Document:

2001 Stock Option Plan

 Exhibit 10.46 
  
  
  
 PALM, INC. 
  
 2001 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS 
  
 (As Amended and Restated Effective as of
October 15, 2002) 

  
 TABLE OF CONTENTS 
  
 
	  	  	  	  	 Page
 

	 
	 SECTION 1 EFFECTIVE DATE AND PURPOSE
 	  	 1
 
	 
	         1.1
 	  	 Effective Date
 	  	 1
 
	         1.2
 	  	 Purpose of the Plan
 	  	 1
 
	 
	 SECTION 2 DEFINITIONS
 	  	 1
 
	 
	         2.1
 	  	 “1934 Act”
 	  	 1
 
	         2.2
 	  	 “Board”
 	  	 1
 
	         2.3
 	  	 “Change of Control”
 	  	 1
 
	         2.4
 	  	 “Committee”
 	  	 2
 
	         2.5
 	  	 “Company”
 	  	 2
 
	         2.6
 	  	 “Director”
 	  	 2
 
	         2.7
 	  	 “Disability”
 	  	 2
 
	         2.8
 	  	 “Exercise Price”
 	  	 2
 
	         2.9
 	  	 “Fair Market Value”
 	  	 2
 
	         2.10
 	  	 “Grant Date”
 	  	 2
 
	         2.11
 	  	 “Non-Employee Director”
 	  	 2
 
	         2.12
 	  	 “Option”
 	  	 2
 
	         2.13
 	  	 “Option Agreement”
 	  	 2
 
	         2.14
 	  	 “Participant”
 	  	 2
 
	         2.15
 	  	 “Plan”
 	  	 2
 
	         2.16
 	  	 “Shares”
 	  	 2
 
	         2.17
 	  	 “Subsidiary”
 	  	 2
 
	         2.18
 	  	 “Termination of Service”
 	  	 3
 
	 
	 SECTION 3 ADMINISTRATION
 	  	 3
 
	 
	         3.1
 	  	 The Committee
 	  	 3
 
	         3.2
 	  	 Authority of the Committee
 	  	 3
 
	         3.3
 	  	 Decisions Binding
 	  	 3
 
	 
	 SECTION 4 SHARES SUBJECT TO THE PLAN
 	  	 3
 
	 
	         4.1
 	  	 Number of Shares
 	  	 3
 
	         4.2
 	  	 Lapsed Options
 	  	 3
 
	         4.3
 	  	 Adjustments in Options and Authorized Shares
 	  	 3
 
	 
	 SECTION 5 STOCK OPTIONS
 	  	 4
 
	 
	         5.1
 	  	 Granting of Options
 	  	 4
 
	         5.2
 	  	 Terms of Options
 	  	 5
 
	         5.3
 	  	 Exercise
 	  	 6
 
	         5.4
 	  	 Options are not Incentive Stock Options
 	  	 6
 
	 
	 SECTION 6 MISCELLANEOUS
 	  	 7
 
	 
	         6.1
 	  	 No Effect on Service
 	  	 7
 
	         6.2
 	  	 Indemnification
 	  	 7
 

 

 
 -i- 

 TABLE OF CONTENTS 
 (continued)

  
 
	  	  	  	  	 Page
 

	         6.3
 	  	 Successors
 	  	 7
 
	         6.4
 	  	 Beneficiary Designations
 	  	 7
 
	         6.5
 	  	 Nontransferability of Options
 	  	 7
 
	         6.6
 	  	 No Rights as Stockholder
 	  	 7
 
	         6.7
 	  	 Withholding Requirements
 	  	 8
 
	 
	 SECTION 7 AMENDMENT, TERMINATION, AND DURATION
 	  	 8
 
	 
	         7.1
 	  	 Amendment or Termination
 	  	 8
 
	         7.2
 	  	 Duration of the Plan
 	  	 8
 
	 
	 SECTION 8 LEGAL CONSTRUCTION
 	  	 8
 
	 
	         8.1
 	  	 Gender and Number
 	  	 8
 
	         8.2
 	  	 Severability
 	  	 8
 
	         8.3
 	  	 Requirements of Law
 	  	 8
 
	         8.4
 	  	 Compliance with Rule 16b-3
 	  	 8
 
	         8.5
 	  	 Governing Law
 	  	 8
 
	         8.6
 	  	 Captions
 	  	 9
 

 
  

