PALM INC
GENERAL CONTINUING GUARANTY
<DOCUMENT>
<TYPE>EX-10.31
<SEQUENCE>11
<FILENAME>dex1031.txt
<DESCRIPTION>GENERAL CONTINUING GUARANTY
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.31

                           GENERAL CONTINUING GUARANTY

            THIS GENERAL CONTINUING GUARANTY ("Guaranty"), dated as of November
30, 2001, is executed and delivered by PALM, INC., a Delaware corporation
("Guarantor"), in favor of Guarantied Party (as defined below), in light of the
following:

            WHEREAS, Palm Europe Ltd., a corporation organized under the laws of
the England and Wales ("Debtor") and Guarantied Party are, contemporaneously
herewith, entering into the Loan Agreement; and

            WHEREAS, in order to induce Guarantied Party to extend financial
accommodations to the Debtor pursuant to the Loan Agreement and in consideration
thereof, and in consideration of any loans or other financial accommodations
heretofore or hereafter extended by Guarantied Party to the Debtor, whether
pursuant to the Loan Agreement, or otherwise, Guarantor has agreed to guaranty
the Guarantied Obligations.

            NOW, THEREFORE, in consideration of the foregoing, Guarantor hereby
agrees, in favor of Guarantied Party, as follows:

      1. Definitions and Construction.

            (a) Definitions. Capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to them in the Loan Agreement.
The following terms, as used in this Guaranty, shall have the following
meanings:

            "Agent" shall mean Foothill Capital Corporation, a California
      corporation, in its capacity as arranger and administrative agent under
      the Loan Agreement.

            "Debtor" shall have the meaning set forth in the recitals to this
      Guaranty.

            "Guarantied Obligations" shall mean all present and future
      Indebtedness owed by Debtor to Guarantied Party.

            "Guarantied Party" shall mean, individually and collectively, the
      Lenders and Agent.

            "Guarantor" shall have the meaning set forth in the preamble to this
      Guaranty.

            "Guaranty" shall have the meaning set forth in the preamble to this
      Guaranty.

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            "Indebtedness" shall mean any and all obligations, indebtedness, or
      liabilities of any kind or character owed by Debtor to Guarantied Party
      and arising directly or indirectly out of or in connection with the Loan
      Agreement or the other UK Loan Documents, including all such obligations,
      indebtedness, or liabilities, whether for principal, interest (including
      any and all interest which, but for the application of the provisions of
      the Bankruptcy Code, would have accrued on such amounts), premium,
      reimbursement obligations, fees, costs, expenses (including attorneys
      fees), or indemnity obligations, whether heretofore, now, or hereafter
      made, incurred, or created, whether voluntarily or involuntarily made,
      incurred, or created, whether secured or unsecured (and if secured,
      regardless of the nature or extent of the security), whether absolute or
      contingent, liquidated or unliquidated, or determined or indeterminate,
      whether Debtor is liable individually or jointly with others, and whether
      recovery is or hereafter becomes barred by any statute of limitations or
      otherwise becomes unenforceable for any reason whatsoever, including any
      act or failure to act by Guarantied Party.

            "Lenders" shall mean the lenders that are signatories to the Loan
      Agreement.

            "Loan Agreement" shall mean that certain Loan Agreement, dated as of
      November 30, 2001, entered into between Debtor, Lenders, Agent, Heller
      Financial, Inc., as Syndication Agent, and the CIT Group/Business Credit,
      Inc., as Documentation Agent.

            (b) Construction. Unless the context of this Guaranty clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, the part includes the whole, the terms
"include" and "including" are not limiting, and the term "or" has the inclusive
meaning represented by the phrase "and/or." The words "hereof," "herein,"
"hereby," "hereunder," and other similar terms refer to this Guaranty as a whole
and not to any particular provision of this Guaranty. Any reference in this
Guaranty to any of the following documents includes any and all alterations,
amendments, restatements, extensions, modifications, renewals, or supplements
thereto or thereof, as applicable: the Loan Agreement; this Guaranty; and the
other UK Loan Documents. Neither this Guaranty nor any uncertainty or ambiguity
herein shall be construed or resolved against Guarantied Party or Guarantor,
whether under any rule of construction or otherwise. On the contrary, this
Guaranty has been reviewed by Guarantor, Guarantied Party, and their respective
counsel, and shall be construed and interpreted according to the ordinary
meaning of the words used so as to fairly accomplish the purposes and intentions
of Guarantied Party and Guarantor.

