PALM  COMPUTING
 
                        MANAGEMENT RETENTION AGREEMENT
 
 
This Management Retention Agreement (the "Agreement") is made and entered into
by and between Carl J. Yankowski (the "Employee") and Palm Computing (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
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A.    It is expected that the Company from time to time will consider the
possibility of an acquisition by another company or other change of control.
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 (as
defined below) 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
provides incentive and encouragement to the Employee to remain with the Company
notwithstanding the possibility of a Change of Control.
 
D.    Certain capitalized terms used in the 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
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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
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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.  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.
<PAGE>
 
3.   Change of Control Severance Benefits.
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     (a)  Involuntary Termination other than for Cause, Death or Disability or
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Voluntary Termination for Good Reason Following A Change of Control.  If, within
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twenty-four (24) months following a Change of Control, Employee's employment is
terminated (i) involuntarily by the Company 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
                -----------------
two hundred percent (200%) 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 (i) two years from the date of termination, or (ii) 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 100%
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of such Employee's target bonus as in effect for the fiscal year in which the
Change of Control occurs, pro-rated by multiplying such bonus amount by a
fraction, the numerator of which shall be the number of days prior to occurrence
of the Change of Control during such fiscal year, and the denominator of which
shall be three-hundred and sixty-five.
 
          (iv)  Equity Compensation Accelerated Vesting. One Hundred percent
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(100%) of the unvested portion of any stock option, restricted stock or other
Company equity compensation held by the Employee shall automatically be
accelerated in full so as to become completely vested.
 
 
     (b)  Voluntary Resignation; Termination For Cause.  If the Employee's
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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 then existing severance and benefits plans or pursuant to other
written agreements with the Company.
<PAGE>
 
     (c)  Disability; Death. If the Employee's employment with the Company
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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 then existing severance and benefits
plans or pursuant to other written agreements with the Company.
 
     (d)  Termination Apart from Change of Control.  In the event the Employee's
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employment is terminated for any reason, either prior to the occurrence of a
Change of Control or after the twenty-four (24) 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 existing
severance and benefits plans or pursuant to other written agreements with the
Company.
 
4.   Golden Parachute Excise Tax Full Gross-Up.  In the event that the benefits
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provided for in this Agreement or otherwise payable to the Employee constitute
"parachute payments" within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code") and will be subject to the excise tax
imposed by Section 4999 of the Code, then the Employee shall receive (i) a
payment from the Company sufficient to pay such excise tax, plus (ii) an
additional payment from the Company sufficient to pay the excise tax and federal
and state income and employment taxes arising from the payments made by the
Company to Employee pursuant to this sentence. Unless the Company and the
Executive otherwise agree in writing, the determination of Executive's excise
tax liability and the amount required to be paid under this Section 4 shall be
made in writing by the Company's independent auditors who are primarily used by
the Company immediately prior to the Change of Control (the "Accountants"). For
purposes of making the calculations required by this Section 4, 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 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.  The Company shall bear all costs the Accountants may reasonably incur
in connection with any calculations contemplated by this Section 4.
 
5.   Definition of Terms.  The following terms referred to in this Agreement
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shall have the following meanings:
 
     (a)  Annual Compensation. "Annual Compensation" shall mean an amount equal
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to the sum of (i) the Employee's Company annual base salary as in effect
immediately preceding the Change of Control, and (ii) 100% of the Employee's
Target Bonus.
 
     (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, (iv)
following
<PAGE>
 
delivery to the Employee of a written demand for performance from the Company
which describes the basis for the Company'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 which are demonstrably willful and
deliberate on the Employee's part.
 
     (d)  Change of Control.  "Change of Control" means the occurrence of any of
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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; 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 outstanding or by
being converted into voting securities of the surviving entity) at least fifty
percent (50%) of the total voting power represented by the voting securities of
the Company or such surviving entity 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
 
               (v)   The sale or disposition to third parties (other than
pursuant to a spin-off or similar transaction) by the Company of all or
substantially all of any the Carrier, PCBU, Enterprise, Palm or comparable
business units; provided, however, that such transactions shall only constitute
a "Change of Control" under this Agreement with respect to the Section 16
executive officers working primarily for the sold or disposed business unit
immediately prior to the effective date of the Change of Control who are not
offered a comparable position within the Company.
 
          (e)  Disability.  "Disability" shall mean that the Employee has been
               ----------
unable to perform his Company duties as the result of his incapacity due to
physical or mental illness, and such inability, 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
<PAGE>
 
the Company 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.
 
          (f)  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
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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.   Successors.
          ----------
 
          (a)  Company's Successors. 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 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 any 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.
<PAGE>
 
          (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, distributees, devisees and legatees.
 
     8.   Notice.
          ------
 
          (a)  General.  Notices and all other communications contemplated by
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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 by the Company for Cause
               ---------------------
or by the Employee pursuant to a Voluntary Termination for Good Reason 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.   Pooling of Interests Limitation.   To the extent any of the benefits
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(including the equity compensation vesting acceleration and the 280G excise tax
gross-up) hereunder would cause a contemplated Change of Control transaction
that was intended to be accounted for as a "pooling-of-interests" transaction to
become ineligible for such accounting treatment under generally accepted
accounting principles, as determined by the Accountants, then this Agreement
shall automatically be deemed amended to provide Employee with such lesser
benefits as would allow for the contemplated Change of Control transaction to be
accounted for as a "pooling-of-interests" transaction.
 
     10.  Miscellaneous Provisions.
          ------------------------
 
          (a)  No Duty to Mitigate.  The Employee shall not be required to
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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.
<PAGE>
 
          (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, other than the employment offer
letter dated November 30, 1999, have been made or entered into by either party
with respect to the subject matter hereof. This Agreement and the offer letter
represent the entire understanding of the parties hereto with respect to the
subject matter hereof and supersedes all prior arrangements and understandings
regarding same.
 
          (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.
<PAGE>
 
     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.
 
 
COMPANY                                 PALM COMPUTING
 
 
 
                                        By: /s/ Eric A. Benhamou
                                            -----------------------------------
                                                ERIC A. BENHAMOU
 
                                        Title:  Chairman & CEO, 3Com Corporation
 
                                        Date: December 1, 1999
                                              ---------------------------------
 
 
                                        By: /s/ Mark D. Michael
                                            ------------------------------------
                                                MARK D. MICHAEL
 
                                        Title:  S.V.P., General Counsel &
                                                Secretary
 
                                        Date: December 1, 1999
                                              ---------------------------------
 
 
EMPLOYEE                                      /s/ Carl J. Yankowski
                                              ---------------------------------
                                                  CARL J. YANKOWSKI
 
                                          Date: December 1, 1999
                                                --------------------------------