 
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 PALM, INC. 
 2001 STOCK OPTION
PLAN FOR NON-EMPLOYEE DIRECTORS 
 (As Amended and Restated Effective as of October 15, 2002) 
  
 PALM, INC., having adopted the Palm, Inc. 2001 Stock Option Plan for Non-Employee Directors (the “Plan”) effective as of October 11, 2001, hereby amends and
restates the Plan in its entirety effective as of October 15, 2002, as follows: 
  
 SECTION 1 
 EFFECTIVE DATE AND PURPOSE 
  
 1.1    Effective Date.    The Plan became effective as of October 11, 2001. This amended and restated Plan is effective as of October 15, 2002. 
  
 1.2    Purpose of the Plan.    The Plan is intended to closely align the interests of the
Non-Employee Directors with the interests of the Company’s stockholders. This is achieved by making a significant portion of Non-Employee Director compensation directly related to the total return performance of the Shares. The Plan also is
intended to encourage Share ownership on the part of Non-Employee Directors. 
  
 SECTION 2 
 DEFINITIONS 
  
 The following words and
phrases shall have the following meanings unless a different meaning is plainly required by the context: 
  
 2.1    “1934 Act” means the Securities Exchange Act of 1934, as amended. Reference to a specific section of the 1934 Act or regulation thereunder shall include such section or regulation, any
valid regulation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation. 
  
 2.2    “Board” means the Board of Directors of the Company. 
  
 2.3    “Change of Control” means the occurrence of any of the following events: 
  

(a)    Any “person” (as such term is used in Sections 13(d) and 14(d) of the 1934 Act) becomes the “beneficial
owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities;
or 
  
 (b)    The consummation of the sale or disposition by the Company of all
or substantially all the Company’s assets; or 
  
 (c)    The consummation of
a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining
out-standing or by being converted into voting securities of the surviving entity or its 

 
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 parent) at least fifty percent (50%) of the total voting power represented by the
voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation; or 
  
 (d)    A change in the composition of the Board occurring within a two-year period, as a result of which fewer than a majority of the directors are Incumbent Directors.
“Incumbent Directors” shall mean directors who either (1) are directors of the Company as of the effective date of the Plan, or (2) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of
those directors whose election or nomination was not in connection with any transaction described in subsections (a), (b), or (c) above, or in connection with an actual or threatened proxy contest relating to the election of directors to the
Company. 
  
 2.4    “Committee” means the committee appointed pursuant to
Section 3.1 to administer the Plan. 
  
 2.5    “Company” means Palm, Inc., a
Delaware corporation, or any successor thereto. 
  
 2.6    “Director” means an
individual who is a member of the Board. 
  
 2.7    “Disability” means a
permanent and total disability, as determined by the Committee (in its discretion) in accordance with uniform and non-discriminatory standards adopted by the Committee from time to time. 
  
 2.8    “Exercise Price” means the price at which a Share may be purchased by a Participant pursuant to the exercise of an Option.

  
 2.9    “Fair Market Value” means the closing per share selling price for the
Shares, as quoted on the Nasdaq National Market for the date in question. 
  
 2.10    “Grant Date” means, with respect to a particular Option, the date on which the Option was granted. 
  
 2.11    “Non-Employee Director” means a Director who is an employee of neither the Company nor of any Subsidiary. 
  
 2.12    “Option” means an option to purchase Shares granted pursuant to Section 5. 

 
 2.13    “Option Agreement” means the written agreement setting forth the terms and
provisions applicable to each Option granted under the Plan. 
  
 2.14    “Participant” means a Non-Employee Director who has an outstanding Option. 
  
 2.15    “Plan” means the Palm, Inc. 2001 Stock Option Plan for Non-Employee Directors, as set forth in this instrument and as hereafter amended from time to time. 
  
 2.16    “Shares” means the shares of the Company’s common stock, $0.001 par value. 

 
 2.17    “Subsidiary” means any corporation in an unbroken chain of corporations beginning
with the Company if each of the corporations other than the last corporation in the unbroken chain 

 
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 then owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain. 
  
 2.18    “Termination of
Service” means a cessation of the Participant’s service on the Board for any reason. 
  
 SECTION 3

 ADMINISTRATION 
  
 3.1    The Committee.    The Plan shall be administered by the Committee. The Committee shall consist of one or more Directors who shall be appointed by, and serve at the pleasure of,
the Board. Until otherwise determined by the Board, the Compensation Committee of the Board shall serve as the Committee. 
  
