Progress Software Corporation Announces Acquisition of Actional Corporation

Merger with Sonic Software Operating Unit Extends Leadership inSOA Infrastructure with Web Services Visibility and Run-TimeGovernance

Progress Software Corporation (Nasdaq: PRGS), a global supplier ofapplication infrastructure software used to develop, deploy, integrateand manage business applications, has agreed to acquire privately-heldActional Corporation for approximately $32 million, net of cashacquired, in cash and shares of Progress common stock. Actional is aleading provider of Web services management (WSM) software forvisibility and run-time governance of distributed IT systems in aservice-oriented architecture (SOA). Upon the closing of thetransaction, Actional will become part of Sonic Software, the inventorand leading provider of the enterprise service bus, and an operatingunit of Progress Software Corporation.

Every enterprise making the transition to SOA can greatly benefitfrom Actional's products, whether they are initiating their firstproject, or have fully deployed a large-scale SOA productionenvironment. Actional's SOA visibility and run-time governance ensurealignment between IT and business, by providing real-time monitoringand analysis of business processes, and by employing security andpolicies to manage and optimize any enterprise SOA implementation.Actional's technology provides these capabilities with extremely lowoverhead and minimal impact on system performance.

Unlike competing products, Actional Looking Glass(TM) providesend-to-end business process visibility across any SOA deployment.Using Actional's non-intrusive Ghost Agents and unique processtracking technology, Looking Glass automatically discovers servicesand message flows through the SOA network, and dynamically maps andmonitors each and every step for unprecedented SOA visibility andinsight. A wide range of usage and performance metrics are capturedand correlated for governance, troubleshooting, and processoptimization. Beyond monitoring individual services, Looking Glassautomatically detects and monitors business transactions as they flowacross a wide variety of application servers, databases, and networkappliances.

Actional SOAPstation(TM) is a SOA intermediary that dramaticallyreduces the costs and complexity of deploying and managing SOAprojects. Through active mediation of SOA-based business transactions,SOAPstation provides policy-based security and access control, servicelevel agreement (SLA) management and enforcement, and minimizes theimpact of system changes on service uptime by providing proactive,non-disruptive impact monitoring and control.

The pairing of Sonic's SOA Suite and Actional's products--each anestablished, best-of-breed SOA product line in its ownright--establishes Sonic as the market's leading provider ofplatform-independent, enterprise-grade SOA infrastructure software.Sonic has successfully established Sonic ESB(R) as the preferredplatform to connect, mediate and orchestrate services in an enterpriseSOA environment. Actional's platform-agnostic approach to SOAvisibility and run-time governance supports SOA environments usingenterprise service buses (ESBs), application servers, or othertechnologies. The Actional and Sonic products can be usedindependently of one another, or combined to support the entire SOAlifecycle from service definition and deployment, to processdefinition and staging, to runtime visibility and real-timeoptimization.

"Like Sonic, Actional has been an innovator and pioneer of SOA,"said Greg O'Connor, president of Sonic. "Now that most enterprisesacknowledge the business agility and operational efficiency benefitsof SOA, we see that there are many organizations with clear needs forWeb services management. A thorough analysis of the WSM marketrevealed that Actional had far and away the most advanced feature setas well as the most robust, scalable and high performance WSMinfrastructure.

"ESB and WSM complement each other perfectly," O'Connor said."Sonic's SOA Suite offerings provide best-of-breed infrastructure forend-to-end, distributed execution of business processes across SOAimplementations. Actional WSM technologies add system andprocess-level visibility as well as policy enforcement to Sonic'sproduct mix, allowing Sonic to address a much wider range of customerneeds as they implement their SOA strategies," O'Connor concluded.

"Progress has created an impressive portfolio of sophisticated androbust SOA technologies," said Tom Ryan, chief executive officer ofActional. "Our proven product line delivers the missing ingredient:the management and visibility to ensure that every SOA project, nomatter what technologies are used, is a successful one. We're excitedto join forces and create the dominant SOA infrastructure solution intoday's rapidly expanding SOA market."

In addition to the Sonic and Actional product lines, ProgressSoftware provides an event stream processing (ESP) platform, andexpects to provide mainframe SOA integration after the completion ofthe pending acquisition of NEON Systems. Progress believes no othervendor is bringing together such an all-encompassing array of productsdesigned to tackle issues critical to the success of enterprise SOA.ESP optimizes business process execution within an SOA environment byanalyzing events in real-time and initiating instantaneous automatedaction based upon business-defined rules. NEON's Shadow RTE productsallow enterprises to incorporate mainframe applications--where manymission-critical enterprise transactions run--directly within theirSOA environments, with full security and operational robustness.

About the Transaction

Progress and Actional have agreed to close the transaction as soonas possible pursuant to a merger agreement approved by the Boards ofDirectors of both companies and by the stockholders of Actional. Nofurther approvals are believed necessary. Under the terms of themerger agreement, Actional shareholders who are entitled to receivepart of the merger consideration and who are "accredited investors"under federal securities laws may elect to receive their proceeds ineither cash or shares of Progress common stock. Progress estimatesthat it may issue up to approximately 1.1 million shares. The balanceof the merger consideration not paid in stock will be paid in cash.Progress expects that, under the terms of its existing stockrepurchase program, an equivalent number of shares will be repurchasedin the open market.

