Xerox ScanSoft Unit and Visioneer to Form New Digital Imaging Software Company

Themerged company will be called ScanSoft and willdeliver software products to retail, OEM andcorporate markets. The company's digital imagingproducts will enhance users' ability to capture,organize and share images and electronicdocuments in the office, at home and on the WorldWide Web.

"ScanSoft will be a leading supplier ofsoftware for Xerox' rapidly growing networkedmultifunction product lines and will leverage theleadership of the Xerox brand in thesemarkets," said Brian E. Stern, president ofthe Xerox Office Document Products Group.

Pursuant to the terms of this agreement,Visioneer will acquire Xerox' ScanSoft subsidiaryfor approximately 6.9 million shares of commonstock, approximately 3.8 million shares ofnonvoting convertible preferred stock and theassumption of 1.8 million shares of ScanSoftstock options. In addition, approximately 5.1million outstanding Visioneer shares will becashed out by Visioneer at $2.06 per share withconsideration from Xerox, and those shares willthen be owned by Xerox. Xerox will own 45 percentof the outstanding common stock of ScanSoft afterthe merger, with Visioneer's current stockholdersowning the remaining 55 percent. The transactionis expected to close in the first quarter of1999.

ScanSoft headquarters will be in Peabody,Mass., with development centers on both East andWest Coasts and European operations based inReading, U.K.

Except for the historical informationcontained herein, the matters set forth in thispress release, including statements as to thetiming of the proposed merger, the extent of themarket demand and the perceived benefits of theproposed merger, are forward-looking statementswithin the meaning of the "safe harbor"provisions of the private Securities LitigationReform Act of 1995. These forward lookingstatements are subject to risks and uncertaintiesthat may cause actual results to differmaterially, including the satisfaction of theconditions to closing of the proposed merger, thesuccessful integration of ScanSoft and Visioneerand other risks detailed from time to time inVisioneer's SEC reports, including its QuarterlyReport on Form 10-Q for the fiscal quarter endedSept. 27, 1998, and Annual Report on Form 10-Kfor the fiscal year ended Dec. 28, 1997.Visioneer, ScanSoft and Xerox disclaim any intentor obligation to update these forward-lookingstatements.

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Contact: Judd Everhart, Xerox, 203 968-3572

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