Microsoft and Dialogic Announce Licensing, Development And Investment Agreements

Companies Work Together to Extend Windows as a Platform for Communications

LOS ANGELES - March 2, 1999 - Microsoft Corp. and Dialogic Corp. today announced at the Computer Telephony Expo (CT Expo) Spring '99 that they have entered into an agreement that will extend the Microsoft^® Windows^® operating system to enable developers to build open, cost-effective computer telephony and converged communications solutions. Microsoft will license Dialogic's CT Media™ server software, and Dialogic will provide development services to Microsoft in exchange for $20 million. In addition, Microsoft has made an equity investment in Dialogic in the amount of $24.2 million.

The vigorous growth of the computer telephony industry has been driven by the increased use of open systems and the ongoing convergence of voice and data networking. Still, the process of integrating computing systems, telephone systems and data networks is often difficult and time-consuming, requiring diverse skills and tools. The agreement between Microsoft and Dialogic will accelerate the use of open platforms and standards, such as Windows telephony applications programming interface (TAPI), extending the benefits of computer telephony and network convergence to organizations of all sizes.

"Microsoft is committed to innovation and to creating new opportunities and customer benefits in telephony and converged communications based on the Windows platform and open standards," said Jim Allchin, senior vice president, personal and business systems group, Microsoft. "Building on our mutual strengths, our new relationship with Dialogic will expand Windows communications services and create business opportunities for the entire industry."

"Dramatically increased customer value from leveraging computer telephony servers built on open systems and standards represents both the promise and vision of this relationship," said Howard Bubb, president and CEO of Dialogic. "Microsoft's strong reaffirmation of this vision today will catalyze the industry to move forward more rapidly and more coherently, providing a new generation of innovative and empowering communications-driven applications and services to business."

Licensing, Support and Equity Investment

Under terms of the agreement, Microsoft becomes a nonexclusive licensee of Dialogic's CT Media for the Windows NT^® operating system, a communications resource management software platform. Microsoft will retain Dialogic to provide development services and support to extend the Windows platform for telephony and communications services. Microsoft payments to Dialogic over approximately the next four years are expected to total $20 million for the CT Media license and related development services and support.

In addition, Microsoft has made a $24.2 million equity investment in Dialogic by purchasing from the company approximately 860,000 shares of common stock. This represents
5 percent of Dialogic's outstanding common stock. Dialogic also has issued to Microsoft four-year warrants to purchase approximately 280,000 additional shares of Dialogic common stock at $35.19 per share. Microsoft has agreed to refrain from selling any shares for a period of one year and 50 percent of the shares for two years.

Microsoft will announce at a later date more detailed product plans resulting from this joint work with Dialogic. For more information about Windows communications, visit http://www.microsoft.com/communications/. For information from Dialogic about the CT Media and CT Server, visit http://www.ctserver.com/. For more information at CT Expo, please visit Booth 1655 (Microsoft) and Booth 857 (Dialogic).

About Dialogic

Dialogic (Nasdaq "DLGC"), the global leader in open computer telephony, provides the critical building blocks and technical services that enable partners to develop solutions for the converging voice and data networks. Dialogic products are used in voice, fax, data call center management and Internet Protocol (IP) telephony applications in both customer premise equipment (CPE) and public network environments. The company is headquartered in Parsippany, N.J., with regional headquarters in Tokyo, Singapore, Brussels and Buenos Aires, and sales offices worldwide. For more information, visit the Dialogic Web site at http://www.dialogic.com/.

About Microsoft

Founded in 1975, Microsoft (Nasdaq "MSFT") is the worldwide leader in software for personal computers. The company offers a wide range of products and services for business and personal use, each designed with the mission of making it easier and more enjoyable for people to take advantage of the full power of personal computing every day.

Microsoft, Windows and Windows NT are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

Dialogic and the Dialogic logo are registered trademarks and CT Media is a trademark of Dialogic Corp.

Other product and company names herein may be trademarks of their respective owners.

Statements expressing the beliefs and expectations of management regarding future performance and events are forward-looking statements under the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties. These risks are detailed from time to time in the company's filings with the Securities and Exchange Commission, including the company's form 10-K for the year ended Dec. 31, 1997, and its Form 10-Qs filed since Dec. 31, 1997. Actual results may differ those express or implied in the forward-looking statements.

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