 3.2    Authority of the Committee.    It shall be the duty of the Committee to administer the Plan in accordance with the Plan’s provisions. The Committee shall have all powers and
discretion necessary or appropriate to administer the Plan and to control its operation, including, but not limited to, the power to (a) interpret the Plan and the Options, (b) adopt rules for the administration, interpretation and application of
the Plan as are consistent therewith, (c) interpret, amend or revoke any such rules, and (d) adopt such procedures and subplans as are necessary or appropriate to permit participation in the Plan by Non-Employee Directors who are foreign nationals
or employed outside of the United States. 
  
 3.3    Decisions
Binding.    All determinations and decisions made by the Committee shall be final, conclusive, and binding on all persons, and shall be given the maximum deference permitted by law. 
  
 SECTION 4 
 SHARES SUBJECT TO THE PLAN

  
 4.1    Number of Shares.    Subject to adjustment as provided
in Section 4.3, the total number of Shares available for grant under the Plan shall not exceed 300,000. Shares issued under the Plan may be either authorized but unissued Shares or treasury Shares. 
  
 4.2    Lapsed Options.    If an Option terminates or expires for any reason, any Shares
subject to such Option again shall be available to be the subject of an Option. 
  
 4.3    Adjustments in Options and Authorized Shares. 
  
 4.3.1    Changes in Capitalization.    Subject to any required action by the shareholders of the Company, the number and class of Shares which may be delivered under the Plan, and the
number, class, and Exercise Price of Shares subject to outstanding Options and future grants, shall be proportionately adjusted by the Committee for any increase or decrease in the number of issued Shares resulting from a stock split, reverse stock
split, stock dividend, spin-off combination or reclassification of the Shares, or any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Except as expressly provided herein, no issuance by the Company of 

 
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 shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares subject to an Option. 
  
 4.3.2    Dissolution or Liquidation.    In the event of the proposed dissolution or liquidation of the Company, to the extent that an Option has not been
previously exercised, it shall terminate immediately prior to the consummation of such proposed action. 
  
 4.3.3    Merger or Asset Sale.    In the event of a merger of the Company with or into another corporation or the sale of substantially all of the assets of the Company, outstanding
Options may be assumed or equivalent options may be substituted by the successor corporation or a parent or subsidiary thereof (the “Successor Corporation”). If the Successor Corporation does not assume an outstanding Option or substitute
for it an equivalent option, the Option shall become fully vested and exercisable, including as to Shares for which it would not otherwise be exercisable. In such event the Committee shall notify the Participant that the Option shall be fully
exercisable for a period of thirty (30) days from the date of such notice, and upon the expiration of such period the Option shall terminate. For this purpose, an Option shall be considered assumed if, following the merger or sale of assets, the
Option confers the right to purchase or receive, for each Share covered by the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Shares for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares). If such
consideration received in the merger or sale of assets is not solely common stock of the Successor Corporation, the Committee may, with the consent of the Successor Corporation, provide for the consideration to be received upon the exercise of the
Option, for each Share subject to the Option, to be solely common stock of the Successor Corporation equal in fair market value to the per share consideration received by holders of Shares in the merger or sale of assets. 
  
 SECTION 5 
 STOCK OPTIONS 

 
 5.1    Granting of Options. 
  
 5.1.1    Initial Grants.    Each individual who first becomes a Non-Employee Director on or after October 15,
2002 automatically shall receive an Option on the date that he or she first is appointed or elected as a Non-Employee Director. The number of Shares covered by each Option described in this Section 5.1.1 shall equal 3,000. 
  
 5.1.2    Ongoing Grants for Service on the Board.    Each Non-Employee
Director automatically shall receive an Option on the date of each Annual Meeting of the Company’s stockholders that occurs on or after October 15, 2002, provided that the individual will receive such Option only if he or she both (a) is a
Non-Employee Director on that date, and (b) has served as a Non-Employee Director for at least the six (6) months immediately preceding that date. The number of Shares covered by each Option described in this Section 5.1.2 shall equal 1,500.

