full amount
thereof, or (c) release, wholly or partly, any Person liable

                                       15
<PAGE>   16

for the payment thereof, or allow any credit or discount whatsoever thereon
other than trade discounts granted in the ordinary course of business of
Borrower.

        7.6 Borrower shall maintain and protect its properties, assets and
facilities, including without limitation, its Equipment and Fixtures, in good
order and working repair and condition (taking into consideration ordinary wear
and tear) and from time to time make or cause to be made all necessary and
proper repairs, renewals and replacements thereto and shall competently manage
and care for its property in accordance with prudent industry practices.

        7.7 Borrower shall notify Lender a minimum of thirty (30) days prior to
the closing date of a Merger Event and request Lender's consent to the
assignment of all of Borrower's Secured Obligations hereunder to the successor
entity in form and substance satisfactory to Lender. In the event Lender does
not consent to such assignment, which consent shall not be unreasonably
withheld, and a Merger Event as described in the preceding sentence is closed
and consummated, the parties agree Borrower shall prepay the Loan in accordance
with Section 2.2 hereof; provided that such consent by the Lender shall not be
required in any transaction in which the surviving entity or its parent
corporation has a Moody's Bond rating of BA3 or better or a commercially
acceptable equivalent measure of creditworthiness as reasonably determined by
Lender.

        7.8 Borrower shall not, without the prior written consent of Lender,
such consent not to be unreasonably withheld, declare or pay any cash dividend
or make a distribution of cash or property on any class of stock, other than
pursuant to employee repurchase plans upon an employee's death or termination of
employment or transfer, sell, lease, lend or in any other manner convey any
equitable, beneficial or legal interest in any material portion of the assets of
Borrower (except inventory sold in the normal course of business).

        7.9 Upon the request of Lender, Borrower shall, during business hours,
make the Inventory and Equipment available to Lender for inspection at the place
where it is normally located and shall make Borrower's log and maintenance
records pertaining to the Inventory and Equipment available to Lender for
inspection. Borrower shall take all action necessary to maintain such logs and
maintenance records in a correct and complete fashion.

        7.10 Borrower covenants and agrees to pay when due, all taxes, fees or
similar charges of any nature whatsoever (together with any related interest or
penalties) now or hereafter imposed or assessed against Borrower or Lender with
respect to or the Collateral or upon Borrower's ownership, possession, use,
operation or disposition thereof or upon Borrower's rents, receipts or earnings
arising therefrom. Borrower shall file on or before the due date therefor all
personal property tax returns in respect of the Collateral. Notwithstanding the
foregoing, Borrower may contest, in good faith and by appropriate proceedings,
taxes for which Borrower maintains adequate reserves therefor.

        7.11 Borrower shall not relocate any material item of the Collateral
(other than sale or movement of inventory, raw materials or component parts in
the ordinary course of business) except: (i) with the prior written consent of
the Lender not to be unreasonably withheld; and (ii) if such relocation shall be
within the continental United States. If permitted to relocate Collateral
pursuant to subparts (i) or (ii) of the foregoing sentence, unless otherwise
agreed in writing by Lender, Borrower shall first (a) cause to be filed and/or
delivered to the Lender all Uniform Commercial Code financing statements,
certificates or other documents or instruments

                                       16
<PAGE>   17

necessary to continue in effect the perfected security interest of the Lender in
the Collateral, and (b) have given the Lender no less than thirty (30) days
prior written notice of such relocation.

SECTION 8. PURCHASE OPTION

        8.1 Subject to the provisions of Section 8.10, Lender shall have the
right to purchase shares of Borrower's Preferred Stock with an aggregate value
of up to twenty-five percent (25%) of the Maximum Loan Amount (subject to
increase as provided in Section 8.2) at any time, at Lender's sole and absolute
discretion (the "Purchase Option"). The Purchase Option shall be exercisable at
a purchase price as set forth below:

             (a)    If Borrower closes the Next Event on or before July 15,
                    1999, the purchase price will be equal to seventy percent
                    (70%) of the price per share of the Next Event, but at no
                    greater than a $300 million (fully diluted) pre money
                    valuation. For purposes of this Section 8.1(a), a "fully
                    diluted" valuation shall be based on a calculation including
                    (1) all outstanding Common Stock, (2) all outstanding
                    preferred stock as if converted to Common Stock and (3) the
                    total number of shares subject to outstanding options and
                    shares remaining available for grant.

             (b)    If Borrower closes the Next Event after July 15, 1999 but
                    before June 30, 2000, the purchase price will be equal to
                    the lesser of:

                    (i)  $4.46 per share;

                    (ii) the price per share equal to seventy percent (70%) of
                         the Next Event; or

                    (iii) the price per share equal to seventy percent (70%) of
                         any future private equity financing round prior to an
                         IPO.

             (c)    If Borrower does not complete the Next Event on or before
                    June 30, 2000, the purchase price will be equal to $2.79 per
                    share.

        The Purchase Option will terminate upon the date thirty (30) days from
receipt by Lender of notice from Borrower of an Initial Public Offering or a
Merger Event, subject to the terms set forth in Section 8.9 hereof.

        The number and purchase price of such shares are subject to adjustment
as provided in this Section 8.

        8.2 If the Borrower has not repaid the outstanding principal amount
under a Note in its entirety by the Maturity Date (as defined in the applicable
Note(s)), then for each additional month, or portion thereof, thereafter that
the outstanding principal is not paid, Lender shall have the right to purchase
from the Borrower, at the Purchase Price (adjusted, as set forth and defined in
Section 8.3 herein), an additional amount of Preferred Stock with a value equal
to the product of (x) the outstanding principal amount which is due but unpaid
and (y) one percent (1%).

                                       17
<PAGE>   18

        8.3 The Purchase Price per share and the number of shares of Preferred
Stock purchasable hereunder are subject to adjustment, as follows:

             (a) If the Borrower at any time shall, by stock split, reverse
        stock split, combination, reclassification, exchange or subdivision of
        the securities as to which purchase rights under this Purchase Option
        exist into the same or a different number of securities of any other
        class or classes, this Purchase Option shall thereafter represent the
        right to acquire such number and kind of securities as would have been
        issuable as the result of such change with respect to the securities
        which were subject to the purchase rights under this Purchase Option
        immediately prior to such classification, exchange, subdivision or other
        change.

             (b) If the Borrower at any time shall combine or subdivide its
        Preferred Stock, the Purchase Price shall be proportionately decreased
        in the case of a subdivision, or proportionately increased in the case
        of a combination.

             (c) If the Borrower at any time shall pay a dividend payable in, or
        make any other distribution (except any distribution specifically
        provided for in the foregoing subsections (a) or (b)) of the Borrower's
        stock, then the Purchase Price shall be adjusted, from and after the
        record date of such dividend or distribution, to that price determined
        by multiplying the Purchase Price in effect immediately prior to such
        record date by a fraction (i) the numerator of which shall be the total
        number of all shares of the Borrower's stock outstanding immediately
        prior to such dividend or distribution, and (ii) the denominator of
        which shall be the total number of all shares of the Borrower's stock
        outstanding immediately after such dividend or distribution. The Lender
        shall thereafter be entitled to purchase, at the Purchase Price
        resulting from such adjustment, the number of shares of Preferred Stock
        (calculated to the nearest whole share) obtained by multiplying the
        Purchase Price in effect immediately prior to such adjustment by the
        number of shares of Preferred Stock issuable upon the exercise hereof
        immediately prior to such adjustment and dividing the product thereof by
        the Purchase Price resulting from such adjustment.

             (d) Additional antidilution rights applicable to the Preferred
        Stock purchasable hereunder are as set forth in the Borrowers Articles
        of Incorporation, as may be amended from time to time through the date
        of this Agreement, a true and complete copy of the current Articles of
        Incorporation which is attached hereto AS EXHIBIT C (the "Charter"). The
        Borrower shall promptly provide the Lender with any restatement,
        amendment, modification or waiver of the Charter. The Borrower shall
        provide Lender with prior written notice of any issuance of its stock or
        other equity security to occur after the Effective Date of this Purchase
        Option, which notice shall 'include (i) the price at which such stock or
        security is to be sold, (ii) the number of shares to be issued, and
        (iii) such other information as necessary for Lender to determine if a
        dilutive event has occurred.

             (e) If: (i) the Borrower shall declare any dividend or distribution
        upon its stock, whether in cash, property, stock or other securities;
        (ii) the Borrower shall offer for subscription prorata to the holders of
        any class of its preferred or other convertible stock any additional
        shares of stock of any class or other rights; (iii) there shall be any
        Merger Event; (iv) there shall be an Initial Public Offering; or (v)
        there shall be any voluntary

                                       18
<PAGE>   19

        dissolution, liquidation or winding up of the Borrower; then, in
        connection with each such event, the Borrower shall send to the Lender:
        (A) at least twenty (20) days' prior written notice of the date on which
        the books of the Borrower shall close or a record shall be taken for
        such dividend, distribution, subscription rights (specifying the date on
        which the holders of Preferred Stock shall be entitled thereto) or for
        determining rights to vote in respect of such Merger Event, dissolution,
        liquidation or winding up; (B) in the case of any such dissolution,
        liquidation or winding up, at least thirty (30) days' prior written
        notice of the date when the same shall take place (and specifying the
        date on which the holders of Preferred Stock shall be entitled to
        exchange their Preferred Stock for securities or other property
        deliverable upon dissolution, liquidation or winding up); and (C) in the
        case of a Initial Public Offering or Merger Event, the Borrower shall
        give the Lender at least thirty (30) days written notice prior to the
        effective date thereof.

        Each such written notice shall set forth, in reasonable detail, (i) the
event requiring the adjustment, (ii) the amount of the adjustment, (iii) the
method by which such adjustment was calculated, (iv) the Purchase Price, and (v)
the number of shares subject to purchase hereunder after giving effect to such
adjustment, and shall be given by first class mail, postage prepaid, addressed
to the Lender, at the address as shown on the books of the Lender.

             (f) Failure to timely provide such notice required by subsection
        (e) above shall entitle Lender to retain the benefit of the applicable
        notice period notwithstanding anything to the contrary contained in any
        insufficient notice received by Lender. The notice period shall begin on
        the date Lender actually receives a written notice containing all the
        information specified above.

