Prepared by R.R. Donnelley Financial -- Letter Agreement-Texas Instruments Incorporated




 Exhibit 4.5 
  

September 17, 2003 
  
 Texas Instruments Incorporated 
 12500 TI Boulevard 
 P.O. Box 660199 
 Dallas, Texas 75266-0199 
 Attention: William A. Aylesworth 
  

	 	Re:	 	Agreements Regarding $50,000,000 5% Convertible Subordinated Note 

  
 Dear William: 
  
 Reference is made to (i) the $50,000,000 5% Convertible Subordinated Note due 2006 (the “Existing Note”) issued by Palm, Inc.
(“Palm”) to Texas Instruments Incorporated (“TI”), (ii) the $15,000,000 convertible note (the “PalmSource Note”) to be issued by PalmSource, Inc. pursuant to the terms of the Existing Note upon the
spin-off of PalmSource by Palm, and (iii) the new $35,000,000 convertible note (the “New Palm Note”) to be issued by Palm pursuant to the terms of the Existing Note upon the spin-off of PalmSource by Palm. Capitalized terms used and
not otherwise defined in this letter shall have the respective meanings given to them in the Existing Note. 
  
 This letter confirms that, notwithstanding the provisions of the Existing Note and related notices sent under the terms of the Existing Note, Palm and TI
have agreed to superimpose a “collar” on the “Conversion Price” of the PalmSource Note that is determined according to the formula (the “Existing Formula”) in the Existing Note, such that: 
  

	 	(1)	 	if such Conversion Price determined according to the Existing Formula is less than or equal to 115% (i.e., 15% premium to market) of the VWAP for PalmSource common stock (the
“Minimum Conversion Price”) on the first day of trading of PalmSource common stock (the “First PalmSource Trading Day”), then the Conversion Price of the PalmSource Note shall be the Minimum Conversion Price;


  

	 	(2)	 	if such Conversion Price determined according to the Existing Formula is greater than or equal to 400% (i.e., 300% premium to market) of the VWAP for PalmSource common stock
(the “Maximum Conversion Price”) on the First PalmSource Trading Day, then the Conversion Price of the PalmSource Note shall be the Maximum Conversion Price; and 









 Agreements Regarding $50,000,000 5% Convertible Subordinated Note 
 September 17, 2003 
 Page 2 
  

	 	(3)	 	if such Conversion Price determined according to the Existing Formula is greater than the Minimum Conversion Price and less than the Maximum Conversion on the First PalmSource
Trading Day, then the Conversion Price of the PalmSource Note shall be the Conversion Price determined according to the Existing Formula. 

  
 “VWAP” means mean the daily volume weighted average price of the Palm common stock or the PalmSource common stock, as applicable, on the
Nasdaq National Market (or such other market or exchange on which such common stock is traded) as reported by Bloomberg Financial L.P. (based on a trading day from 9:30 a.m. Eastern Time to 4:00 p.m. Eastern Time) using the VAP function for the date
in question. 
  
 This letter also confirms our discussion and
agreement that, notwithstanding the earlier notice sent by Palm to TI, under the Existing Formula the “Company Prior FMV Per Share” and the “Company Ex FMV Per Share” determinations should actually be made using the average last
sale prices per share on the Nasdaq National Market for the five trading day periods referred to in Sections 3(g)(2)(i)(A) and 3(g)(2)(i)(B) of the Existing Note. 
  
 If the foregoing is consistent with your understanding of our agreement, please execute a copy of this letter in the space
below to indicate your agreement that the Existing Note shall be amended as set forth above. 
  

	 Very truly yours,

	
	 PALM, INC.

		
	 By:
	 	 /s/ Judy Bruner


	 Name:
	 	 Judy Bruner


	 Title:
	 	 Sr. VP & CFO




  

	 AGREED:

	
	 TEXAS INSTRUMENTS, INCORPORATED

		
	 By:
	 	 /s/ William A. Aylesworth


	 Name:
	 	 William A. Aylesworth


	 Title:
	 	 Senior Vice President
 Chief Financial Officer