      2. Guarantied Obligations. Guarantor hereby irrevocably and
unconditionally guaranties to Guarantied Party, as and for its own debt, until
final and indefeasible payment thereof has been made, (a) the payment of the
Guarantied Obligations, in each case when and as the same shall become due and
payable, whether at maturity, pursuant to a mandatory prepayment requirement, by
acceleration, or otherwise; it being the intent of Guarantor that


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the guaranty set forth herein shall be a guaranty of payment and not a guaranty
of collection; and (b) the punctual and faithful performance, keeping,
observance, and fulfillment by Debtor of all of the agreements, conditions,
covenants, and obligations of Debtor contained in the Loan Agreement, and under
each of the other UK Loan Documents.

      3. Continuing Guaranty. This Guaranty includes Guarantied Obligations
arising under successive transactions continuing, compromising, extending,
increasing, modifying, releasing, or renewing the Guarantied Obligations,
changing the interest rate, payment terms, or other terms and conditions
thereof, or creating new or additional Guarantied Obligations after prior
Guarantied Obligations have been satisfied in whole or in part. To the maximum
extent permitted by law, Guarantor hereby waives any right to revoke this
Guaranty as to future Indebtedness. If such a revocation is effective
notwithstanding the foregoing waiver, Guarantor acknowledges and agrees that (a)
no such revocation shall be effective until written notice thereof has been
received by Guarantied Party, (b) no such revocation shall apply to any
Guarantied Obligations in existence on such date (including any subsequent
continuation, extension, or renewal thereof, or change in the interest rate,
payment terms, or other terms and conditions thereof), (c) no such revocation
shall apply to any Guarantied Obligations made or created after such date to the
extent made or created pursuant to a legally binding commitment of Guarantied
Party in existence on the date of such revocation, (d) no payment by Guarantor,
Debtor, or from any other source, prior to the date of such revocation shall
reduce the maximum obligation of Guarantor hereunder, and (e) any payment by
Debtor or from any source other than Guarantor subsequent to the date of such
revocation shall first be applied to that portion of the Guarantied Obligations
as to which the revocation is effective and which are not, therefore, guarantied
hereunder, and to the extent so applied shall not reduce the maximum obligation
of Guarantor hereunder.

      4. Performance Under this Guaranty. In the event that Debtor fails to make
any payment of any Guarantied Obligations, on or before the due date thereof, or
if Debtor shall fail to perform, keep, observe, or fulfill any other obligation
referred to in clause (b) of Section 2 hereof in the manner provided in the Loan
Agreement or the other UK Loan Documents, as applicable, Guarantor immediately
shall cause such payment to be made or each of such obligations to be performed,
kept, observed, or fulfilled.

      5. Primary Obligations. This Guaranty is a primary and original obligation
of Guarantor, is not merely the creation of a surety relationship, and is an
absolute, unconditional, and continuing guaranty of payment and performance
which shall remain in full force and effect without respect to future changes in
conditions. Guarantor agrees that it is directly, jointly and severally with any
other guarantor of the Guarantied Obligations, liable to Guarantied Party, that
the obligations of Guarantor hereunder are independent of the obligations of
Debtor or any other guarantor, and that a separate action may be brought against
Guarantor, whether such action is brought against Debtor or any other guarantor
or whether Debtor or any other guarantor is joined in such action. Guarantor
agrees that its liability hereunder shall be immediate and shall not be
contingent upon the exercise or enforcement by Guarantied Party of whatever
remedies it may have against Debtor or any other guarantor, or the enforcement
of any lien or realization upon any security Guarantied


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Party may at any time possess. Guarantor agrees that any release which may be
given by Guarantied Party to Debtor or any other guarantor shall not release
Guarantor. Guarantor consents and agrees that Guarantied Party shall be under no
obligation to marshal any property or assets of Debtor or any other guarantor in
favor of Guarantor, or against or in payment of any or all of the Guarantied
Obligations.

