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Silicon Graphics to Acquire ParaGraph International - May 1997

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ParaGraph Becomes Key Component of Newly Formed Company -- Cosmo Software

MOUNTAIN VIEW, CA (May 14, 1997) -- Silicon Graphics, Inc. (NYSE: SGI) today announced that it has signed a definitive agreement to acquire ParaGraph International, the leading PC 3D Internet software company. Silicon Graphics and ParaGraph were brought together by a shared vision and commitment to enable a more engaging, interactive and three-dimensional Second Web. ParaGraph's Campbell operations will move to Silicon Graphics' Mountain View campus and be integrated into Cosmo Software, the new multiplatform Internet software business unit, announced separately today. The financial terms of the acquisition were not disclosed. The acquisition of ParaGraph and the formation of Cosmo Software are in line with Silicon Graphics' recent reorganization announcement to focus key resources on growth markets.

"One of the most important long-term growth opportunities for Silicon Graphics is to empower the designers, developers and service providers of the Second Web," said Edward R. McCracken, chairman and chief executive officer of Silicon Graphics. "With the acquisition of the leading PC 3D Internet company and the formation of Cosmo Software, we are increasing our investment and reinforcing our leadership in the market for the software and services that will bring about this new interactive medium."

ParaGraph International, based in Campbell, Calif., is the industry leader in several key Second Web market segments, including consumer-level VRML tools and robust client/server software for multiuser online services. ParaGraph is also a key supplier of technologies, content and services for several high-profile Second Web online deployments. ParaGraph's list of prominent online service clients includes Disney Online, Microsoft's MSN and PeopleWorld Co., Ltd, one of the largest and fasting growing online services in Japan.

"ParaGraph International offers the unique combination of technology leadership and a business model perfectly in synch with the evolution of the Second Web software and services market," said Gregory Slayton, president and chief operating officer of ParaGraph International. "The fit with Silicon Graphics, the most dedicated and successful pioneer of pervasive 3D computing, couldn't be better. The combination of these two focused companies should generate significant value for shareholders."

Dr. Kai-Fu Lee, president of Cosmo Software, a Silicon Graphics company, commented, "Silicon Graphics and ParaGraph came together because of complementary technologies, products, business models, and complementary visions. ParaGraph is driven by a vision of applying various technologies to enable new kinds of online experiences."

"ParaGraph's dream has been to develop cultural and educational Internet products that let people virtually travel to different cultural epochs, such as ancient Rome and Greece," said Stepan Pachikov, ParaGraph's founder and CEO/chairman. "Our cornerstones, including 3D, Internet digital ink and multiuser networking technologies, along with our Internet VR production studio, have enabled ParaGraph to approach this goal. We are excited to join Silicon Graphics to work together toward a visually engaging and culturally rich Second Web."