ParcPlace and Digitalk to Merge.

SUNNYVALE, Calif.--(BUSINESS WIRE)--May 22, 1995--ParcPlace Systems, Inc. (NASDAQ:PARQ) and Digitalk, Inc. jointly announced today that they have signed a definitive agreement to merge the two companies.

ParcPlace is the leader in Smalltalk license revenue and Digitalk is the leader in Smalltalk unit sales. The new company -- to be named ParcPlace-Digitalk, Inc. -- will be the largest independent company dedicated to object-oriented technology. ParcPlace-Digitalk's headquarters will be in Sunnyvale, Calif., with major offices located in Santa Ana, Calif. and Portland, Ore.

Under the terms of the agreement, ParcPlace will issue 3.8 million shares of its common stock in both stock and options in exchange for all the stock and options of Digitalk, which is privately held. The transaction is expected to be a tax-free reorganization and to be accounted for as a "pooling of interests." The two companies together have approximately 350 employees and had revenue of approximately $55 million, for the 12 months ended March 31, 1995. The merger, expected to be completed before the end of August, is subject to the approval of the companies' shareholders.

"ParcPlace and Digitalk share a common vision for the important role object-oriented development and Smalltalk will play in the business enterprise," said Bill Lyons, president and CEO of ParcPlace. "The window of opportunity for objects is now -- and by joining forces, we can make our customers more successful with objects by providing them with a more comprehensive product line, broader choices of computing platforms, and much larger development and service organizations."

"This merger is a strategic milestone in the history of object technology," said John Carrington, president and CEO of Digitalk. "We believe the merger will be successful because ParcPlace and Digitalk have complementary products, channels, and customers, and a shared vision of the future. Together we can turn this vision into reality."

The new company will able to offer the broadest range of object- oriented solutions for the enterprise, including:

o products that range from analysis and design to visual

programming and maintenance,

o training and support that can focus not only on how to use the

products, but on how to be successful with object-oriented

development,

o over 150 partners, including management consulting firms,

systems integrators, and hardware and software companies, and

o support of 12 client/server computing platforms and access to

relational, object-oriented, and legacy databases.

Management Team

Bill Lyons, ParcPlace's president and chief executive officer, will continue as president and chief executive officer of the new company. Adele Goldberg, ParcPlace's chairman, will continue as chairman of the new company, with Jim Anderson, Digitalk's chairman, joining as co-chairman. John Carrington, Digitalk's president and chief executive officer, will leave ParcPlace-Digitalk as an employee after a short transition period following the merger. Along with Jim Anderson, he will join the current members of ParcPlace's board on the board of directors of the new company.

Products

The merger is not expected to affect the delivery of either company's next product release. ParcPlace expects to deliver the next release of VisualWorks, its object-oriented application development tool, in the fourth quarter of 1995. Digitalk also expects to deliver its next release of Visual Smalltalk Enterprise for Windows 95 and Windows NT/Server in the fourth quarter of 1995.

ParcPlace and Digitalk believe that their customers will benefit significantly from this merger. ParcPlace customers will gain access to host platform "look and feel," COBOL and CICS wrappers, and mainframe connectivity. Digitalk customers will gain access to additional computing platforms including UNIX servers, native database connections, and analysis tools. Long-term product plans will be announced at the ParcPlace International Users Conference July 30 - Aug. 2, 1995, in San Jose, Calif.

Smalltalk Advantages

Smalltalk is a true object-oriented programming language well suited to the commercial software development market. According to a recent study by International Data Corp. titled "Smalltalk Market Accelerates":

o Smalltalk ranked highest in 19 of 27 categories when compared by

programmers to other object-oriented languages.

o The Smalltalk tools market grew 60% in 1994 over 1993, making

Smalltalk the fastest-growing object-oriented programming

language.

o Another indicator of interest in Smalltalk is its use by major

systems integrators in their consulting practices. Many of the

major systems integration firms have begun practices around

Smalltalk.

o Smalltalk is an increasingly popular choice (over C++) for the

typical COBOL MIS shop.

Digitalk, Inc.

Digitalk, founded in 1983, was the first company to deliver pure object-oriented programming on personal computers, with its Smalltalk/V products. The company markets worldwide its pure object-oriented Visual Smalltalk and Visual Smalltalk Enterprise development environments for Windows, Windows NT and OS/2. Digitalk provides consulting and training for all of its products, and in object-oriented analysis and Responsibility-Driven Design, through its Professional Services Group.

ParcPlace Systems, Inc.

ParcPlace develops, markets and supports object-oriented solutions for the client/server market. The company also provides a comprehensive range of services, including customer support, training, on-site assistance and consulting. With headquarters in Sunnyvale, Calif., the company maintains offices across the United States and internationally with subsidiaries in Germany and the United Kingdom and a network of distributors throughout the world. -0-

Note to Editors: ParcPlace and VisualWorks are registered trademarks of ParcPlace Systems, Inc., Sunnyvale, Calif. Digitalk and Smalltalk/V are registered trademarks and Visual Smalltalk, Visual Smalltalk Enterprise and Responsibility-Driven Design are trademarks of Digital, Inc., Santa Ana, Calif. Other products or services mentioned herein are trademarks of their respective companies.

CONTACT: ParcPlace Systems Inc., Sunnyvale

Sue Ann Nichols, 408/720-7514 (press)

Carolyn Aver, 408/773-7409 (investor)

or

Digitalk Inc.

Deborah Bayles, 714/513-3000 ext 177