      6. Waivers.

            (a) To the fullest extent permitted by applicable law, Guarantor
hereby waives: (i) notice of acceptance hereof; (ii) notice of any loans or
other financial accommodations made or extended under the Loan Agreement, or the
creation or existence of any Guarantied Obligations; (iii) notice of the amount
of the Guarantied Obligations, subject, however, to Guarantor's right to make
inquiry of Guarantied Party to ascertain the amount of the Guarantied
Obligations at any reasonable time; (iv) notice of any adverse change in the
financial condition of Debtor or of any other fact that might increase
Guarantor's risk hereunder; (v) notice of presentment for payment, demand,
protest, and notice thereof as to any instrument among the UK Loan Documents;
(vi) notice of any Default or Event of Default under the Loan Agreement; and
(vii) all other notices (except if such notice is specifically required to be
given to Guarantor under this Guaranty or any other UK Loan Documents to which
Guarantor is a party) and demands to which Guarantor might otherwise be
entitled.

            (b) To the fullest extent permitted by applicable law, Guarantor
waives the right by statute or otherwise to require Guarantied Party to
institute suit against Debtor or to exhaust any rights and remedies which
Guarantied Party has or may have against Debtor. In this regard, Guarantor
agrees that it is bound to the payment of each and all Guarantied Obligations,
whether now existing or hereafter arising, as fully as if such Guarantied
Obligations were directly owing to Guarantied Party by Guarantor. Guarantor
further waives any defense arising by reason of any disability or other defense
(other than the defense that the Guarantied Obligations shall have been fully
and finally performed and indefeasibly paid in full in cash) of Debtor or by
reason of the cessation from any cause whatsoever of the liability of Debtor in
respect thereof.

            (c) To the fullest extent permitted by applicable law, Guarantor
hereby waives: (i) any rights to assert against Guarantied Party any defense
(legal or equitable), set-off, counterclaim, or claim which Guarantor may now or
at any time hereafter have against Debtor or any other party liable to
Guarantied Party; (ii) any defense, set-off, counterclaim, or claim, of any kind
or nature, arising directly or indirectly from the present or future lack of
perfection, sufficiency, validity, or enforceability of the Guarantied
Obligations or any security therefor; (iii) any defense arising by reason of any
claim or defense based upon an election of remedies by Guarantied Party
including any defense based upon an election of remedies by Guarantied Party
under the provisions of ss.ss. 580d and 726 of the California Code of Civil
Procedure, or any similar law of California or any other jurisdiction; (iv) the
benefit of any statute of limitations affecting Guarantor's liability hereunder
or the enforcement thereof, and any act which shall defer or delay the operation
of any statute of


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limitations applicable to the Guarantied Obligations shall similarly operate to
defer or delay the operation of such statute of limitations applicable to
Guarantor's liability hereunder.

            (d) Until such time as all of the Guarantied Obligations have been
fully, finally, and indefeasibly paid in full in cash: (i) Guarantor hereby
waives and postpones any right of subrogation Guarantor has or may have as
against Debtor with respect to the Guarantied Obligations; (ii) in addition,
Guarantor hereby waives and postpones any right to proceed against Debtor or any
other Person, now or hereafter, for contribution, indemnity, reimbursement, or
any other suretyship rights and claims (irrespective of whether direct or
indirect, liquidated or contingent), with respect to the Guarantied Obligations;
and (iii) in addition, Guarantor also hereby waives and postpones any right to
proceed or to seek recourse against or with respect to any property or asset of
Debtor.

            (e) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER
PROVISION SET FORTH IN THIS GUARANTY, GUARANTOR HEREBY WAIVES, TO THE MAXIMUM
EXTENT SUCH WAIVER IS PERMITTED BY LAW, ANY AND ALL BENEFITS OR DEFENSES ARISING
DIRECTLY OR INDIRECTLY UNDER ANY ONE OR MORE OF CALIFORNIA CIVIL CODE ss.ss.
2799, 2808, 2809, 2810, 2815, 2819, 2820, 2821, 2822, 2838, 2839, 2845, 2847,
2848, 2849, AND 2850, CALIFORNIA CODE OF CIVIL PROCEDURE ss.ss. 580a, 580b,
580c, 580d, AND 726, AND CHAPTER 2 OF TITLE 14 OF THE CALIFORNIA CIVIL CODE.