        8.5 The Purchase Option is exercisable by the Lender, in whole or in
part, at any time, or from time to time, prior to the earlier of thirty (30)
days after receipt of notice from Borrower of (i) an Initial Public Offering, or
(ii) a Merger Event. Lender may exercise its Purchase Option by tendering to the
Borrower at its principal office a notice of exercise in the form attached
hereto as EXHIBIT D (the "Notice of Purchase"), duly completed and executed
together with payment in an amount equal to the Purchase Price for that portion
of the Purchase Option so exercised, in cash or by bank cashier's or certified
check; provided that Lender may satisfy all or a portion of the Purchase Price
by tender of one or more Note(s), the outstanding principal and interest of
which shall be credited against the Purchase Price, with the balance, if any, of
the Purchase Price payable in cash or by check as provided above. In such event,
the Note(s) so tendered will be deemed satisfied in full and will be cancelled
by the Borrower and the Borrower will have no further obligation to the Lender
under such Note(s).

        Promptly upon receipt of the Notice of Purchase and the payment of the
Purchase Price in accordance with the terms set forth below, Borrower shall
execute the acknowledgment of exercise in the form attached hereto as EXHIBIT E
(the "Acknowledgment of Purchase") indicating the number of shares which remain
subject to future purchases, if any. Subject to Lender's right of rescission of
its election pursuant to Section 8.9, no later than twenty-one (21) days
thereafter, the Borrower shall issue to the Lender a certificate for the number
of shares of Preferred Stock purchased.

        8.6 (a) During the term of this Purchase Option, the Borrower will at
all times have authorized and reserved a sufficient number of shares of its
Preferred Stock to provide for the exercise of the rights to purchase Preferred
Stock as provided for herein.

                                       19
<PAGE>   20

             (b) If any shares of Preferred Stock required to be reserved
        hereunder require registration with or approval of any governmental
        authority under any Federal or State law (other than any registration
        under the Securities Act of 1933, as amended ("1933 Act"), as then in
        effect, or any similar Federal statute then enforced, or any state
        securities law, required by reason of any transfer involved in such
        purchase), or listing on any domestic securities exchange, before such
        shares may be issued upon purchase, the Borrower will, at its expense
        and as expeditiously as possible, use its best efforts to cause such
        shares to be duly registered, listed or approved for listing on such
        domestic securities exchange, as the case may be.

        8.7 No fractional shares or scrip representing fractional shares shall
be issued upon the exercise of the Purchase Option, but in lieu of such
fractional shares the Borrower shall make a cash payment therefor upon the basis
of the Purchase Price then in effect.

        8.8 This Purchase Option does not entitle the Lender to any voting
rights or other rights as a shareholder of the Borrower prior to the exercise of
the Purchase Option.

        8.9 In the event Lender has exercised the Purchase Option based upon
receipt of notice from Borrower of an Initial Public Offering or Merger Event
and if such transaction is not consummated, the Borrower shall promptly notify
the Lender that such proposed transaction has been terminated, and the Lender
may rescind any exercise of its Purchase Option promptly after such notice of
termination of the proposed transaction.

        8.10 (a) If Lender for any reason has refused to make an Advance (a
"Refused Advance") to Borrower pursuant to a proper Advance Request, then
Lender's Purchase Option under this Section 8 shall be reduced by a value equal
to the amount of such Refused Advance.

             (b) In order to effectuate the reduction of the Purchase Option set
forth in subclause (a) above, if Lender exercises the Purchase Option prior to
the termination date set forth in Section 4.6, the shares issuable upon such
exercise shall be subject to a repurchase right in favor of the Borrower at a
price per share equal to the price paid by Lender in such exercise and shall be
held in escrow by the Borrower.

        8.11 Lender hereby agrees that it shall not, to the extent requested by
Borrower or an underwriter of securities of Borrower, sell or otherwise transfer
or dispose of any shares of Preferred Stock issued upon exercise of the Purchase
Option for such period of time not to exceed one hundred eighty (180) days
following the effective date of a registration statement of the Borrower filed
under the 1933 Act for the Borrower's underwritten initial public offering
provided, however, that:

        (a) such agreement shall be applicable only to the first such
        registration statement of the Company which covers securities to be sold
        on its behalf to the public in an underwritten offering but not to
        Registrable Securities sold pursuant to such registration statement; and

        (b) all officers, directors and one percent (1%) shareholders of the
        Company enter into similar agreements.

                                       20
<PAGE>   21

        In order to enforce the foregoing covenant, Borrower shall have the
right to place restrictive legends on the certificates representing the shares
subject to this Section 8.11 and to impose stop transfer instructions with
respect to such shares.

SECTION 9. DEFAULT

        The occurrence of any one or more of the following events (herein called
"Events of Default") shall constitute a default hereunder and under the Note(s)
and other Loan Documents:

        9.1 Borrower defaults in the payment of any principal, interest or other
Secured Obligation involving the payment of money under this Agreement, the
Note(s) or any of the other Loan Documents, and such default continues for more
than five (5) days after the due date thereof; or

        9.2 Borrower defaults in the performance of any other covenant or
Secured Obligation of Borrower hereunder or under the Note(s) or any of the
other Loan Documents, and such default continues for more than thirty (30) days
after Lender has given notice of such default to Borrower.

        9.3 Any representation or warranty made herein by Borrower shall prove
to have been false or misleading in any material respect; or

        9.4 Borrower shall make an assignment for the benefit of creditors, or
shall admit in writing its inability to pay its debts as they become due, or
shall file a voluntary petition in bankruptcy, or shall file any petition or
answer seeking for itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future statute, law or regulation pertinent to such circumstances, or shall seek
or consent to or acquiesce in the appointment of any trustee, receiver, or
liquidator of Borrower or of all or any substantial part (33-1/3% or more) of
the properties of Borrower; or Borrower or its directors or majority
shareholders shall take any action initiating the dissolution or liquidation of
Borrower; or

        9.5 Sixty (60) days shall have expired after the commencement of an
action by or against Borrower seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future statute, law or regulation, without such action being dismissed or all
orders or proceedings thereunder affecting the operations or the business of
Borrower being stayed; or a stay of any such order or proceedings shall
thereafter be set aside and the action setting it aside shall not be timely
appealed; or Borrower shall file any answer admitting or not contesting the
material allegations of a petition filed against Borrower in any such
proceedings; or the court in which such proceedings are pending shall enter a
decree or order granting the relief sought in any such proceedings; or

        9.6 Sixty (60) days shall have expired after the appointment, without
the consent or acquiescence of Borrower, of any trustee, receiver or liquidator
of Borrower or of all or any substantial part of the properties of Borrower
without such appointment being vacated; or

                                       21
<PAGE>   22

        9.7 The material default by Borrower under any Excluded Agreement(s),
any other promissory note or agreement for borrowed money, or any other
agreement between Borrower and Lender; or

        9.8 The occurrence of any material default under any lease or other
agreement or obligation of Borrower having an outstanding obligation to Borrower
in excess of $100,000.00 or having a Material Adverse Effect; or the entry of
any judgment against Borrower involving an award in excess of $100,000.00 that
would have a Material Adverse Effect, that has not been bonded or stayed on
appeal within thirty (30) days; or

        9.9 The occurrence of any material default under the Senior Loan
Documents.

SECTION 10. REMEDIES

        Upon the occurrence of any one or more Events of Default, Lender, at its
option, may declare the Note and all of the other Secured Obligations to be
accelerated and immediately due and payable (provided, that upon the occurrence
of an Event of Default of the type described in Sections 9.4 or 9.5, the Note(s)
and all of the other Secured Obligations shall automatically be accelerated and
made due and payable without any further act), whereupon the unpaid principal of
and accrued interest on such Note(s) and all other outstanding Secured
Obligations shall become immediately due and payable, and shall thereafter bear
interest at the Default Rate set forth in, and calculated according to, Section
2.4 (c) of this Agreement. Lender may pursue all rights and remedies with
respect to the Collateral under the Loan Documents or otherwise available to it
under applicable law, including the right to release, hold or otherwise dispose
of all or any part of the Collateral and the right to occupy, utilize, process
and commingle the Collateral.

        Upon the happening and during the continuance of any Event of Default,
Lender may then, or at any time thereafter and from time to time, apply,
collect, sell in one or more sales, lease or otherwise dispose of, any or all of
the Collateral, in its then condition or following any commercially reasonable
preparation or processing, in such order as Lender may elect, and any such sale
may be made either at public or private sale at its place of business or
elsewhere. Borrower agrees that any such public or private sale may occur upon
ten (10) calendar days' prior written notice to Borrower. Lender may require
Borrower to assemble the Collateral and make it available to Lender at a place
designated by Lender which is reasonably convenient to Lender and Borrower. The
proceeds of any sale, disposition or other realization upon all or any part of
the Collateral shall be distributed by Lender in the following order of
priorities:

        First, to Lender in an amount sufficient to pay in full Lender's costs
        and professionals' and advisors' fees and expenses;

        Second, to Lender in an amount equal to the then unpaid amount of the
        Secured Obligations in such order and priority as Lender may choose in
        its sole discretion; and

        Finally, upon payment in full of all of the Secured Obligations, to
        Borrower or its representatives or as a court of competent jurisdiction
        may direct.

                                       22
<PAGE>   23

        Lender shall be deemed to have acted reasonably in the custody,
        preservation and disposition of any of the Collateral if it complies
        with the obligations of a secured party under Section 9-207 of the UCC.

        Lender's rights and remedies hereunder are subject to the terms of the
        Subordination Agreement.

