RECITALS

                                FUNDING AGREEMENT


     This Funding  Agreement  (the  "Agreement")  is made and entered into as of
August 16, 2001,  by and between Palm,  Inc. ("P  Company") and Be  Incorporated
(the "Company").

                                    RECITALS

     A. The parties  hereto have  executed an Asset  Purchase  Agreement of even
date herewith,  by and among P Company, ECA Subsidiary  Acquisition  Corporation
("ECA") and the Company (the  "Purchase  Agreement"),  whereby ECA has agreed to
purchase certain assets of the Company (the "Transaction").


     B. P Company has requested that the Company  continue its  development  and
related activities until the closing of the Transaction, and the Company desires
to comply with P Company's request.

     NOW THEREFORE, the parties agree as follows:

     1. Obligations of the Company.  Beginning on the date of this Agreement and
continuing  until the End Date  (defined  below)  unless  earlier  terminated as
specified  below,  the  Company  agrees to  continue  to employ  the  Designated
Employees (as defined in the Purchase  Agreement) at the same salary and benefit
levels as the date hereof  through the  termination  of this  agreement,  and to
assign such employees to work on the continued  development  and  enhancement of
the BeOS and BeIA operating systems or other software, products,  documentation,
specifications or development  tools and environments of the Company  (including
all  versions  or  portions  of any  of  the  foregoing  under  development)  as
reasonably requested by P Company (the "Agreed Obligations"); provided, however,
that neither (a) the Company's right to terminate any Designated  Employee if in
the Company's  sole judgment such  termination  is in the best  interests of the
Company nor (b) the right of any Designated  Employee to resign from the Company
shall be limited by this  Agreement.  The parties  agree that there are no third
party  beneficiaries  to this Agreement and no rights,  benefits,  privileges or
entitlements  are  accorded to any third party under this  Agreement,  including
without limitation, the Designated Employees.

     2. Consideration.  As consideration for the Agreed  Obligations,  P Company
agrees to pay the Company an amount equal to $2,500  multiplied by the number of
Designated  Employees  employed  by the  Company at the start of the  applicable
weekly  period (the "Weekly  Sum") at the end of such oneweek  period,  with the
first Weekly Sum being due on August 21, 2001 and weekly thereafter with respect
to each subsequent weekly period unless this Agreement is earlier  terminated as
specified  below.  Such  Weekly Sum shall be due and  payable no later than 1:00
p.m. local time at the end of the applicable  oneweek period, to be paid by wire
transfer to the account specified by the Company. In the event of termination of
this Agreement  during a oneweek period,  P Company shall be required to pay the
entire Weekly Sum for such oneweek period. The parties agree that time is of the
essence with respect to the payment of each Weekly Sum.

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          (a) Term; Termination. This Agreement shall continue in full force and
     effect  until the  earliest to occur of (i) of the Closing Date (as defined
     in the Purchase  Agreement),  (ii) the date of  termination of the Purchase
     Agreement in  accordance  with Article 10 of the  Purchase  Agreement,  and
     (iii)  termination of this Agreement by mutual written consent of P Company
     and the Company (the "End Date").


     3. Governing  Law. This Agreement  shall be governed in all respects by the
internal laws of the State of California.

     4. Interpretation. In the event that any provisions or any capitalized term
used  herein  shall  conflict  with the  terms  or  conditions  of the  Purchase
Agreement, the terms and conditions of the Purchase Agreement shall govern.

     5.  Counterparts.   This  Agreement  may  be  executed  in  any  number  of
counterparts,  each of which shall be enforceable  against the parties  actually
executing such  counterparts,  and all of which  together  shall  constitute one
instrument.


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     IN WITNESS WHEREOF, the parties have executed this Agreement the date first
written above.

                           Palm, Inc.
                           By:/s/ XXXX XXXXXXXXX
                           Name: Xxxx Xxxxxxxxx
                           Title: Chief Executive Officer

                           Be Incorporated
                           By:/s/ XXXX-XXXXX X. GASSEE
                           Name:Xxxx-Xxxxx X. Gassee
                           Title:President and Chief Executive Officer


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