Progress Software Corporation to Acquire NEON Systems Creating Unparalleled Data Connectivity Leader

Merger with DataDirect Operating Unit to Extend Data ConnectivityLeadership and Enable Mainframe Integration for Service-OrientedArchitecture (SOA) and Real-Time Event Stream Processing (ESP)

Progress Software Corporation (Nasdaq:PRGS), a global supplier ofapplication infrastructure software used to develop, deploy, integrateand manage business applications, and NEON Systems, Inc. (Nasdaq:NEON), a leader in mainframe integration, today jointly announced theyhave signed a definitive agreement under which a wholly ownedsubsidiary of Progress will make a $6.20 per share cash tender offerfor all outstanding shares of NEON common stock. The transaction isvalued at approximately $68 million in the aggregate. The tender offerprice represents a premium of approximately 46 percent for NEON'sstockholders based on the 30-day trailing average share price of NEONon the Nasdaq National Market for the period ending on December 19,2005. Following the purchase of shares in the tender offer, thesubsidiary of Progress and NEON will merge. Owners of NEON shares notpurchased in the tender offer will be entitled to receive $6.20 pershare in cash in the merger. Upon the closing of the transaction, NEONwill become part of DataDirect Technologies, the software industryleader in standards-based data connectivity and an operating unit ofProgress Software Corporation.

DataDirect has long been the industry leader in standards-baseddata connectivity, with products covering all major relationaldatabases, operating systems, and data access standards. Hundreds ofindependent software vendors and thousands of corporate IT departmentsworldwide rely on DataDirect for production proven database drivers,which deliver the reliability, security, and performance needed forthe most demanding software systems. The technology is backed byaward-winning technical support and the industry's most comprehensivetest suite.

NEON is a leading independent vendor of standards-based softwareto access data and applications stored on mainframes, where many largecompanies run some of their most critical business applications. NEONproducts support SQL access through ODBC and JDBC and also enable webservices integration with mainframes for service-orientedarchitectures and real-time event processing. NEON's customer baseincludes some of the world's most well known commercial and governmententities, who depend on its products for mainframe integration fortheir mission critical systems.

The combination of the two companies will offer customers anunparalleled range of data access products and technologies. Togetherthe two companies will offer standards-based access to mainframe datasources such as DB2, IMS/DB VSAM, Adabas, CICS/TS, IMS/TM, CA-IDMS,and Natural along with relational databases such as Oracle, DB2, SQLServer, Sybase, Informix, and Progress OpenEdge. Moreover, theacquisition will bring together the industry's top data connectivitydevelopers and leading technical experts, paving the way for even moreinnovation in the future. As part of DataDirect, NEON will remain avisionary and a leader in the mainframe integration market.

The NEON acquisition will extend Progress' ability to deliver dataconnectivity, web services for Service-Oriented Architectures (SOA),and real-time event stream processing. Progress' Sonic Software andReal Time operating units can now make the mainframe an equalparticipant in any SOA deployment. NEON's Shadow RTE product enablesstandards-based mainframe integration support of web services for SOAand real-time events for Event-Driven Architecture (EDA).

"Our customers and prospects have long asked for a singleenterprise-wide data connectivity vendor that can cover all platformsincluding the mainframe," said Rick Reidy, president of DataDirect."This acquisition lets us meet all of our customers' data accessrequirements - regardless of their environment and where their datasits. And by acquiring the industry leader in mainframe access, wewill continue our tradition of providing our customers with the veryhighest quality data connectivity products available anywhere."

"DataDirect's rich product set, comprehensive understanding ofstandards based data connectivity, and extensive market reach will bea tremendous benefit to NEON customers," said Mark Cresswell, chiefexecutive officer of NEON. "In addition, our web services and eventstreaming products will be of great value to the many Progresscustomers currently deploying service-oriented and event-drivenarchitectures utilizing mainframe data."

Conference Call/WebCast at 9:00 AM ET Today

Progress will discuss this acquisition during its previouslyscheduled conference call to discuss fourth quarter results onTuesday, December 20, 2005 at 9:00 a.m. Eastern Standard Time.

This call is being Webcast by CCBN and can be accessed at theProgress Website (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 and supporting materials willbe available on the Progress Website after the live conference call.

Transaction Terms

The acquisition will be accomplished by a cash tender offer at$6.20 per share for all of NEON's outstanding common stock, which isexpected to be commenced on or before December 30, 2005 by NobleAcquisition Corp., a wholly owned subsidiary of Progress, followed bya cash merger in which any outstanding shares not tendered will beacquired by Noble Acquisition Corp. for $6.20 per share.

The agreement has been unanimously approved by the boards ofdirectors of Progress and NEON. The board of directors of NEON hasreceived an opinion from Jefferies Broadview that $6.20 per share isfair, from a financial point of view, to the holders of NEON commonstock.