            (f) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER
PROVISION SET FORTH IN THIS GUARANTY, GUARANTOR WAIVES ALL RIGHTS AND DEFENSES
ARISING OUT OF AN ELECTION OF REMEDIES BY THE GUARANTIED PARTY, EVEN THOUGH THAT
ELECTION OF REMEDIES, SUCH AS A NONJUDICIAL FORECLOSURE WITH RESPECT TO SECURITY
FOR A GUARANTIED OBLIGATION, HAS DESTROYED GUARANTOR'S RIGHTS OF SUBROGATION AND
REIMBURSEMENT AGAINST THE DEBTOR BY THE OPERATION OF SECTION 580d OF THE
CALIFORNIA CODE OF CIVIL PROCEDURE OR OTHERWISE.

      7. Releases. Guarantor consents and agrees that, without notice to or by
Guarantor and without affecting or impairing the obligations of Guarantor
hereunder, Guarantied Party may, by action or inaction, compromise or settle,
extend the period of duration or the time for the payment, or discharge the
performance of, or may refuse to, or otherwise not enforce, or may, by action or
inaction, release all or any one or more parties to, any one or more of the
terms and provisions of the Loan Agreement or any of the other UK Loan Documents
or may grant other indulgences to Debtor in respect thereof, or may amend or
modify in any manner and at any time (or from time to time) any one or more of
the Loan Agreement or any of the other UK Loan Documents, or may, by action or
inaction, release or substitute any other guarantor, if any, of the Guarantied
Obligations, or may enforce, exchange, release, or waive, by action or inaction,
any security for the Guarantied Obligations or any other guaranty of the
Guarantied Obligations, or any portion thereof.


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      8. No Election. Guarantied Party shall have the right to seek recourse
against Guarantor to the fullest extent provided for herein and no election by
Guarantied Party to proceed in one form of action or proceeding, or against any
party, or on any obligation, shall constitute a waiver of Guarantied Party's
right to proceed in any other form of action or proceeding or against other
parties unless Guarantied Party has expressly waived such right in writing.
Specifically, but without limiting the generality of the foregoing, no action or
proceeding by Guarantied Party under any document or instrument evidencing the
Guarantied Obligations shall serve to diminish the liability of Guarantor under
this Guaranty except to the extent that Guarantied Party finally and
unconditionally shall have realized indefeasible payment by such action or
proceeding.

      9. Indefeasible Payment. The Guarantied Obligations shall not be
considered indefeasibly paid for purposes of this Guaranty unless and until all
payments to Guarantied Party are no longer subject to any right on the part of
any person whomsoever, including Guarantor, Guarantor as a debtor in possession,
or any trustee (whether appointed under the Bankruptcy Code or otherwise) of
Guarantor's assets to invalidate or set aside such payments or to seek to recoup
the amount of such payments or any portion thereof, or to declare same to be
fraudulent or preferential. In the event that, for any reason, all or any
portion of such payments to Guarantied Party is set aside or restored, whether
voluntarily or involuntarily, after the making thereof, the obligation or part
thereof intended to be satisfied thereby shall be revived and continued in full
force and effect as if said payment or payments had not been made and Guarantor
shall be liable for the full amount Guarantied Party is required to repay plus
any and all costs and expenses (including reasonable attorneys fees) paid by
Guarantied Party in connection therewith.

      10. Financial Condition of Debtor. Guarantor represents and warrants to
Guarantied Party that it is currently informed of the financial condition of
Debtor and of all other circumstances which a diligent inquiry would reveal and
which bear upon the risk of nonpayment of the Guarantied Obligations. Guarantor
further represents and warrants to Guarantied Party that it has read and
understands the terms and conditions of the Loan Agreement and the other UK Loan
Documents. Guarantor hereby covenants that it will continue to keep itself
informed of Debtor's financial condition, the financial condition of other
guarantors, if any, and of all other circumstances which bear upon the risk of
nonpayment or nonperformance of the Guarantied Obligations.