SECTION 11. MISCELLANEOUS

        11.1 CONTINUATION AND TERMINATION OF SECURITY INTEREST. This is a
continuing Agreement and the grant of a security interest hereunder shall remain
in full force and effect and all the rights, powers and remedies of Lender
hereunder shall continue to exist until the Secured Obligations are paid in full
as the same become due and payable and until Lender has executed a written
termination statement (which Lender shall execute within thirty (30) days after
full payment of the Secured Obligations hereunder or within 10 days upon request
of Borrower), reassigning to Borrower, without recourse, the Collateral and all
rights conveyed hereby and returning possession of the Collateral to Borrower.
The rights, powers and remedies of Lender hereunder shall be in addition to all
rights, powers and remedies given by statute or rule of law and are cumulative.
The pursuit of any one or more of the rights, powers and remedies provided
herein shall not be construed as a waiver of or election of remedies with
respect to any other rights, powers and remedies of Lender. When all Secured
Obligations have been paid in full and discharged, all security interests and
other Liens granted to Lender under this Agreement will terminate. Upon the full
and final discharge of all of the Secured Obligations, Lender will execute and
deliver such documents as may be reasonably necessary and requested by Borrower
to release the Collateral from the security interest and Lien granted to Lender
in this Agreement, and return (or cause to be returned) to Borrower any
Collateral in the possession of Lender or its agents.

        11.2 SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under such law, such provision shall be ineffective only to the extent
and duration of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.

        11.3 NOTICE. Except as otherwise provided herein, all notices and
service of process required, contemplated, or permitted hereunder or with
respect to the subject matter hereof shall be in writing, and shall be deemed to
have been validly served, given or delivered upon the earlier of: (i) the first
business day after transmission by facsimile or hand delivery or deposit with an
overnight express service or overnight mail delivery service; or (ii) the third
calendar day after deposit in the United States mails, with proper first class
postage prepaid, and shall be addressed to the party to be notified as follows:

        (a)    IF TO LENDER:

                                 COMDISCO, INC.
                                Legal Department
                           Attention: General Counsel
                              6111 North River Road
                               Rosemont, IL 60018
                            Facsimile: (847) 518-5088

                                       23
<PAGE>   24

               WITH A COPY TO:

                        COMDISCO, INC./COMDISCO VENTURES
                              6111 North River Road
                               Rosemont, IL 60018
                            Facsimile: (847) 518-5465

        (b) IF TO BORROWER:

                                HANDSPRING, INC.
                            Attention: Donna Dubinsky
                        299 California Avenue, Suite 300
                               Palo Alto, CA 94306
                            Facsimile: (650) 566-8100
                              Phone: (650) 566-2222

or to such other address as each party may designate for itself by like notice.

        11.4 ENTIRE AGREEMENT; AMENDMENTS. This Agreement, the Note(s), and the
other Loan Documents constitute the entire agreement and understanding of the
parties hereto in respect of the subject matter hereof and thereof, and
supersede and replace in their entirety any prior proposals, term sheets,
letters, negotiations or other documents or agreements, whether written or oral,
with respect to the subject matter hereof or thereof (including, without
limitation, Lender's proposal letter dated April 22, 1999), all of which are
merged herein and therein. None of the terms of this Agreement, the Note(s) or
any of the other Loan Documents may be amended except by an instrument executed
by each of the parties hereto.

        11.5 HEADINGS. The various headings in this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement or any provisions hereof.

        11.6 NO WAIVER. The powers conferred upon Lender by this Agreement are
solely to protect its interest in the Collateral and shall not impose any duty
upon Lender to exercise any such powers. No omission, or delay, by Lender at any
time to enforce any right or remedy reserved to it, or to require performance of
any of the terms, covenants or provisions hereof by Borrower at any time
designated, shall be a waiver of any such right or remedy to which Lender is
entitled, nor shall it in any way affect the right of Lender to enforce such
provisions thereafter.

        11.7 SURVIVAL. All agreements, representations and warranties contained
in this Agreement, the Note(s) and the other Loan Documents or in any document
delivered pursuant hereto or thereto shall be for the benefit of Lender and
shall survive the execution and delivery of this Agreement and the expiration or
other termination of this Agreement.

        11.8 SUCCESSOR AND ASSIGNS. The provisions of this Agreement and the
other Loan Documents shall inure to the benefit of and be binding on Borrower
and its permitted assigns (if any). Borrower shall not assign its obligations
under this Agreement, the Note(s) or any of the

                                       24
<PAGE>   25

other Loan Documents without Lender's express written consent, and any such
attempted assignment shall be void and of no effect. Subject to the
Subordination Agreement, Lender may assign, transfer, or endorse its rights
hereunder and under the other Loan Documents without prior notice to Borrower,
and all of such rights shall inure to the benefit of Lender's successors and
assigns; provided, however, that any such successors or assigns shall be bound
by and expressly assume all obligations under the Subordination Agreement.

        11.9 FURTHER INDEMNIFICATION. Borrower agrees to pay, and to save Lender
harmless from any and all liabilities with respect to, or resulting from any
delay in paying, any and all excise, sales or other similar taxes which may be
payable or determined to be payable with respect to any of the Collateral or in
connection with any of the transactions contemplated by this Agreement.

        11.10 GOVERNING LAW. This Agreement, the Note(s) and the other Loan
Documents have been negotiated and delivered to Lender in the State of Illinois,
and shall not become effective until accepted by Lender in the State of
Illinois. Payment to Lender by Borrower of the Secured Obligations is due in the
State of Illinois. This Agreement, the Note(s) and the other Loan Documents
shall be governed by, and construed and enforced in accordance with, the laws of
the State of Illinois, excluding conflict of laws principles that would cause
the application of laws of any other jurisdiction.

        11.11 CONSENT TO JURISDICTION AND VENUE. All judicial proceedings
arising in or under or related to this Agreement, the Note(s) or any of the
other Loan Documents may be brought in any state or federal court of competent
jurisdiction located in the State of Illinois. By execution and delivery of this
Agreement, each party hereto generally and unconditionally: (a) consents to
personal jurisdiction in Cook County, State of Illinois; (b) waives any
objection as to jurisdiction or venue in Cook County, State of Illinois; (c)
agrees not to assert any defense based on lack of jurisdiction or venue in the
aforesaid courts; and (d) irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Agreement, the Note(s) or the other
Loan Documents. Service of process on any party hereto in any action arising out
of or relating to this agreement shall be effective if given in accordance with
the requirements for notice set forth in Section 11.3, above and shall be deemed
effective and received as set forth in Section 11.3, above. Nothing herein shall
affect the right to serve process in any other manner permitted by law or shall
limit the right of either party to bring proceedings in the courts of any other
jurisdiction.

        11.12 MUTUAL WAIVER OF JURY TRIAL. Because disputes arising in
connection with complex financial transactions are most quickly and economically
resolved by an experienced and expert person and the parties wish applicable
state and federal laws to apply (rather than arbitration rules), the parties
desire that their disputes be resolved by a judge applying such applicable laws.
EACH OF BORROWER AND LENDER SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL
BY JURY OF ANY CAUSE OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY
CLAIM OR ANY OTHER CLAIM (COLLECTIVELY, "CLAIMS") ASSERTED BY BORROWER AGAINST
LENDER OR ITS ASSIGNEE AND/OR BY LENDER OR ITS ASSIGNEE AGAINST BORROWER. This
waiver extends to all such Claims, including any other Claims which involve
Borrower and Lender and additional persons or entities ; Claims which arise out
of or are in any way related to the relationship between Borrower and Lender and
other persons or creditors under the Loan Documents; and any Claims for damages,
breach of contract arising out of this Agreement, any other Loan

                                       25
<PAGE>   26

Document or any of the Excluded Agreements, specific performance, or any
equitable or legal relief of any kind.

        11.13 CONFIDENTIALITY. Lender acknowledges that certain items of
Collateral, including, but not limited to trade secrets, source codes, customer
lists and certain other items of Intellectual Property, and any Financial
Statements provided pursuant to Section 7 hereof, constitute proprietary and
confidential information of the Borrower (the "Confidential Information").
Accordingly, Lender agrees that any Confidential Information it may obtain in
the course of acquiring, perfecting or foreclosing on the Collateral or
otherwise provided under this Agreement, provided such Confidential Information
is marked as confidential by Borrower at the time of disclosure, shall be
received in the strictest confidence and will not be disclosed to any other
person or entity in any manner whatsoever, in whole or in part, without the
prior written consent of the Borrower, unless and until Lender has acquired
indefeasible title thereto.

        11.14 COUNTERPARTS. This Agreement and any amendments, waivers, consents
or supplements hereto may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so
delivered shall be deemed an original, but all of which counterparts shall
constitute but one and the same instrument.

                   REMAINDER OF PAGE LEFT INTENTIONALLY BLANK

                                       26
<PAGE>   27

        IN WITNESS WHEREOF, the Borrower and the Lender have duly executed and
delivered this Agreement as of the day and year first above written.

        BORROWER:                      HANDSPRING, INC.

                                       Signature:  /s/ Donna L. Dubinsky
                                                 --------------------------
                                       Print Name:  Donna L. Dubinsky
                                                  -------------------------
                                       Title:               CEO
                                             ------------------------------

ACCEPTED IN ROSEMONT, ILLINOIS:

        LENDER:                        COMDISCO, INC.

                                       Signature:  /s/ James Labe
                                                 --------------------------
                                       Print Name:  James Labe, President
                                                    Comdisco Ventures
                                                    Division
                                                  -------------------------
                                       Title:   June 14, 1999
                                             ------------------------------

                                       27
<PAGE>   28

                                    EXHIBIT A

                          SUBORDINATED PROMISSORY NOTE

$_______                                                        DATE:  _________

                                                                DUE:   _________

FOR VALUE RECEIVED, Handspring, Inc., a California corporation (the "Borrower")
hereby promises to pay to the order of Comdisco, Inc., a Delaware corporation
(the "Lender") at P.O. Box 91744, Chicago, IL 60693 or such other place of
payment as the holder of this Secured Promissory Note (this "Note") may specify
from time to time in writing, in lawful money of the United States of America,
the principal amount of __________ and 00/100 Dollars ($ _______) together with
interest at ten percent (10%) per annum from the date of this Note to maturity
of each installment on the principal hereof remaining from time to time unpaid,
such principal and interest to be paid in monthly installments of interest only
until the earlier of (i) completion of Borrower's Initial Public Offering, or
(ii) eighteen (18) months from the Advance Date in the amount of $_________
each, commencing ____________and on the same day of each month thereafter to and
including, _____________________ which shall be followed by 18 equal monthly
installments of principal and interest in the amount of $_________ each,
commencing ______________ and on the same day of each month thereafter to and
including ________________, such installments to be applied first to accrued and
unpaid interest and the balance to unpaid principal. Interest shall be computed
on the basis of a year consisting of twelve months of thirty days each. This
Note is the Note referred to in, and is executed and delivered in connection
with, that certain Subordinated Loan and Security Agreement dated June 10, 1999
by and between Borrower and Lender (as the same may from time to time be
amended, modified, supplemented or restated in accordance with its terms, the
"Loan Agreement"), and is entitled to the benefit and security of the Loan
Agreement and the other Loan Documents (as defined in the Loan Agreement), to
which reference is made for a statement of all of the terms and conditions
thereof. All terms defined in the Loan Agreement shall have the same definitions
when used herein, unless otherwise defined herein.