The tender offer is expected to be consummated in the firstcalendar quarter of 2006, unless extended. If at least 90% of NEON'sthen-outstanding common stock is tendered, the merger will closeimmediately thereafter. Consummation of the tender offer is subject tocustomary conditions, including the tender of a majority of the sharesof common stock of NEON, termination or expiration of the waitingperiod under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,and other customary conditions. The tender offer is not conditioned onfinancing. The holders of approximately 44% of NEON's outstandingcommon stock, including all directors and executive officers of NEON,have agreed to tender their shares in the tender offer.

Notice to Investors

The tender offer for the outstanding shares of NEON Systems, Inc.has not yet commenced. This announcement is not a recommendation, anoffer to purchase or a solicitation of an offer to sell shares ofNEON. At the time the offer is commenced, Noble Acquisition Corp. willfile a tender offer statement (including an offer to purchase, arelated letter of transmittal and other offer documents) with theSecurities and Exchange Commission, and NEON will file a solicitationand recommendation statement with respect to the offer. When thesematerials become available, NEON security holders should read themcarefully because they will contain important information about thetender offer. Progress and NEON will make these materials available toNEON security holders at no cost to them. In addition, all of thesematerials, as well as any other offer documents filed with theSecurities and Exchange Commission, will be available for free on theSecurities and Exchange Commission's Website at www.sec.gov.

About NEON

NEON Systems, Inc. (Nasdaq:NEON) -- the Mainframe IntegrationExperts -- is a leading provider of enterprise-class mainframeintegration solutions, delivering the industry's first MainframeServices Bus (MSB) for seamless interoperability with distributedsystems: Shadow RTE, which is the only unified mainframe integrationplatform to support the entire range of requirements forService-Oriented Architectures (SOA) and Event-Driven Architectures(EDA) -- key requirements to underpin the Real-time Enterprise. NEON'sShadow technology is designed to reduce the complexity of mainframeintegration allowing large organizations with significant commitmentto mainframe systems to streamline incumbent technologies and lowertotal cost of ownership. NEON's Shadow z/Services and Shadow z/Eventsofferings attack the emerging mainframe Web services and real-timemainframe event-driven markets and are unique in their depth andbreadth of support for the requirements of such markets. Withextensive mainframe integration expertise, NEON is uniquely qualifiedto solve the complexities of supporting new business initiatives thatmust integrate with critical mainframe systems. For more informationon Powering the Real-time Enterprise, visit www.neonsys.com.

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.

About DataDirect Technologies

DataDirect Technologies is focused on data access, enablingsoftware developers at both packaged software vendors and in corporateIT departments to create better applications faster. DataDirectTechnologies offers the most comprehensive, proven line of dataconnectivity components available anywhere. Developers worldwidedepend on DataDirect(R) products to connect their applications to anunparalleled range of data sources using standards-based interfacessuch as ODBC, JDBC and ADO.NET, as well as cutting-edge XML querytechnologies. More than 250 leading independent software vendors andthousands of enterprises rely on DataDirect Technologies to simplifyand streamline data connectivity. DataDirect Technologies is anoperating company of Progress Software Corporation (Nasdaq:PRGS). Formore information, visit www.datadirect.com.

Safe Harbor Language

Except for the historical information and discussions containedherein, statements contained in this release about Progress, NEON andthe acquisition may constitute "forward-looking statements" within themeaning of the Private Securities Litigation Reform Act of 1995,including statements regarding the timing of the consummation of thetender offer and merger, the expected benefits of the acquisition toProgress and customers of the combined company, integration plans, andthe effect of the acquisition on the financial condition and resultsof operations of the combined company. These forward-lookingstatements involve a number of risks, uncertainties and other factorsthat could cause actual results to differ materially, including butnot limited to the following: uncertainties as to the timing of thetender offer and merger, the uncertainty as to how many NEONstockholders will tender their shares, the risk that competing offerswill be made, the possibility that other closing conditions to thetender offer or merger may not be satisfied, the risk that Progressmay encounter unanticipated difficulties or delays in integrating thebusiness and products of NEON with its own, the risk that importantcustomers, suppliers, business partners or key executives of NEONmight terminate their business relationships with NEON, which coulddetract from the expected benefits of the acquisition, an unexpectedincrease in costs related to the acquisition, the receipt and shipmentof new orders for the combined company, the timely release ofenhancements to the combined company's products, the growth rates ofcertain market segments, the positioning of the combined company'sproducts in those market segments, variations in the demand forcustomer service and technical support from the combined company,pricing pressures and the competitive environment in the softwareindustry, business and consumer use of the Internet, and the combinedcompany's ability to penetrate international markets and manage itsinternational operations. Progress and NEON disclaim any intent orobligation to update publicly any forward-looking statements whetherin response to new information, future events or otherwise. Forfurther information regarding risks and uncertainties associated withProgress and NEON and information concerning the acquisition, pleaserefer to Progress's and NEON's filings with the Securities andExchange Commission, including Progress's and NEON's annual reports onForm 10-K for the fiscal years ending 2004 and subsequently filedreports.

DataDirect is a registered trademark of Progress SoftwareCorporation, or one of its affiliates or subsidiaries, in the U.S. andother countries. Shadow RTE is a trademark of NEON Systems, Inc., inthe U.S. and other countries. Any other trademarks or service markscontained herein are the property of their respective owners.