The shares of Progress common stock being issued pursuant to themerger agreement have not been registered under the Securities Act of1933, as amended, and may not be offered or sold in the United Statesabsent registration or an applicable exemption from registrationrequirements.

Progress anticipates the effect of the acquisition on pro formaearnings per share, which excludes in-process research and developmentand amortization of acquired intangibles, to be dilutive by betweenapproximately five cents per share and approximately seven cents pershare for fiscal 2006 and be neutral to accretive in fiscal 2007.Progress is presently unable to calculate the effect of theacquisition on a GAAP basis. GAAP requires the inclusion of theexcluded items, and the valuation analysis necessary to calculate theeffect of the excluded items is not reasonably available at this time.

In connection with the acquisition, Progress is grantinginducement stock options to purchase an aggregate of 160,000 shares ofProgress common stock. The grants are being made to 38 Actionalemployees who are joining Progress as a result of the acquisition. Thegrants are being made under Progress' 2004 Inducement Stock Plan. Eachoption has a term of seven years and an exercise price equal to theclosing price of the common stock on the date of grant. In general,the options vest in equal monthly increments over 60 months beginningon the first day of the month following the date of grant, and aregenerally non-transferable without Progress' approval.

Conference Call/WebCast at 9:00 AM ET Today

Progress' conference call to discuss this acquisition will beWebcast live today at 9:00 a.m. Eastern via CCBN on the company's Website, located at www.progress.com/investors. The call will also beWebcast live via Yahoo (www.yahoo.com), Motley Fool (www.fool.com),Streetevents (www.streetevents.com), TD Waterhouse(www.tdwaterhouse.com) and Fidelity.com (www.fidelity.com). Anarchived version of the conference call will be available for replay.

About Actional

Actional's enterprise-class solutions address the criticalchallenges of securing, monitoring and managing SOA environments.Leveraging leading technology and services, customers achieve theend-to-end transaction visibility required for performance, Webservices management and SLA adherence. Actional's proven solutions aredesigned for each stage of migration from Web services pilots toproduction SOA. Actional is based in Mountain View, Calif. For moreinformation, please visit www.actional.com.

About Sonic Software

Sonic Software is the inventor and leading provider of theenterprise service bus (ESB), a new communication and integrationinfrastructure that supports the enterprise requirements of aservice-oriented architecture (SOA). Sonic's technology delivers thescalability, security, continuous availability and managementcapabilities necessary to connect, integrate and control distributed,mission critical business processes. Over 1,000 customers use Sonicproducts to achieve broad-scale interoperability of IT systems and theflexibility to adapt these systems to ever-changing business needs.

Sonic Software is an operating company of Progress SoftwareCorporation (Nasdaq: PRGS), a global software industry leader.Headquartered in Bedford, Mass., Sonic Software can be reached on theWeb at http://www.sonicsoftware.com, or by phone at +1-781-999-7000 or1-866-GET-SONIC.

About Progress Software Corporation

Progress Software Corporation (Nasdaq:PRGS) is a global industryleader providing application infrastructure software for all aspectsof the development, deployment, integration and management of businessapplications through its operating units: Progress OpenEdge Division,Sonic Software, DataDirect Technologies, and Progress Real TimeDivision. Headquartered in Bedford, Mass., Progress can be reached atwww.progress.com or +1-781-280-4000.

Safe Harbor Language

Except for the historical information and discussions containedherein, statements contained in this release about Progress, Actionaland the acquisition may constitute "forward-looking statements" withinthe meaning of the Private Securities Litigation Reform Act of 1995,including statements regarding the number of shares to be issued.These forward-looking statements involve a number of risks,uncertainties and other factors that could cause actual results todiffer materially, including but not limited to the following: therisk that Progress may encounter unanticipated difficulties or delaysin integrating the business and products of Actional with its own, therisk that important customers, suppliers, business partners or keyexecutives of Actional might terminate their business relationshipswith Actional, which could detract from the expected benefits of theacquisition, an unexpected increase in costs related to theacquisition, the receipt and shipment of new orders for the combinedcompany, the timely release of enhancements to the combined company'sproducts, the growth rates of certain market segments, the positioningof the combined company's products in those market segments,variations in the demand for customer service and technical supportfrom the combined company, pricing pressures and the competitiveenvironment in the software industry, and the combined company'sability to penetrate international markets and manage itsinternational operations. Progress disclaims any intent or obligationto update publicly any forward-looking statements whether in responseto new information, future events or otherwise. For furtherinformation regarding risks and uncertainties associated with Progressand information concerning the acquisition, please refer to Progress'filings with the Securities and Exchange Commission, includingProgress' annual reports on Form 10-K for the fiscal year ending 2004and subsequently filed reports.

Sonic ESB, Sonic SOA Suite, Sonic Continuous AvailabilityArchitecture, and Sonic Software (and design) are trademarks orregistered trademarks of Sonic Software Corporation in the U.S. andother countries. LookingGlass and SOAPstation are trademarks ofActional Corporation, in the U.S. and other countries. Any othertrademarks or service marks contained herein are the property of theirrespective owners.