THIS NOTE IS EXPRESSLY SUBJECT TO THE TERMS OF THAT CERTAIN SUBORDINATION
AGREEMENT BY AND BETWEEN LENDER AND BORROWER FOR THE BENEFIT OF SENIOR CREDITOR.
IN THE EVENT OF ANY CONTRADICTION OR INCONSISTENCY BETWEEN THIS NOTE AND THE
SUBORDINATION AGREEMENT, THE TERMS OF THE SUBORDINATION AGREEMENT SHALL CONTROL.

The Borrower waives presentment and demand for payment, notice of dishonor,
protest and notice of protest and any other notice as permitted under the UCC or
any applicable law.

                                      -1-
<PAGE>   29

This Note has been negotiated and delivered to Lender and is payable in the
State of Illinois, and shall not become effective until accepted by Lender in
the State of Illinois. This Note shall be governed by and construed and enforced
in accordance with, the laws of the State of Illinois, excluding any conflicts
of law rules or principles that would cause the application of the laws of any
other jurisdiction.

      BORROWER:                   HANDSPRING, INC.
                                  299 California Avenue, Suite 300
                                  Palo Alto, CA 94306

                                  Signature:    __________________________

                                  Print Name:   __________________________

                                  Title:        __________________________

                                      -2-
<PAGE>   30

                                    EXHIBIT B

                                 ADVANCE REQUEST

                                                        Date:___________________
To:     Lender:
        Comdisco, Inc.
        % Comdisco Ventures
        3000 Sand Hill Road
        Menlo Park, CA 94025
        Attention: Vika Tonga
        Facsimile (650) 854-4026

        Borrower hereby requests from Comdisco, Inc. ("Lender") an Advance in
the amount of $________________________ on__________________________(the
"Advance Date") under that Subordinated Loan and Security Agreement between
Borrower and Lender dated June 10, 1999 (the "Agreement").

        Please:

        (a)    Issue a check payable to Borrower   ______________

                             or

        (b)    Wire Funds to Borrower's account    ______________

               Bank:
               Address:______________________________
                       ______________________________
               ABA Number:___________________________
               Account Number:_______________________
               Account Name:_________________________

        Borrower hereby represents that the Conditions Precedent to Loan set
forth in Section 4 of the Agreement are satisfied and will be satisfied upon the
making of such Loans, except and to the extent described on Schedule 1 to this
Advance Request. Borrower understands and acknowledges that Lender has the right
to review such Schedule and based upon such review in its reasonable discretion
Lender may decline to fund the requested Advance if a condition precedent
thereto as set forth in Section 4 of the Agreement has not been satisfied.

        Executed this _____ day of___________, 199__ by:

                  BORROWER:         HANDSPRING, INC.

                         BY:    _________________________________
                         TITLE: _________________________________
                         PRINT: _________________________________

                                       28
<PAGE>   31

                                    EXHIBIT C

                                (INSERT CHARTER)

                                       29
<PAGE>   32

                                                                ENDORSED - FILED
                                                            IN THE OFFICE OF THE
                                                              SECRETARY OF STATE
                                                      OF THE STATE OF CALIFORNIA
                                                                OCTOBER 16, 1998
                                                  BILL JONES, SECRETARY OF STATE

                 AMENDED AND RESTATED ARTICLES OF INCORPORATION
                             OF JD TECHNOLOGY, INC.

        Donna L. Dubinsky and Jeffrey C. Hawkins certify that:

        1. They are the President and Secretary, respectively, of JD Technology,
Inc., a California corporation.

        2. The Articles of Incorporation of the corporation, as amended to the
date of the filing of this certificate, including amendments set forth herein
but not separately filed (and with the omissions required by Section 910 of the
California Corporations Code), are restated in their entirety as set forth in
Exhibit "1" attached hereto and made a part hereof by this reference.

        3. The Restated Articles of Incorporation set forth herein have been
duly approved by the Board of Directors of the corporation.

        4. The amendments to the Articles of Incorporation included in the
Restated Articles of Incorporation set forth herein (other than omissions
required by Section 910 of the Corporations Code) have been duly approved by the
required vote of the shareholders of the corporation in accordance with Sections
902 and 903 of the California Corporations Code. The corporation has one class
of stock, and the number of outstanding shares is 14,000,000 shares of Common
Stock. The number of shares voting in favor of the Restated Articles of
Incorporation set forth herein equaled or exceeded the vote required. The
percentage vote required was more than 50% of the outstanding shares of Common
Stock.

        We further declare under penalty of perjury under the laws of the State
of California that the matters set forth in this certificate are true and
correct of our own knowledge.

Dated: October 16, 1998           /s/  Donna L. Dubinsky
                                  ----------------------------------------------
                                  Donna L. Dubinsky, President

                                  /s/  Jeffrey C. Hawkins
                                  ----------------------------------------------
                                  Jeffrey C. Hawkins, Secretary

<PAGE>   33

                                   EXHIBIT "1"

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

                 AMENDED AND RESTATED ARTICLES OF INCORPORATION

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

                                    ARTICLE I

               The name of the corporation is JD Technology, Inc.

                                   ARTICLE II

        The purpose of the corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California
Corporations Code.

                                   ARTICLE III

        The liability of the directors of the corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law.
Unless applicable law otherwise provides, any amendment, repeal or modification
of this Article III shall not adversely affect any right or protection of a
director under this Article III that existed at or prior to the time of such
amendment, repeal or modification.

                                   ARTICLE IV

        The corporation is authorized to provide indemnification of agents (as
defined in Section 317 of the California Corporations Code) through bylaw
provisions, by agreements with agents, vote of shareholders or disinterested
directors or otherwise, in excess of the indemnification otherwise permitted by
Section 317 of the California Corporations Code, subject only to the applicable
limits on such excess indemnification set forth in Section 204 of the California
Corporations Code. Unless applicable law otherwise provides, any amendment,
repeal or modification of any provision of this Article IV shall not adversely
affect any contract or other right to indemnification of an agent of the
corporation that existed at or prior to the time of such amendment, repeal or
modification.

                                    ARTICLE V

        This corporation is authorized to issue two classes of shares,
designated "Common Stock" and "Preferred Stock," respectively, both of which
shall have no par value. The number of shares of Common Stock authorized to be
issued is 35,000,000 shares. The number of shares of Preferred Stock authorized
to be issued is 8,200,000 shares, all of which are designated as "Series A
Preferred Stock."

<PAGE>   34

                                   ARTICLE VI

        The rights, preferences, privileges and restrictions granted to and
imposed on the Series A Preferred Stock and the Common Stock are as follows:

        1. DEFINITIONS. For purposes of this Article VI, the following
        definitions apply:

             1.1 "BOARD" shall mean the Board of Directors of the Company.

             1.2 "COMPANY" shall mean this corporation.

             1.3 "COMMON STOCK" shall mean the Common Stock, no par value, of
        the Company.

             1.4 "COMMON STOCK DIVIDEND" shall mean a stock dividend declared
        and paid on the Common Stock that is payable in shares of Common Stock.

             1.5 "DIVIDEND RATE" shall mean $0.0892 per share per annum for the
        Series A Preferred Stock (as adjusted for any stock splits, stock
        dividends, recapitalizations or the like, with respect to the Series A
        Preferred Stock).

             1.6 "ORIGINAL ISSUE DATE" shall mean the date on which the first
        share of Series A Preferred Stock is issued by the Company.

             1.7 "ORIGINAL ISSUE PRICE" shall mean $2.23 per share for the
        Series A Preferred Stock (as adjusted for any stock splits, stock
        dividends, recapitalizations or the like, with respect to the Series A
        Preferred Stock).

             1.8 "PERMITTED REPURCHASES" shall mean the repurchase by the
        Company of shares of Common Stock held by employees, officers,
        directors, consultants, independent contractors, advisors, or other
        persons performing services for the Company or a subsidiary (if in
        transactions that are primarily for non-financing purposes) that are
        subject to restricted stock purchase agreements or stock option exercise
        agreements under which the Company has the option to repurchase such
        shares: (i) at cost, upon the occurrence of certain events, such as the
        termination of employment or services; or (ii) at any price pursuant to
        the Company's exercise of a right of first refusal to repurchase such
        shares.

             1.9 "PREFERRED STOCK" shall mean the Series A Preferred Stock.

             1.10 "SERIES A PREFERRED STOCK" shall mean the Series A Preferred
        Stock, no par value, of the Company.

             1.11 "SUBSIDIARY" shall mean any corporation of which at least
        fifty percent (50%) of the outstanding voting stock is at the time owned
        directly or indirectly by the Company or by one or more of such
        subsidiary corporations.

                                       2
<PAGE>   35

        2. DIVIDEND RIGHTS.

             2.1 Series A Preferred Stock. In each calendar year, the holders of
the then outstanding Series A Preferred Stock shall be entitled to receive,
when, as and if declared by the Board, out of any funds and assets of the
Company legally available therefor, noncumulative dividends at the annual
Dividend Rate for the Series A Preferred Stock, prior and in preference to the
payment of any dividends on the Common Stock in such calendar year (other than a
Common Stock Dividend). No dividends (other than a Common Stock Dividend) shall
be paid with respect to the Common Stock during any calendar year unless
dividends in the total amount of the annual Dividend Rate for the Series A
Preferred Stock shall have first been paid or declared and set apart for payment
to the holders of the Series A Preferred Stock during that calendar year;
provided, however, that this restriction shall not apply to Permitted
Repurchases. Dividends on the Series A Preferred Stock shall not be mandatory or
cumulative, and no rights or interest shall accrue to the holders of the Series
A Preferred Stock by reason of the fact that the Company shall fail to declare
or pay dividends on the Series A Preferred Stock in the amount of the annual
Dividend Rate for the Series A Preferred Stock or in any other amount in any
calendar year or any fiscal year of the Company, whether or not the earnings of
the Company in any calendar year or fiscal year were sufficient to pay such
dividends in whole or in part.

