Press Release

Palm Digital Media and Lightning Source Unveil eBook Classics Collection for Schools

Special Pricing Includes 500 Titles to Use With Handheld and Desktop Computers

MAYNARD, Mass., Feb. 4, 2003 -- In a move designed to give schools an affordable way to use eBook technology, Palm Digital Media, Inc. and Lightning Source Inc. today introduced the Classics Collection, a selection of classic literature that gives students, teachers and administrators unlimited use of up to 500 eBooks for an entire school year.

Palm Digital Media, a leading publisher and distributor of eBooks for handheld and desktop computers joined with Lightning Source, the leading provider of digital content management solutions to the book industry, to develop a comprehensive collection of titles that includes "The Red Badge of Courage," by Stephen Crane, "Little Women," by Louisa May Alcott, "Night and Day," by Virginia Woolf, the works of William Shakespeare, and other books commonly found on middle and high school reading lists. A licensing fee beginning at $499 for the school year gives schools unlimited access to the eBooks.

"This collection provides schools with a cost-effective way to easily distribute books to students," said Mike Segroves, director of business development at Palm Digital Media. "eBooks cannot be lost, stolen, or damaged, and the license entitles the school to internally distribute as many copies of the eBooks as it wants, as many times as it wants throughout the school year. The use of eBook literature in schools is just beginning, and eTextbooks are on the horizon. We expect the use of these digital materials to keep pace with the investment schools make in technology in the coming years."

"Today Palm Digital Media sets in motion a new future for students - a future that may do away with 20-pound backpacks," said J. Kirby Best, President and CEO of Lightning Source. "With the Classics Collection, students will have the luxury and convenience of an entire electronic library at their fingertips. Lightning Source is delighted to be part of creating this future."

The use of technology in schools is expected to grow quickly. According to IDC, computer hardware will continue to make up the largest share of district technology budgets, accounting for 26 percent of spending in the 2005/2006 academic year. The K-12 market is moving from desktop PCs towards notebook computers and smart handheld devices. This shift will rapidly accelerate at the start of the 2003-2004 academic calendar. (Source: IDC: The Education eVolution: The U.S. Public K12 Education IT).

Schools receive the Classics Collection on a CD that can be loaded on the school's server. The eBooks are listed on the school Web site by both title and author, or can be located by using the browser's built-in search function. Users simply click on the selection and download it in less than a minute to Palm Powered™ handheld computers, the Palm Powered portable computer Dana from AlphaSmart, Pocket PC devices, Mac and Windows desktop and notebook computers, and Microsoft's Tablet PC version of Windows XP. For schools without Web sites, Lightning Source will offer to host the service for small annual fee.

The Classics Collection includes 500 core literature classics that have been jointly created by Lightning Source and Palm Digital Media. The title selections have been optimized for reading with Palm Reader, the free, award winning eBook application that includes navigational tools and other features that let students bookmark pages, add notes, and change fonts and type sizes.

Two licensing options are available. The first option includes a collection of 250 titles for $499. It will be available in late February. The second option adds an additional 250 titles to the collection for a total of 500 titles for $750. This option will be available in April. Palm Digital Media also announced an introductory promotion that gives schools the collection of 250 eBooks for the 2003-2004 school year, plus the balance of the current semester if ordered by April 1. To see the titles included in the Classics Collection visit www.palmdigitalmedia.com.

Palm Digital Media also offers schools special pricing for its award-winning Palm Reader™ Pro eBook application featuring a built-in dictionary; and Palm eBook Studio, an easy-to-use authoring tool that lets users create their own eBooks. With Palm eBook Studio, students can self-publish stories with photographs and graphics, making the most out of creative writing assignments. Teachers can use it to distribute homework assignments and reading lists, to hand out course notes and lesson plans, and to replace a variety of other printed documents. Administrators can use it to create school-related handbooks, manuals and other materials.

Purchasing options for Palm Reader Pro (Suggested List Price $14.95):

• Individual Level: 1 to 9 copies for $13.95 each
• Class Level: 10 to 24 copies for $11.95 each
• School Level: 25 to 249 copies for $9.95 each
• More than 250 copies are $7.95 each

Licensing options for Palm eBook Studio:

• 1 copy $29.95
• 3 copies $28.95/ea.
• 5 copies $26.95/ea.
• 10 copies $22.95/ea.
• 25 copies $19.95/ea.

Palm Digital Media is a subsidiary of PalmSource, Inc., the Palm OS® subsidiary of Palm, Inc. (Nasdaq: PALM). More information about Palm Digital Media is available at www.palmdigitalmedia.com.

About PalmSource, Inc.
PalmSource is the company behind Palm OS, the world's most popular operating system for handhelds and smart phones. Licensed by industry leaders -- including Acer, AlphaSmart, ARM, ATI, Fossil, Garmin, GSL, Handera, Handspring, HuneTec, Intel, Kyocera, Legend, MediaQ, Motorola, Palm, Samsung, Sony, Symbol, Texas Instruments --Palm OS has been shipped on more than 25 million handhelds and smart phones, and given rise to a huge community of users, enterprises, developers and manufacturers, who together make up the Palm Economy. More information about PalmSource, Inc., is available at www.palmsource.com. Information about Palm, Inc. is available at www.palm.com/aboutpalm.

About Lightning Source Inc.
Lightning Source Inc., a subsidiary of Ingram Industries Inc., provides a comprehensive suite of digital fulfillment services. The company is revolutionizing the options available to the industry in the storage, management, and distribution of digital content. Lightning Source stores books and other information electronically and delivers them "on demand" in either traditional printed format or as e-books in response to orders from booksellers, librarians, and publishers. Lightning Source has printed more than 6,500,000 "on demand" books for more than 1,900 publishers around the world. For more information, visit our website at www.lightningsource.com.

Palm OS and PalmSource are registered trademarks and Palm Powered is a trademark of PalmSource, Inc., a subsidiary of Palm, Inc. Other brands may be trademarks of their respective owners.

The Lightning Source name, corresponding logos, taglines and other service marks identifying Lightning Source and its services are the proprietary marks of Lightning Source Inc. and must be represented accordingly. Other products and company names mentioned herein may be the trademarks of their respective owners.