Investor FAQs

On October 24, 2007, the private-equity firm Elevation Partners invested $325 million in Palm. Under the terms of the Recapitalization plan, Elevation purchased Series B Convertible Preferred Stock at a conversion price of $8.50 per share, representing approximately 27% of the Company's outstanding common stock on an as-converted basis (based on the number of shares of commons stock outstanding as of August 31, 2007). In connections with this Recapitalization transaction, Palm distributed $9.00 per share to its common shareholders. All common shareholders of record as of October 24, 2007, 4:00 P.M. EDT should have received this distribution.

In connection with the Recapitalization transaction, Palm filed a proxy statement and other relevant documents with the Securities and Exchange Commission ("SEC") on August 10, 2007. Shareholders of Palm are urged to ready the proxy statement and related documents because they contain important information.

In connection with the cash distribution of $9.00 per share to holders of Palm common stock, pursuant to Treas. Reg. Section 1.1441-3 © (2) (ii), Palm has made a reasonable estimate as of December 31, 2007 that it will not have current earnings and profits for the taxable year of the distribution, and Palm does not have accumulated earnings and profits. Accordingly, Palm has determined that no portion of the distribution will constitute a dividend, as defined in Section 316 of the Code.

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