             2.2 Participation Rights. If, after dividends in the full
preferential amount specified in this Section 2 for the Series A Preferred Stock
have been paid or declared and set apart in any calendar year of the Company,
the Board shall declare additional dividends out of funds legally available
therefor in that calendar year, then such additional dividends shall be declared
pro rata on the Common Stock and the Series A Preferred Stock on a pari passu
basis according to the number of shares of Common Stock held by such holders,
where each holder of shares of Series A Preferred Stock is to be treated for
this purpose as holding the greatest whole number of shares of Common Stock then
issuable upon conversion of all shares of Series A Preferred Stock held by such
holder pursuant to Section 5.

             2.3 Non-Cash Dividends. Whenever a dividend provided for in this
Section 2 shall be payable in property other than cash, the value of such
dividend shall be deemed to be the fair market value of such property as
determined in good faith by the Board.

        3. LIQUIDATION RIGHTS. In the event of any liquidation, dissolution or
winding up of the Company, whether voluntary or involuntary, the funds and
assets that may be legally distributed to the Company's shareholders (the
"AVAILABLE FUNDS AND ASSETS") shall be distributed to shareholders in the
following manner:

             3.1 Series A Preferred Stock. The holders of each share of Series A
Preferred Stock then outstanding shall be entitled to be paid, out of the
Available Funds and Assets, and prior and in preference to any payment or
distribution (or any setting apart of any payment or distribution) of any
Available Funds and Assets on any shares of Common Stock, an amount per share
equal to the Original Issue Price of the Series A Preferred Stock plus all
declared but unpaid dividends on the Series A Preferred Stock. If upon any
liquidation, dissolution or winding up of the Company, the Available Funds and
Assets shall be insufficient to permit the

                                       3
<PAGE>   36

payment to holders of the Series A Preferred Stock of their full preferential
amount described in this subsection, then the entire Available Funds and Assets
shall be distributed among the holders of the then outstanding Series A
Preferred Stock pro rata, according to the number of outstanding shares of
Series A Preferred Stock held by each holder thereof.

             3.2 Remaining Assets. If there are any Available Funds and Assets
remaining after the payment or distribution (or the setting aside for payment or
distribution) to the holders of the Series A Preferred Stock of their full
preferential amounts described above in this Section 3, then all such remaining
Available Funds and Assets shall be distributed among the holders of the then
outstanding Common Stock pro rata according to the number of shares of Common
Stock held by each holder thereof.

             3.3 Merger or Sale of Assets. A (i) reorganization, consolidation
or merger (or similar transaction or series of transactions) of the Company with
or into any other corporation or corporations in which the holders of the
Company's outstanding shares immediately before such transaction or series of
transactions do not, immediately after such transaction or series of
transactions, retain stock representing a majority of the voting power of the
surviving corporation (or its parent corporation if the surviving corporation is
wholly owned by the parent corporation) of such transaction or series of
transactions; or (ii) a sale of all or substantially all of the assets of the
Company, shall each be deemed to be a liquidation, dissolution or winding up of
the Company as those terms are used in this Section 3.

             3.4 Non-Cash Consideration. If any assets of the Company
distributed to shareholders in connection with any liquidation, dissolution, or
winding up of the Company are other than cash, then the value of such assets
shall be their fair market value as determined by the Board, except that any
securities to be distributed to shareholders in a liquidation, dissolution, or
winding up of the Company shall be valued as follows:

                  (a) The method of valuation of securities not subject to
investment letter or other similar restrictions on free marketability shall be
as follows:

                      (i) if the securities are then traded on a national
                securities exchange or the Nasdaq National Market (or a similar
                national quotation system), then the value shall be deemed to be
                the average of the closing prices of the securities on such
                exchange or system over the 30-day period ending three (3) days
                prior to the distribution; and

                      (ii) if actively traded over-the-counter, then the value
                shall be deemed to be the average of the closing bid prices over
                the 30-day period ending three (3) days prior to the
                distribution; and

                      (iii) if there is no active public market, then the value
                shall be the fair market value thereof, as determined in good
                faith by the Board of Directors of the Company.

                                       4
<PAGE>   37

                  (b) The method of valuation of securities subject to
investment letter or other restrictions on free marketability shall be to make
an appropriate discount from the market value determined as above in
subparagraphs (a)(i), (ii) or (iii) of this subsection to reflect the
approximate fair market value thereof, as determined in good faith by the Board.

             3.5 Notice and Waiver. The Company shall give each holder of record
of Series A Preferred Stock written notice of an impending liquidation,
dissolution or winding up of the Company not later than ten (10) days prior to
the shareholders' meeting, if any, called to approve such transaction, or twenty
(20) days prior to the closing of such transaction, whichever is earlier. The
notice shall describe the nature of the impending transaction. The transaction
shall in no event take place sooner than twenty (20) days after the Company has
given the notice provided for herein. Notwithstanding the foregoing provisions
of this subsection 3.5, the periods and provisions specified herein may be
shortened or waived upon the written consent of the holders of Series A
Preferred Stock that are entitled to such notice rights and that represent at
least a majority of the voting power of all then outstanding shares of such
Series A Preferred Stock.

        4. VOTING RIGHTS.

             4.1 Common Stock. Each holder of shares of Common Stock shall be
entitled to one (1) vote for each share thereof held.

             4.2 Preferred Stock. Each holder of shares of Series A Preferred
Stock shall be entitled to the number of votes equal to the number of whole
shares of Common Stock into which such shares of Series A Preferred Stock could
be converted pursuant to the provisions of Section 5 below at the record date
for the determination of the shareholders entitled to vote on such matters or,
if no such record date is established, the date such vote is taken or any
written consent of shareholders is solicited.

             4.3 General. Subject to the foregoing provisions of this Section 4,
each holder of Series A Preferred Stock shall have full voting rights and powers
equal to the voting rights and powers of the holders of Common Stock, and shall
be entitled to notice of any shareholders' meeting in accordance with the bylaws
of the Company (as in effect at the time in question) and applicable law, and
shall be entitled to vote, together with the holders of Common Stock, with
respect to any question upon which holders of Common Stock have the right to
vote, except as may be otherwise provided by applicable law. Except as otherwise
expressly provided herein or as required by law, the holders of Series A
Preferred Stock and the holders of Common Stock shall vote together and not as
separate classes.

             4.4 Board Size. The authorized number of directors of the Company's
Board shall be five (5). The Company shall not alter the authorized number of
directors in its Articles of Incorporation, Bylaws or otherwise, without first
obtaining the written consent, or affirmative vote at a meeting, of the holders
of at least a majority of the then outstanding shares of Series A Preferred
Stock, consenting or voting (as the case may be) separately as a class.

             4.5 Board of Directors Election and Removal.

                                       5
<PAGE>   38

                  (a) Election. So long as at 2,000,000 shares of Series A
Preferred Stock are outstanding (such number of shares being subject to
proportional adjustment to reflect combinations or subdivisions of such Series A
Preferred Stock or dividends declared in shares of such stock), (i) the holders
of the Series A Preferred Stock, voting as a separate series (with cumulative
voting rights as among themselves in accordance with Section 708 of the
California Corporations Code), shall be entitled to elect two (2) directors of
the Company; (ii) the holders of the Common Stock, voting as a separate class
(with cumulative voting rights as among themselves in accordance with Section
708 of the California Corporations Code), shall be entitled to elect two (2)
directors of the Company; and (iii) the holders of the Series A Preferred Stock
and the Common Stock, voting together as a single class (with cumulative voting
rights as among themselves in accordance with Section 708 of the California
Corporations Code) shall be entitled to elect the remaining directors of the
Company.

                  (b) Quorum; Required Vote.

                       (i) Quorum. At any meeting held for the purpose of
electing directors, the presence in person or by proxy (A) of the holders of a
majority of the shares of the Series A Preferred Stock or Common Stock then
outstanding, respectively, shall constitute a quorum of the Series A Preferred
Stock or Common Stock, as the case may be, for the election of directors to be
elected solely by the holders of the Series A Preferred Stock or Common Stock,
respectively, and (B) of holders of Series A Preferred Stock and Common Stock
representing a majority of each of the voting power of all the then-outstanding
shares (1) of Series A Preferred Stock and (2) of Common Stock shall constitute
a quorum for the election of the directors to be elected jointly by the holders
of the Preferred Stock and the Common Stock.

                       (ii) Required Vote. With respect to the election of any
director or directors by the holders of the outstanding shares of a specified
series, class or classes of stock given the right to elect such director or
directors pursuant to subsection 4.5(a) above ("SPECIFIED STOCK"), that
candidate or those candidates (as applicable) shall be elected who either: (i)
in the case of any such vote conducted at a meeting of the holders of such
Specified Stock, receive the highest number of affirmative votes of the
outstanding shares of such Specified Stock, up to the number of directors to be
elected by such Specified Stock; or (ii) in the case of any such vote taken by
written consent without a meeting, are elected by the unanimous written consent
of the holders of shares of such Specified Stock, except that, if such vote is
to fill a vacancy on the Board other than a vacancy created by removal of a
director pursuant to Section 305(b) of the California Corporations Code, such
vacancy may be filled by election by the written consent of the holders of a
majority of the outstanding shares of such Specified Stock entitled to vote.

                  (c) Vacancy. If there shall be any vacancy in the office of a
director elected by the holders of any Specified Stock pursuant to subsection
4.5(a), then a successor to hold office for the unexpired term of such director
may be elected by either: (i) the remaining director or directors (if any) in
office that were so elected by the holders of such Specified Stock, by the
affirmative vote of a majority of such directors (or by the sole remaining
director elected by the holders of such Specified Stock if there be but one), or
if such vacancy is not filled by such

                                       6
<PAGE>   39

directors (ii) the required vote of holders of the shares of such Specified
Stock specified in subsection 4.5(b)(ii) above that are entitled to elect such
director under subsection 4.5(a).