  
 5.1.3    Grants for Service as a Committee
Chair.    Each Non-Employee Director who first becomes the Chairman of a standing committee of the Board (a “Committee Chair”) on or after 

 
 -4- 

  
 October 15, 2002 automatically shall receive an Option on the date that he or she
first is appointed as a Committee Chair. Each Non-Employee Director who either has (a) received an Option pursuant to the foregoing sentence, or (b) received an Option pursuant to this Section 5.1.3 as in effect before October 15, 2002 also
automatically shall receive an Option on the date of each subsequent Annual Meeting of the Company’s stockholders, provided that the individual will receive such Option only if he or she both (i) is a Committee Chair on that date, and (ii) has
served in such position for at least the six (6) months immediately preceding that date. A Non-Employee Director shall be entitled to more than one Option pursuant to this Section 5.1.3 to the extent that on any Grant Date, he or she is the Chairman
of more than one standing committee of the Board. The number of Shares covered by each Option described in this Section 5.1.3 shall equal 350. Each Option granted pursuant to this Section 5.1.3 shall be in addition to any other Option(s) to which
the Non-Employee Director may be entitled under any other subsection of Section 5.1. 
  
 5.1.4    Grants for Service as a Committee Member.    Each Non-Employee Director who first becomes a member of a standing committee of the Board (a “Committee Member”) on or
after October 15, 2002 automatically shall receive an Option on the date that he or she first is appointed as a Committee Member. Each Non-Employee Director who either has (a) received an Option pursuant to the foregoing sentence, or (b) received an
Option pursuant to this Section 5.1.4 as in effect before October 15, 2002 also automatically shall receive an Option on the date of each subsequent Annual Meeting of the Company’s stockholders, provided that the individual will receive such
Option only if he or she both (i) is a Committee Member on that date, and (ii) has served in such position for at least the six (6) months immediately preceding that date. A Non-Employee Director shall be entitled to more than one Option pursuant to
this Section 5.1.4 to the extent that on any Grant Date, he or she has qualifying membership on more than one standing committee of the Board. The number of Shares covered by each Option described in this Section 5.1.4 shall equal 250. Each Option
granted pursuant to this Section 5.1.4 shall be in addition to any other Option(s) to which the Non-Employee Director may be entitled under any other subsection of Section 5.1, except that a Non-Employee Director shall not receive an Option under
this Section 5.1.4 for service on any committee with respect to which he or she is entitled to receive an Option under Section 5.1.3. 
  
 5.1.5    Grants for Service as Chairman of the Board.    Each Non-Employee Director who is the Chairman of the Board on the date of an Annual Meeting of
the Company’s stockholders that occurs on or after October 15, 2002 automatically shall receive an Option to purchase 500 Shares on that date. Each Option granted pursuant to this Section 5.1.5 shall be in addition to any other Option(s) to
which the Non-Employee Director may be entitled under any other subsection of Section 5.1. 
  
 5.2    Terms of Options. 
  
 5.2.1    Option Agreement.    Each Option shall be evidenced by a written Option Agreement (satisfactory to the Committee) which shall be executed by the Participant and the Company.

  
 5.2.2    Exercise Price.    The Exercise Price for
the Shares subject to each Option shall be 100% of the Fair Market Value of such Shares on the Grant Date. 

 
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 5.2.3    Exercisability. 

 
 (a)    Each Option shall become exercisable in three (3) equal annual installments,
commencing on the first anniversary of the applicable Grant Date, except as follows. If a Change of Control occurs while the Non-Employee Director is such and the Non-Employee Director will cease to be such as an immediate and direct consequence of
the Change of Control, the Option (if not yet expired) shall become fully exercisable on the date of the Change of Control. Notwithstanding the preceding, once a Participant ceases to be a Director, his or her Options which are not then exercisable
shall never become exercisable and shall be immediately forfeited, except to the limited extent provided in Section 5.2.3(b). 
  
 (b)    Upon a Non-Employee Director’s death, all unvested and unexpired Options held by such person shall immediately become exercisable. 
  
 5.2.4    Expiration of Options.    Each Option shall terminate upon the
first to occur of the following events: 
  
 (a) The expiration of ten (10) years from the Grant Date;

  
 (b) The expiration of three (3) months from the date of the Participant’s Termination of
Service prior to age 65 for any reason other than the Participant’s death or Disability; 
  
 (c)
The expiration of one (1) year from the date of the Participant’s Termination of Service by reason of Disability, or 
  
 (d) The expiration of one (1) year from the date of the Participant’s Termination of Service at or after age 65 for any reason other than the Participant’s death or Disability. 
  