      11. Payments; Application. All payments to be made hereunder by Guarantor
shall be made in lawful money of the United States of America at the time of
payment, shall be made in immediately available funds, and shall be made without
deduction (whether for taxes or otherwise) or offset. All payments made by
Guarantor hereunder shall be applied as follows: first, to all reasonable costs
and expenses (including reasonable attorneys fees) incurred by Guarantied Party
in enforcing this Guaranty or in collecting the Guarantied Obligations; second,
to all accrued and unpaid interest, premium, if any, and fees owing to
Guarantied Party constituting Guarantied Obligations; and third, to the balance
of the Guarantied Obligations.


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      12. Attorneys Fees and Costs. Guarantor agrees to pay, on demand, all
reasonable attorneys fees and all other reasonable costs and expenses which may
be incurred by Guarantied Party in the enforcement of this Guaranty or in any
way arising out of, or consequential to the protection, assertion, or
enforcement of the Guarantied Obligations (or any security therefor),
irrespective of whether suit is brought.

      13. Notices. Unless otherwise specifically provided in this Guaranty, any
notice or other communication relating to this Guaranty shall be made in care of
Debtor in accordance with the terms of the Loan Agreement.

      14. Cumulative Remedies. No remedy under this Guaranty, under the Loan
Agreement, or any other UK Loan Document is intended to be exclusive of any
other remedy, but each and every remedy shall be cumulative and in addition to
any and every other remedy given under this Guaranty, under the Loan Agreement,
or any other UK Loan Document, and those provided by law. No delay or omission
by Guarantied Party to exercise any right under this Guaranty shall impair any
such right nor be construed to be a waiver thereof. No failure on the part of
Guarantied Party to exercise, and no delay in exercising, any right under this
Guaranty shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under this Guaranty preclude any other or further exercise
thereof or the exercise of any other right.

      15. Severability of Provisions. Any provision of this Guaranty which is
prohibited or unenforceable under applicable law shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.

      16. Entire Agreement; Amendments. This Guaranty constitutes the entire
agreement between Guarantor and Guarantied Party pertaining to the subject
matter contained herein. This Guaranty may not be altered, amended, or modified,
nor may any provision hereof be waived or noncompliance therewith consented to,
except by means of a writing executed by Guarantor and Guarantied Party. Any
such alteration, amendment, modification, waiver, or consent shall be effective
only to the extent specified therein and for the specific purpose for which
given. No course of dealing and no delay or waiver of any right or default under
this Guaranty shall be deemed a waiver of any other, similar or dissimilar,
right or default or otherwise prejudice the rights and remedies hereunder.

      17. Successors and Assigns. This Guaranty shall be binding upon Guarantor
and its successors and assigns and shall inure to the benefit of the successors
and assigns of Guarantied Party; provided, however, Guarantor shall not assign
this Guaranty or delegate any of its duties hereunder without Guarantied Party's
prior written consent and any unconsented to assignment shall be absolutely
void. In the event of any assignment or other transfer of rights by Guarantied
Party, the rights and benefits herein conferred upon Guarantied Party shall
automatically extend to and be vested in such assignee or other transferee.


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      18. No Third Party Beneficiary. This Guaranty is solely for the benefit of
Guarantied Party and its successors and assigns and may not be relied on by any
other Person.

      19. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER

            THE VALIDITY OF THIS GUARANTY, ITS CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS
ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.

            THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS GUARANTY SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND
FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, OR AT
THE SOLE OPTION OF GUARANTIED PARTY, IN ANY OTHER COURT IN WHICH GUARANTIED
PARTY SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER
JURISDICTION OVER THE MATTER IN CONTROVERSY. GUARANTOR AND GUARANTIED PARTY EACH
WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO
ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT
ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 19.

            GUARANTOR AND GUARANTIED PARTY HEREBY WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS GUARANTY OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. GUARANTOR AND GUARANTIED PARTY EACH REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A
COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.

                            [Signature page follows]


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            IN WITNESS WHEREOF, the undersigned has executed and delivered this
Guaranty as of the date first written above.

                                        PALM, INC.,
                                        a Delaware corporation


                                        By: /s/ Judy Bruner
                                            ------------------------------
                                        Title: CFO


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