                  (d) Removal. Subject to Section 303 of the California
Corporations Code, any director who shall have been elected to the Board by the
holders of any Specified Stock pursuant to subsection 4.5(a) or by any director
or directors elected by holders of any Specified Stock as provided in subsection
4.5(c), may be removed during his or her term of office, either with or without
cause, by, and only by, the affirmative vote of shares representing a majority
of the voting power of all the outstanding shares of such Specified Stock
entitled to vote, given either at a meeting of such shareholders duly called for
that purpose or pursuant to a written consent of shareholders without a meeting,
and any vacancy created by such removal may be filled only in the manner
provided in subsection 4.5(c).

                  (e) Procedures. Any meeting of the holders of any Specified
Stock, and any action taken by the holders of any Specified Stock by written
consent without a meeting, in order to elect or remove a director under this
subsection 4.5, shall be held in accordance with the procedures and provisions
of the Company's Bylaws, the California Corporations Code and applicable law
regarding shareholder meetings and shareholder actions by written consent, as
such are then in effect (including but not limited to procedures and provisions
for determining the record date for shares entitled to vote).

                  (f) Termination. Notwithstanding anything in this subsection
4.5 to the contrary, the provisions of this subsection 4.5 shall cease to be of
any further force or effect upon the earlier to occur of: (i) the first date on
which the total number of outstanding shares of Series A Preferred Stock is less
than 2,000,000 shares (such number of shares being subject to proportional
adjustment to reflect combination or subdivisions of such Series A Preferred
Stock or dividends declared in shares of such stock); or (ii) upon the merger or
consolidation of the Company with or into any other corporation or corporations
if such consolidation or merger is approved by the shareholders of the Company
in compliance with applicable law and the Articles of Incorporation and Bylaws
of the Company in which the holders of the Company's outstanding shares
immediately before such consolidation or merger do not, immediately after such
consolidation or merger, retain stock representing a majority of the voting
power of the surviving corporation (or its parent corporation if the surviving
corporation is wholly owned by the parent corporation); or (iii) a sale of all
or substantially all of the Company's assets.

        5. CONVERSION RIGHTS. The outstanding shares of Series A Preferred Stock
shall be convertible into Common Stock as follows:

             5.1 Optional Conversion.

                  (a) At the option of the holder thereof, each share of Series
A Preferred Stock shall be convertible, at any time or from time to time prior
to the close of business on the business day before any date fixed for
redemption of such share, into fully paid and nonassessable shares of Common
Stock as provided herein.

                                       7
<PAGE>   40

                  (b) Each holder of Series A Preferred Stock who elects to
convert the same into shares of Common Stock shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Company or any
transfer agent for the Series A Preferred Stock or Common Stock, and shall give
written notice to the Company at such office that such holder elects to convert
the same and shall state therein the number of shares of Series A Preferred
Stock being converted. Thereupon the Company shall promptly issue and deliver at
such office to such holder a certificate or certificates for the number of
shares of Common Stock to which such holder is entitled upon such conversion.
Such conversion shall be deemed to have been made immediately prior to the close
of business on the date of such surrender of the certificate or certificates
representing the shares of Series A Preferred Stock to be converted, and the
person entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder of such shares
of Common Stock on such date. If a conversion election under this subsection 5.1
is made in connection with an underwritten offering of the Company's securities
pursuant to the Securities Act of 1933, as amended, (which underwritten offering
does not cause an automatic conversion pursuant to subsection 5.2 to take place)
the conversion may, at the option of the holder tendering shares of Series A
Preferred Stock for conversion, be conditioned upon the closing with the
underwriters of the sale of the Company's securities pursuant to such offering,
in which event the holders making such elections who are entitled to receive
Common Stock upon conversion of their Series A Preferred Stock shall not be
deemed to have converted such shares of Series A Preferred Stock until
immediately prior to the closing of such sale of the Company's securities in the
offering.

             5.2 Automatic Conversion.

                  (a) Each share of Series A Preferred Stock shall automatically
be converted into fully paid and nonassessable shares of Common Stock, as
provided herein: (i) immediately prior to the closing of a firm commitment
underwritten public offering pursuant to an effective registration statement
filed under the Securities Act of 1933, as amended, covering the offer and sale
of Common Stock for the account of the Company in which the aggregate public
offering price (before deduction of underwriters' discounts and commissions)
equals or exceeds $20,000,000 and the public offering price per share of which
equals or exceeds $6.69 per share before deduction of underwriters' discounts
and commissions (such price per share of Common Stock to be appropriately
adjusted to reflect Common Stock Events (as defined in Section 5.4)); or (ii)
upon the Company's receipt of the written consent of the holders of not less
than a majority of the then outstanding shares of Series A Preferred Stock to
the conversion of all then outstanding Series A Preferred Stock under this
Section 5.

                  (b) Upon the occurrence of any event specified in subparagraph
5.2(a) (i) or (ii) above, the outstanding shares of Series A Preferred Stock
shall be converted into Common Stock automatically without the need for any
further action by the holders of such shares and whether or not the certificates
representing such shares are surrendered to the Company or its transfer agent;
provided, however, that the Company shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon such conversion unless the
certificates evidencing such shares of Series A Preferred Stock are either
delivered to the Company or its transfer agent as provided below, or the holder
notifies the Company or its

                                       8
<PAGE>   41

transfer agent that such certificates have been lost, stolen or destroyed and
executes an agreement satisfactory to the Company to indemnify the Company from
any loss incurred by it in connection with such certificates. Upon the
occurrence of such automatic conversion of the Series A Preferred Stock, the
holders of Series A Preferred Stock shall surrender the certificates
representing such shares at the office of the Company or any transfer agent for
the Series A Preferred Stock or Common Stock. Thereupon, there shall be issued
and delivered to such holder promptly at such office and in its name as shown on
such surrendered certificate or certificates, a certificate or certificates for
the number of shares of Common Stock into which the shares of Series A Preferred
Stock surrendered were convertible on the date on which such automatic
conversion occurred.

             5.3 Conversion Price. Each share of Series A Preferred Stock shall
be convertible in accordance with subsection 5.1 or subsection 5.2 above into
the number of shares of Common Stock which results from dividing the Original
Issue Price for such Series A Preferred Stock by the conversion price for such
Series A Preferred Stock that is in effect at the time of conversion (the
"CONVERSION PRICE"). The initial Conversion Price for the Series A Preferred
Stock shall be the Original Issue Price for the Series A Preferred Stock. The
Conversion Price of the Series A Preferred Stock shall be subject to adjustment
from time to time as provided below.

             5.4 Adjustment Upon Common Stock Event. Upon the happening of a
Common Stock Event (as hereinafter defined), the Conversion Price of the Series
A Preferred Stock shall, simultaneously with the happening of such Common Stock
Event, be adjusted by multiplying the Conversion Price of such Series A
Preferred Stock in effect immediately prior to such Common Stock Event by a
fraction, (i) the numerator of which shall be the number of shares of Common
Stock issued and outstanding immediately prior to such Common Stock Event, and
(ii) the denominator of which shall be the number of shares of Common Stock
issued and outstanding immediately after such Common Stock Event, and the
product so obtained shall thereafter be the Conversion Price for such Series A
Preferred Stock. The Conversion Price for the Series A Preferred Stock shall be
readjusted in the same manner upon the happening of each subsequent Common Stock
Event. As used herein, the term "COMMON STOCK EVENT" shall mean, at any time or
from time to time after the Original Issue Date, (i) the issue by the Company of
additional shares of Common Stock as a dividend or other distribution on
outstanding Common Stock, (ii) a subdivision of the outstanding shares of Common
Stock into a greater number of shares of Common Stock, or (iii) a combination of
the outstanding shares of Common Stock into a smaller number of shares of Common
Stock.

             5.5 Adjustments for Other Dividends and Distributions. If at any
time or from time to time after the Original Issue Date the Company pays a
dividend or makes another distribution to the holders of the Common Stock
payable in securities of the Company other than shares of Common Stock, then in
each such event provision shall be made so that the holders of the Series A
Preferred Stock shall receive upon conversion thereof, in addition to the number
of shares of Common Stock receivable upon conversion thereof, the amount of
securities of the Company which they would have received had their Series A
Preferred Stock been converted into Common Stock on the date of such event (or
such record date, as applicable) and had they

                                       9
<PAGE>   42

thereafter, during the period from the date of such event (or such record date,
as applicable) to and including the conversion date, retained such securities
receivable by them as aforesaid during such period, subject to all other
adjustments called for during such period under this Section 5 with respect to
the rights of the holders of the Series A Preferred Stock or with respect to
such other securities by their terms.

             5.6 Adjustment for Reclassification, Exchange and Substitution. If
at any time or from time to time after the Original Issue Date the Common Stock
issuable upon the conversion of the Series A Preferred Stock is changed into the
same or a different number of shares of any class or classes of stock, whether
by recapitalization, reclassification or otherwise (other than by a Common Stock
Event or a stock dividend, reorganization, merger, consolidation or sale of
assets provided for elsewhere in this Section 5), then in any such event each
holder of Series A Preferred Stock shall have the right thereafter to convert
such stock into the kind and amount of stock and other securities and property
receivable upon such recapitalization, reclassification or other change by
holders of the number of shares of Common Stock into which such shares of Series
A Preferred Stock could have been converted immediately prior to such
recapitalization, reclassification or change, all subject to further adjustment
as provided herein or with respect to such other securities or property by the
terms thereof.