 5.2.5    Death of Director.    Notwithstanding Section 5.2.4, if a Director
dies prior to the expiration of his or her Option(s) in accordance with Section 5.2.4, his or her Option(s) which are exercisable on the date of his or her death shall terminate one (1) year after the date of death. 
  
 5.3    Exercise.    Options shall be exercised by the Participant’s delivery of a
notice of exercise in such form and manner as the Company (or its designee) may designate from time to time. In all events, the notice shall set forth the number of Shares with respect to which the Option is to be exercised, and be accompanied by
full payment for the Shares. Upon the exercise of any Option, the Exercise Price shall be payable to the Company in full in cash or its equivalent. The Committee, in its sole discretion, also may permit exercise by (a) tendering previously acquired
Shares having an aggregate Fair Market Value at the time of exercise equal to the total Exercise Price, or (b) any other means which the Committee, in its sole discretion, determines to both provide legal consideration for the Shares, and to be
consistent with the purposes of the Plan. As soon as practicable after receipt of a written notification of exercise and full payment for the Shares purchased, the Company shall deliver to the Participant (or the Participant’s designated
broker), Share certificates (which may be in book-entry form) representing such Shares. 
  
 5.4    Options are not Incentive Stock Options.    Options are not intended to be incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended. 

 
 -6- 

  
 SECTION 6 
 MISCELLANEOUS 
  
 6.1    No Effect on
Service.    Nothing in the Plan shall (a) create any obligation on the part of the Board to nominate any Participant for reelection by the Company’s stockholders, or (b) interfere with or limit in any way the right of
the Company to terminate any Participant’s service. 
  
 6.2    Indemnification.    Each person who is or shall have been a member of the Committee, or of the Board, shall be indemnified and held harmless by the Company against and from (a)
any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved
by reason of any action taken or failure to act under the Plan or any Option Agreement, and (b) from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any
judgment in any such claim, action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her
own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s Certificate of Incorporation or Bylaws, by contract, as a matter of law,
or otherwise, or under any power that the Company may have to indemnify them or hold them harmless. 
  
 6.3    Successors.    All obligations of the Company under the Plan shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business or assets of the Company. 
  
 6.4    Beneficiary Designations.    If permitted by the Committee, a Participant may name a beneficiary or beneficiaries to whom any vested but unpaid Option shall be paid in the event
of the Participant’s death. Each such designation shall revoke all prior designations by the Participant and shall be effective only if given in a form and manner acceptable to the Committee. In the absence of any such designation, any vested
benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate and, subject to the terms of the Plan and of the applicable Option Agreement, any unexercised vested Option may be exercised by the
administrator or executor of the Participant’s estate. 
  
 6.5    Nontransferability of
Options.    No Option granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will, by the laws of descent and distribution, or to the limited extent provided
in Section 6.4. All rights with respect to an Option granted to a Participant shall be available during his or her lifetime only to the Participant. Notwithstanding the foregoing, the Participant may, if permitted by the Committee and in a manner
specified by the Committee, transfer an Option by bona fide gift and not for any consideration, to a member of the Participant’s immediate family or to a trust or other entity for the exclusive benefit of the Participant and/or a member or
members of the Participant’s immediate family. 
  
 6.6    No Rights as
Stockholder.    No Participant (nor any beneficiary) shall have any of the rights or privileges of a stockholder of the Company with respect to any Shares issuable pursuant to an Option (or exercise thereof), unless and until
certificates representing such Shares shall have been 

 
 -7- 

  
 issued, recorded on the records of the Company or its transfer agents or registrars, and delivered to
the Participant or beneficiary. 
  
 6.7    Withholding
Requirements.    Prior to the delivery of any Shares or cash pursuant to an Option (or exercise thereof), the Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company,
an amount sufficient to satisfy the minimum Federal, state, and local taxes required to be withheld with respect to such Option (or exercise thereof). 
  
 SECTION 7 
 AMENDMENT, TERMINATION, AND DURATION 
  
 7.1    Amendment or Termination.    The Board, in its sole discretion, may amend or
terminate the Plan, or any part thereof, at any time and for any reason. The amendment, suspension, or termination of the Plan shall not, without the consent of the Participant, alter or impair any rights or obligations under any Option theretofore
granted to such Participant. 
  
 7.2    Duration of the Plan.    This
amended and restated Plan is effective as of October 15, 2002, and subject to Section 7.1 (regarding the Board’s right to amend or terminate the Plan), shall remain in effect thereafter. 
  

SECTION 8 
 LEGAL CONSTRUCTION 
  
 8.1    Gender and Number.    Except where otherwise indicated by the context, any masculine
term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural. 
  
 8.2    Severability.    In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts
of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included. 
  
 8.3    Requirements of Law.    The granting of Options and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by
any governmental agencies or national securities exchanges as may be required. 
  
 8.4    Compliance with Rule 16b-3.    For the purpose of ensuring that transactions under the Plan do not subject Participants to liability under Section 16(b) of the 1934 Act, all
transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3 promulgated under the 1934 Act, and any future regulation amending, supplementing or superseding such regulation. To the extent any provision of the
Plan, Option Agreement or action by the Committee or a Participant fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee. 
  
 8.5    Governing Law.    The Plan and all Option Agreements shall be construed in accordance with and governed by the laws of
the State of California without giving effect to any 

 
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 choice or conflict of law provision or rule (whether of the State of California or otherwise) which
would cause the application of the laws of any jurisdiction other than the State of California. 
  
 8.6    Captions.    Captions provided herein are for convenience only, and shall not serve as a basis for interpretation or construction of the Plan. 
  
 EXECUTION 
  
 IN WITNESS WHEREOF, Palm, Inc., by its duly authorized officer, has executed this amended and restated Plan on the date indicated below. 
  
 
	  	 	 PALM, INC.
 
	 
	 Dated: October 15, 2002
 	 	 By:
 	 	 /s/    MARIANNE JACKSON
 

	  	 	 Title:
 	 	 Vice President, Human Resources
 

 
  

 
 -9-Management Retention Agreement

  
 Exhibit 10.47 
  
 PALM, INC. 
  
 MANAGEMENT RETENTION AGREEMENT

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

 
 -1- 

  
 3.    Change of Control Severance Benefits.

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

 
 -2- 

  
 Notwithstanding the foregoing, in the event the Employee is employed by a
subsidiary of the Company at the time of a Spin-Off of such subsidiary, then the Employee shall not be deemed to have been terminated for Cause nor shall Employee be permitted to terminate his or her employment pursuant to a Voluntary Termination
for Good Reason and receive the benefits provided for in this Section 3(a) as a result of such Spin-Off, but rather the Former Subsidiary shall assume the obligations under this Agreement as provided for in Section 7. 
  
 (b)    Voluntary Resignation; Termination For Cause.    If the Employee’s employment
terminates by reason of the Employee’s voluntary resignation (and is not a Voluntary Termination for Good Reason), or if the Employee is terminated for Cause, then the Employee shall not be entitled to receive severance or other benefits except
for those (if any) as may then be established under the Company’s (or any subsidiary’s) then existing severance and benefits plans or pursuant to other written agreements with the Company (or any subsidiary thereof). 

 
 (c)    Disability; Death.    If the Employee’s employment with the Company
(or any subsidiary thereof) terminates as a result of the Employee’s Disability, or if Employee’s employment is terminated due to the death of the Employee, then the Employee shall not be entitled to receive severance or other benefits
except for those (if any) as may then be established under the Company’s (or any subsidiary’s) then existing severance and benefits plans or pursuant to other written agreements with the Company (or any subsidiary thereof). 

 
 (d)    Termination Apart from Change of Control.    In the event the
Employee’s employment is terminated for any reason, either prior to the occurrence of a Change of Control or after the twelve (12) month period following a Change of Control, then the Employee shall be entitled to receive severance and any
other benefits only as may then be established under the Company’s (or any subsidiary’s) then existing severance and benefits plans or pursuant to other written agreements with the Company. 
  
 4.    Golden Parachute Excise Tax. 
  
 (a)    In the event that the benefits provided for in this Agreement or otherwise provided by the Company (or any subsidiary thereof) to the Employee
(including, but not by way of limitation, any accelerated vesting on stock options) (the “Total Payments”) would subject the Employee to an excise tax (the “Excise Tax”) imposed under Section 4999 of the Internal Revenue Code of
1986, as amended (the “Code”), then the Company (or any subsidiary thereof that employs the Employee at such time) will pay the Employee (i) an amount sufficient to pay the excise tax, and (ii) an additional amount sufficient to pay the
Excise Tax and federal, state and local income and employment taxes arising from the payments made by the Company (or any subsidiary thereof that employs the Employee at such time) pursuant to this sentence. Any amount required to paid to the
Employee pursuant to the preceding sentence shall be referred to as the “Gross-Up Payment.” 
  