             5.7 Reorganizations, Mergers and Consolidations. If at any time or
from time to time after the Original Issue Date there is a capital
reorganization of the Company (other than a recapitalization, subdivision,
combination, reclassification or exchange of shares provided for elsewhere in
this Section 5) or a merger or consolidation of the Company with or into another
corporation (except an event which is governed under subsection 3.3), then, as a
part of such reorganization, merger or consolidation, provision shall be made so
that the holders of the Series A Preferred Stock thereafter shall be entitled to
receive, upon conversion of the Series A Preferred Stock, the number of shares
of stock or other securities or property of the Company, or of such successor
corporation resulting from such reorganization, merger or consolidation, to
which a holder of Common Stock deliverable upon conversion would have been
entitled on such reorganization, merger or consolidation. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 5 with respect to the rights of the holders of the Series A
Preferred Stock after the reorganization, merger or consolidation to the end
that the provisions of this Section 5 (including adjustment of the Conversion
Price then in effect and number of shares issuable upon conversion of the Series
A Preferred Stock) shall be applicable after that event and be as nearly
equivalent to the provisions hereof as may be practicable. This subsection 5.7
shall similarly apply to successive reorganizations, mergers and consolidations.

             5.8 Sale of Shares Below Conversion Price.

                  (a) Adjustment Formula. If at any time or from time to time
after the Original Issue Date the Company issues or sells, or is deemed by the
provisions of this subsection 5.8 to have issued or sold, Additional Shares of
Common Stock (as hereinafter defined), otherwise than in connection with a
Common Stock Event as provided in subsection 5.4, a dividend or distribution as
provided in subsection 5.5 or a recapitalization, reclassification or other
change as provided in subsection 5.6, or a reorganization, merger or
consolidation as

                                       10
<PAGE>   43

provided in subsection 5.7, for an Effective Price (as hereinafter defined) that
is less than the Conversion Price for the Series A Preferred Stock in effect
immediately prior to such issue or sale (or deemed issue or sale), then, and in
each such case, the Conversion Price for such Series A Preferred Stock shall be
reduced, as of the close of business on the date of such issue or sale, to the
price obtained by multiplying such Conversion Price by a fraction:

                       (i) The numerator of which shall be the sum of (A) the
number of Common Stock Equivalents Outstanding (as hereinafter defined)
immediately prior to such issue or sale of Additional Shares of Common Stock
plus (B) the quotient obtained by dividing the Aggregate Consideration Received
(as hereinafter defined) by the Company for the total number of Additional
Shares of Common Stock so issued or sold (or deemed so issued and sold) by the
Conversion Price for such Series A Preferred Stock in effect immediately prior
to such issue or sale; and

                       (ii) The denominator of which shall be the sum of (A) the
number of Common Stock Equivalents Outstanding immediately prior to such issue
or sale plus (B) the number of Additional Shares of Common Stock so issued or
sold (or deemed so issued and sold).

                  (b) Certain Definitions. For the purpose of making any
adjustment required under this subsection 5.8:

                       (i) "ADDITIONAL SHARES OF COMMON STOCK" shall mean all
shares of Common Stock issued by the Company, whether or not subsequently
reacquired or retired by the Company, other than: (A) shares of Common Stock
issued or issuable upon conversion of Series A Preferred Stock; and (B) shares
of Common Stock (or options, warrants or rights therefor) issued to employees,
officers, or directors of, or contractors, consultants or advisers to, the
Company or any Subsidiary (if in transactions with primarily non-financing
purposes) pursuant to stock purchase or stock option plans, stock bonuses or
awards, warrants, contracts or other arrangements that are approved by the
Board;

                       (ii) The "AGGREGATE CONSIDERATION RECEIVED" by the
Company for any issue or sale (or deemed issue or sale) of securities shall (A)
to the extent it consists of cash, be computed at the gross amount of cash
received by the Company before deduction of any underwriting or similar
commissions, compensation or concessions paid or allowed by the Company in
connection with such issue or sale and without deduction of any expenses payable
by the Company; (B) to the extent it consists of property other than cash, be
computed at the fair value of that property as determined in good faith by the
Board; and (C) if Additional Shares of Common Stock, Convertible Securities or
Rights or Options to purchase either Additional Shares of Common Stock or
Convertible Securities are issued or sold together with other stock or
securities or other assets of the Company for a consideration which covers both,
be computed as the portion of the consideration so received that may be
reasonably determined in good faith by the Board to be allocable to such
Additional Shares of Common Stock, Convertible Securities or Rights or Options.

                                       11
<PAGE>   44

                       (iii) "COMMON STOCK EQUIVALENTS OUTSTANDING" shall mean
the number of shares of Common Stock that is equal to the sum of (A) all shares
of Common Stock of the Company that are outstanding at the time in question,
plus (B) all shares of Common Stock of the Company issuable upon conversion of
all shares of Series A Preferred Stock or other Convertible Securities that are
outstanding at the time in question, plus (C) all shares of Common Stock of the
Company that are issuable upon the exercise of Rights or Options (excluding any
shares of Common Stock excluded from the definition of "Additional Shares of
Common Stock" pursuant to subsection 5.8(b)(i)(B), after the Original Issue
Date) that are outstanding at the time in question assuming the full conversion
or exchange into Common Stock of all such Rights or Options that are Rights or
Options to purchase or acquire Convertible Securities into or for Common Stock.

                       (iv) "CONVERTIBLE SECURITIES" shall mean stock or other
securities convertible into or exchangeable for shares of Common Stock.

                       (v) The "EFFECTIVE PRICE" of Additional Shares of Common
Stock shall mean the quotient determined by dividing the total number of
Additional Shares of Common Stock issued or sold, or deemed to have been issued
or sold, by the Company under this subsection 5.8, into the Aggregate
Consideration Received, or deemed to have been received, by the Company under
this subsection 5.8, for the issue of such Additional Shares of Common Stock;
and

                       (vi) "RIGHTS OR OPTIONS" shall mean warrants, options or
other rights to purchase or acquire shares of Common Stock or Convertible
Securities.

                  (c) Deemed Issuances. For the purpose of making any adjustment
to the Conversion Price of the Series A Preferred Stock required under this
subsection 5.8, if the Company issues or sells any Rights or Options or
Convertible Securities and if the Effective Price of the shares of Common Stock
issuable upon exercise of such Rights or Options and/or the conversion or
exchange of Convertible Securities (computed without reference to any additional
or similar protective or antidilution clauses) is less than the Conversion Price
then in effect for the Series A Preferred Stock, then the Company shall be
deemed to have issued, at the time of the issuance of such Rights, Options or
Convertible Securities, that number of Additional Shares of Common Stock that is
equal to the maximum number of shares of Common Stock issuable upon exercise or
conversion of such Rights, Options or Convertible Securities upon their issuance
and to have received, as the Aggregate Consideration Received for the issuance
of such shares, an amount equal to the total amount of the consideration, if
any, received by the Company for the issuance of such Rights or Options or
Convertible Securities, plus, in the case of such Rights or Options, the minimum
amounts of consideration, if any, payable to the Company upon the exercise in
full of such Rights or Options, plus, in the case of Convertible Securities, the
minimum amounts of consideration, if any, payable to the Company (other than by
cancellation of liabilities or obligations evidenced by such Convertible
Securities) upon the conversion or exchange thereof; provided that:

                                       12
<PAGE>   45

                       (i) if the minimum amounts of such consideration cannot
be ascertained, but are a function of antidilution or similar protective
clauses, then the Company shall be deemed to have received the minimum amounts
of consideration without reference to such clauses;

                       (ii) if the minimum amount of consideration payable to
the Company upon the exercise of Rights or Options or the conversion or exchange
of Convertible Securities is reduced over time or upon the occurrence or
non-occurrence of specified events other than by reason of antidilution or
similar protective adjustments, then the Effective Price shall be recalculated
using the figure to which such minimum amount of consideration is reduced; and

                       (iii) if the minimum amount of consideration payable to
the Company upon the exercise of such Rights or Options or the conversion or
exchange of Convertible Securities is subsequently increased, then the Effective
Price shall again be recalculated using the increased minimum amount of
consideration payable to the Company upon the exercise of such Rights or Options
or the conversion or exchange of such Convertible Securities.

No further adjustment of the Conversion Price, adjusted upon the issuance of
such Rights or Options or Convertible Securities, shall be made as a result of
the actual issuance of shares of Common Stock on the exercise of any such Rights
or Options or the conversion or exchange of any such Convertible Securities. If
any such Rights or Options or the conversion rights represented by any such
Convertible Securities shall expire without having been fully exercised, then
the Conversion Price as adjusted upon the issuance of such Rights or Options or
Convertible Securities shall be readjusted to the Conversion Price which would
have been in effect had an adjustment been made on the basis that the only
shares of Common Stock so issued were the shares of Common Stock, if any, that
were actually issued or sold on the exercise of such Rights or Options or rights
of conversion or exchange of such Convertible Securities, and such shares of
Common Stock, if any, were issued or sold for the consideration actually
received by the Company upon such exercise, plus the consideration, if any,
actually received by the Company for the granting of all such Rights or Options,
whether or not exercised, plus the consideration received for issuing or selling
all such Convertible Securities actually converted or exchanged, plus the
consideration, if any, actually received by the Company (other than by
cancellation of liabilities or obligations evidenced by such Convertible
Securities) on the conversion or exchange of such Convertible Securities,
provided that such readjustment shall not apply to prior conversions of Series A
Preferred Stock.

             5.9 Certificate of Adjustment. In each case of an adjustment or
readjustment of the Conversion Price for the Series A Preferred Stock, the
Company, at its expense, shall cause its Chief Financial Officer to compute such
adjustment or readjustment in accordance with the provisions hereof and prepare
a certificate showing such adjustment or readjustment, and shall mail such
certificate, by first class mail, postage prepaid, to each registered holder of
the Series A Preferred Stock at the holder's address as shown in the Company's
books.

                                       13
<PAGE>   46

             5.10 Fractional Shares. No fractional shares of Common Stock shall
be issued upon any conversion of Series A Preferred Stock. In lieu of any
fractional share to which the holder would otherwise be entitled, the Company
shall pay the holder cash equal to the product of such fraction multiplied by
the Common Stock's fair market value as determined in good faith by the Board as
of the date of conversion.

             5.11 Reservation of Stock Issuable Upon Conversion. The Company
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series A Preferred Stock, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series A Preferred Stock; and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the conversion of all then outstanding shares of the Series A
Preferred Stock, the Company will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purpose.

             5.12 Notices. Any notice required by the provisions of this Section
5 to be given to the holders of shares of the Series A Preferred Stock shall be
deemed given upon the earlier of actual receipt or deposit in the United States
mail, by certified or registered mail, return receipt requested, postage
prepaid, addressed to each holder of record at the address of such holder
appearing on the books of the Company.