 (b)    The determination of the Employee’s Excise Tax liability and the amount, if any, required to be paid under this Section 4 will be made in writing by the Company’s independent auditors (the
“Accountants”). For purposes of making the calculations required by this Section 4, the Employee shall be deemed to pay federal, state and local income taxes at the highest marginal rate in effect in the calendar year in which the Gross-Up
Payment will be made, based on the
 

 
 -3- 

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

 
 -4- 

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

 
 -5- 

  
 (f)    Former
Subsidiary.    “Former Subsidiary” shall mean any former subsidiary of the Company that ceases to be as such due to a Spin-Off. 
  
 (g)    Spin-Off.    “Spin-Off” shall mean the distribution of the securities of a subsidiary of the Company to the Company’s stockholders
at a time when the Company owns at least 80% of such subsidiary’s securities. 
  
 (h)    Voluntary Termination for Good Reason.    “Voluntary Termination for Good Reason” shall mean the Employee voluntarily resigns after the occurrence of any of the
following (i) without the Employee’s express written consent, a material reduction of the Employee’s duties, title, authority or responsibilities, relative to the Employee’s duties, title, authority or responsibilities as in effect
immediately prior to such reduction, or the assignment to Employee of such reduced duties, title, authority or responsibilities; provided, however, that a reduction in duties, title, authority or responsibilities solely by virtue of the Company
being acquired and made part of a larger entity (as, for example, when the Senior Vice-President of a business unit of the Company remains as such following a Change of Control) shall not by itself constitute grounds for a “Voluntary
Termination for Good Reason;” (ii) without the Employee’s express written consent, a material reduction, without good business reasons, of the facilities and perquisites (including office space and location) available to the Employee
immediately prior to such reduction; (iii) a reduction by the Company in the base salary of the Employee as in effect immediately prior to such reduction; (iv) a material reduction by the Company in the aggregate level of employee benefits,
including bonuses, to which the Employee was entitled immediately prior to such reduction with the result that the Employee’s aggregate benefits package is materially reduced (other than a reduction that generally applies to Company employees);
(v) the relocation of the Employee to a facility or a location more than thirty-five (35) miles from the Employee’s then present location, without the Employee’s express written consent; (vi) the failure of the Company to obtain the
assumption of this agreement by any successors contemplated in Section 7(a) below; or (vii) any act or set of facts or circumstances which would, under California case law or statute constitute a constructive termination of the Employee.

  
 6.    Non-Solicitation.    In consideration for the severance
benefits Employee is to receive herein, if any, Employee agrees that he or she will not, at any time during the one year following his or her termination date, directly or indirectly solicit any individuals to leave the Company’s (or any of its
subsidiaries’) employ for any reason or interfere in any other manner with the employment relationships at the time existing between the Company (or any of its subsidiaries) and its current or prospective employees. 
  
 7.    Assignment. 
  
 (a)    Company’s Successors / Former Subsidiary.    Any successor to the Company (whether direct or indirect and whether by purchase, merger,
consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets or any Former Subsidiary shall assume the obligations under this Agreement and agree expressly to perform the obligations under this
Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, the term “Company” shall include (i) any such successor
to the Company’s business and/or assets which executes and delivers the assumption agreement described in this Section 7(a) or which becomes bound by the terms of this Agreement by operation of law, or (ii) a Former Subsidiary. 

 
 -6- 

  
 (b)    Employee’s
Successors.    The terms of this Agreement and all rights of the Employee hereunder shall inure to the benefit of, and be enforceable by, the Employee’s personal or legal representatives, executors, administrators,
successors, heirs, distributes, devisees and legatees. 
  
 8.    Notice. 

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

 
 -7- 

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

  
  
 [Remainder of Page Intentionally Left Blank] 

 
 -8- 

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

	 Title:
 	 	 Chief Executive Officer
 
	 Date:
 	 	 September 23, 2002
 

 
  
  
  
 
	 EMPLOYEE
 
	 
	 By:
 	 	 /s/    THEODORE THEOPHILOS
 

	 Date:
 	 	 August 3, 2002
 

 

 
 -9-

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