             5.13 No Impairment. The Company shall not avoid or seek to avoid
the observance or performance of any of the terms to be observed or performed
hereunder by the Company, but shall at all times in good faith assist in
carrying out all such action as may be reasonably necessary or appropriate in
order to protect the conversion rights of the holders of the Preferred Stock
against impairment.

        6. RESTRICTIONS AND LIMITATIONS.

             6.1 Class Protective Provisions. So long as any shares of Series A
Preferred Stock remain outstanding, the Company shall not, without the approval,
by vote or written consent, of the holders of a majority of the Series A
Preferred Stock then outstanding, voting as a single class:

                  (1) amend its Articles of Incorporation or Bylaws in any
manner that would alter, change or affect any of the rights, preferences,
privileges or restrictions of the Series A Preferred Stock;

                  (2) reclassify any outstanding shares of securities of the
Company into shares having rights, preferences or privileges senior to or on a
parity with the Series A Preferred Stock;

                  (3) authorize any other equity security, including any other
security convertible into or exercisable for any equity security having rights
or preferences senior to or on

                                       14
<PAGE>   47

a parity with the Series A Preferred Stock as to dividend rights, liquidation
preferences, redemption or voting;

                  (4) merge or consolidate with or into any corporation or
effect any transaction or series of related transactions if such merger,
consolidation or transaction or series of transactions would result in the
shareholders of the Company immediately prior to such merger, consolidation or
transaction or series of transactions holding less than a majority of the voting
power of the stock of the surviving corporation (or its parent corporation if
the surviving corporation is wholly owned by the parent corporation) immediately
after such merger, consolidation or transaction or series of transactions;

                  (5) sell all or substantially all the Company's assets in a
single transaction or series of related transactions;

                  (6) liquidate or dissolve; or

                  (7) Declare or pay any dividends (other than dividends payable
solely in shares of its own Common Stock) on or declare or make any other
distribution, purchase, redemption or acquisition (other than Permitted
Repurchases), directly or indirectly, on account of any shares of Preferred
Stock or Common Stock now or hereafter outstanding.

        7. MISCELLANEOUS

             7.1 No Reissuance of Preferred Stock. No share or shares of Series
A Preferred Stock acquired by the Company by reason of redemption, purchase,
conversion or otherwise shall be reissued, and all such shares shall be
cancelled, retired and eliminated from the shares which the Company shall be
authorized to issue.

             7.2 Consent to Certain Transactions. Each holder of shares of
Series A Preferred Stock shall, by virtue of its acceptance of a stock
certificate evidencing Series A Preferred Stock, be deemed to have consented,
for purposes of Sections 502, 503 and 506 of the California Corporations Code,
to all Permitted Repurchases.

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

                                                             [STATE SEAL]

                                       15
<PAGE>   48

                                    EXHIBIT D

                      NOTICE OF EXERCISE OF PURCHASE OPTION

TO:     ________________ ("Borrower")

(1)     The undersigned Lender hereby elects to exercise its Purchase Option
        with respect to _______________ shares of the Series __ Preferred Stock
        of Borrower, pursuant to the terms of the Subordinated Loan and Security
        Agreement dated the 10th day of June, 1999 (the "Loan Agreement")
        between Borrower and the Lender, and tenders herewith payment of the
        purchase price for such shares in full, together with all applicable
        transfer taxes, if any.

(2)     In exercising its rights with respect to the Purchase Option, the
        undersigned hereby represents and warrants to Borrower as follows:

             (a) The right to acquire Preferred Stock or the Preferred Stock
        issuable upon exercise of the Lender's rights contained herein will be
        acquired for investment and not with a view to the sale or distribution
        of any part thereof, and the Lender has no present intention of selling
        or engaging in any public distribution of the same except pursuant to a
        registration or exemption.

             (b) The Lender understands (i) that the Preferred Stock issuable
        upon exercise of its Purchase Option is not registered under the 1933
        Act nor qualified under applicable state securities laws on the ground
        that the issuance contemplated by its Purchase Option will be exempt
        from the registration and qualifications requirements thereof, and (ii)
        that the Borrower's reliance on such exemption is predicated on the
        representations set forth in this notice.

             (c) The Lender has such knowledge and experience in financial and
        business matters as to be capable of evaluating the merits and risks of
        its investment, and has the ability to bear the economic risks of its
        investment.

             (d) The Lender understands that if the Borrower does not register
        with the Securities and Exchange Commission pursuant to Section 12 of
        the 1934 Act (the "1934 Act"), or file reports pursuant to Section
        15(d), of the 1934 Act, or if a registration statement covering the
        securities under the 1933 Act is not in effect when it desires to sell
        (i) the rights to purchase Preferred Stock pursuant to this its Purchase
        Option, or (ii) the Preferred Stock issuable upon exercise of the right
        to purchase, if may be required to hold such securities for an
        indefinite period. The Lender also understands that any sale of its
        rights of the Lender to purchase Preferred Stock or Preferred Stock
        which might be made by it in reliance upon Rule 144 under the 1933 Act
        may be made only in accordance with the terms and conditions of that
        Rule.

             (e) Lender is an "accredited investor" within the meaning of the
        Rule 501 of Regulation D of the Securities Act of 1933, as presently in
        effect.

(3)     Subject to our review and acceptance of your Acknowledgement Certificate
        with respect to this Notice, please issue a certificate or certificates
        representing said shares of Series A

                                       30
<PAGE>   49

Preferred Stock in the name of the undersigned or in such other name as is
specified below.

                                          ---------------------------------
                                          (Name)

                                          ---------------------------------
                                          (Address)

                                          LENDER: COMDISCO, INC.

                                          By:    ___________________________

                                          Title: ___________________________

                                          Date:  ___________________________

                                       31
<PAGE>   50

                                    EXHIBIT E

                       ACKNOWLEDGMENT OF RECEIPT OF NOTICE
                         OF EXERCISE OF PURCHASE OPTION

        The undersigned _________________ ("Borrower") hereby acknowledges
receipt of the "Notice of Purchase" from Comdisco, Inc. ("Lender") to exercise
its Purchase Option with respect to shares of the Series Preferred Stock of
_________________________, pursuant to the terms of the Subordinated Loan and
Security Agreement dated June 10, 1999 (the "Agreement'). Borrower further
acknowledges that ______ shares remain subject to purchase under the terms of
the Agreement.

        In connection with such Purchase Option the undersigned hereby
represents, warrants and agrees as follows:

             (a) All representations and warranties of the Borrower made
        pursuant to the Agreement are true and correct in all material respects
        on and as of the date of this Acknowledgment with the same effect as
        though made on and as of this date (except as set forth in Schedule 1 to
        this Acknowledgment).

             (b) The Preferred Stock issuable upon exercise of the Lender's
        rights has been duly and validly reserved and, when issued in accordance
        with the provisions of the Purchase Option, will be validly issued,
        fully paid and non-assessable, and will be free of any taxes, liens,
        charges or encumbrances of any nature whatsoever; provided, however,
        that the Preferred Stock issuable pursuant to the Purchase Option may be
        subject to restrictions on transfer under state and/or Federal
        securities laws. The Borrower has made available to the Lender true,
        correct and complete copies of its Charter and Bylaws, as amended. The
        issuance of certificates for shares of Preferred Stock upon Purchase of
        the Purchase Option shall be made without charge to the Lender for any
        issuance tax in respect thereof, or other cost incurred by the Borrower
        in connection with such Purchase and the related issuance of shares of
        Preferred Stock. The Borrower shall not be required to pay any tax which
        may be payable in respect of any transfer involved and the issuance and
        delivery of any certificate in a name other than that of the Lender.

             (c) The issuance to Lender of the right to acquire the shares of
        Preferred Stock, has been duly authorized by all necessary corporate
        action on the part of the Borrower, and the Purchase Option is not
        inconsistent with the Borrower's Charter or Bylaws, does not contravene
        any law or governmental rule, regulation or order applicable to it, does
        not and will not contravene any provision of, or constitute a default
        under, any indenture, mortgage, contract or other instrument to which it
        is a party or by which it is bound, and the Purchase Option constitutes
        a legal, valid and binding agreement of the Borrower, enforceable in
        accordance with its terms.

             (d) No consent or approval of, giving of notice to, registration
        with, or taking of any other action in respect of any state, Federal or
        other governmental authority or agency is required with respect to the
        execution, delivery and performance by the Borrower of its obligations
        under the Purchase Option, except for the filing of notices

                                       32
<PAGE>   51

        pursuant to Regulation D under the 1933 Act and any filing required by
        applicable state securities law, which filings will be effective by the
        time required thereby.

             (e) Except as set forth in that certain Investors' Rights Agreement
        dated as of October 22, 1998 by and among Borrower and certain Preferred
        Stock shareholders of Borrower, the Borrower is not, pursuant to the
        terms of any other agreement currently in existence, under any
        obligation to register under the 1933 Act any of its presently
        outstanding securities or any of its securities which may hereafter be
        issued.

             (f) Subject to the accuracy of the Lender's representations in its
        Notice, the issuance of the Preferred Stock upon exercise of the
        Purchase Option will constitute a transaction exempt from (i) the
        registration requirements of Section 5 of the 1933 Act, in reliance upon
        Section 4(2) thereof, and (ii) the qualification requirements of the
        applicable state securities laws.

             (g) If Lender proposes to sell Preferred Stock issuable upon the
        exercise of the Purchase Option in compliance with Rule 144 promulgated
        by the Securities and Exchange Commission, the Borrower shall furnish to
        the Lender, within fifteen (15) days after receipt of a written request,
        a written statement confirming the Borrower's compliance with the filing
        requirements of the Securities and Exchange Commission as set forth in
        such Rule, as such Rule may be amended from time to time.

        Borrower acknowledges that Lender has the right to review Schedule 1 to
this Certificate and that Lender may in its sole discretion withdraw its notice
of exercise of Purchase Option within the ten business days after Lender's
receipt of this Acknowledgment.

                                     BORROWER:  HANDSPRING, INC.

                                     By:    ________________________________
                                     Title: ________________________________
                                     Date:  ________________________________

                                       33

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