ServiceWare Technologies, Inc. (quote),  and Kanisa Inc. announced the signing of a definitive agreement to merge in an all stock transaction. 

The strategic merger will create the leading vendor in the rapidly growing market for SRM applications in customer service and support. Under the terms of the agreement, Kent Heyman, CEO of ServiceWare, will become chairman of the board.  Bruce Armstrong, CEO of Kanisa, will become CEO of the combined company, which will be headquartered in Cupertino, California. The new name of the combined company has not yet been determined.

The demand for Service Resolution Management software is accelerating as enterprises seek to automate the costly, labor-intensive customer service process of resolving customer cases, incidents and questions across multiple channels.  Research by the Service & Support Professionals Association (SSPA) shows that 80% of service & support costs are directly attributed to service resolution, not call routing or case management.  With more than 170 joint customers, the combined company unleashes a growing market leader with a comprehensive suite of SRM applications for agents, self-service and peer support, delivered on a powerful, integrated knowledge management and search platform.

ServiceWare is a recognized leader in knowledge management systems that improve customer service and help desk operations.  ServiceWare business and product highlights include:

• Profitability in the past two quarters

• More than 120 customers including Cingular Wireless, Reuters, H&R Block, Texas Instruments, and QUALCOMM

• A highly successful channel relationship with Hewlett-Packard

• An award-winning knowledge base system for customer support and enterprise service desks

• A feature-rich suite of adaptive knowledge-powered solutions that allow multiple audiences �customers, employees and partners�to capture and access knowledge

• The Cognitive Processor�, patented self-learning, self-organizing knowledge management technology

Kanisa is a recognized technology leader in Service Resolution Management.  Kanisa business and product highlights include:

• The highest ranking solution in Web self-service according to Gartner, Inc

• A powerful natural language processing (NLP) search engine ranked by Gartner as �Visionary� in its Enterprise Search Magic Quadrant

• The first award-winning, integrated suite of collaborative support applications for agent-assisted service, self-service, and peer-service communities

• The Resolution Flow business process engine that integrates all applications to guide users step by step through the optimal resolution process

• More than 50 customers including Microsoft, Novell, Merrill Lynch, McAfee, AmSouth, and Toshiba

• Strategic reseller partnerships with AmdocsClarify and Capgemini

"This merger is a victory for our customers, shareholders, employees, and partners," said Kent Heyman, CEO of ServiceWare.  We estimate the combined company will have annualized revenues of approximately $25-30 million after the integration is complete.  As such, our new organization will focus on both top and bottom line growth. The combined company�s stronger financial position augmented by a highly talented management team puts us in an ideal position to achieve our goals. We are firmly committed to blending the strengths of our application suites and core technologies, to supporting our installed base of customers, and to achieving 100 percent customer satisfaction.�

�The merger of Kanisa and ServiceWare accelerates our joint vision to become the dominant provider of Service Resolution Management applications,� said Bruce Armstrong, CEO of Kanisa. �Kanisa�s product leadership in personalized self-service, NLP search, collaboration technologies and resolution workflow are an excellent complement to ServiceWare�s strengths in self-learning and self-organizing knowledge sharing. We believe that the combination will create an unparalleled knowledge management platform and the most complete and powerful suite of service resolution applications.�

�The merger of ServiceWare and Kanisa combines a respected industry veteran in KM for customer support with the technology pioneer of Service Resolution Management,� commented Liz Roche, vice president, META Group.  �The combination of industry-leading technologies, comprehensive applications and impressive customer base positions the combined company to take advantage of this growing market.�

Under the terms of the merger, ServiceWare has agreed to issue stockholders in Kanisa an aggregate amount of shares of common stock such that Kanisa stockholders will own approximately 40% of the total shares outstanding of the combined company after the merger.  It is currently estimated that the number of shares to be issued will be approximately 35,000,000.  In addition, ServiceWare has agreed to issue warrants to purchase 4,239,231 shares of common stock at an exercise price of $0.72 per share to the Kanisa stockholders.  The Kanisa stockholders will receive shares and warrants based on an exchange ratio determined in accordance with Kanisa�s charter documents.  Certain stockholders of ServiceWare and Kanisa have signed agreements to vote in favor of the transaction. The transaction is subject to approval by ServiceWare and Kanisa stockholders and other customary closing conditions. The merger is expected to close in the first quarter of 2005.

C.E.Unterberg, Towbin acted as ServiceWare�s financial advisor on the transaction. Boston Meridian, LLC rendered a fairness opinion to ServiceWare�s board of directors. SVB Alliant acted as Kanisa�s financial advisor.

CONFERENCE CALL NOTICE
In conjunction with this news release, ServiceWare and Kanisa management will host a conference call for investors tomorrow at 8:30 am EDT. Domestic callers can join the teleconference by dialing (800) 798-2796 and providing the company name, "ServiceWare," and the following conference ID pass code: 54858230. International callers can access the broadcast by dialing (617) 614-6204 and by providing the company name and same pass code. The teleconference also can be accessed over the Internet by clicking on the Investor Relations area of ServiceWare's Web site, http://www.serviceware.com/ir

About ServiceWare Technologies, Inc.

ServiceWare is a leading provider of knowledge-powered applications for customer service and IT support. ServiceWare empowers organizations to deliver superior service while reducing costs. ServiceWare�s problem resolution software, ServiceWare Enterprise�, enables agents and end-users to quickly find accurate and consistent answers to even the most complex problems � in the call center, help desk or via Web self-service. ServiceWare�s patented self-learning and �organizing search technology, the Cognitive Processor�, adapts based on usage. Its easy-to-use knowledge management tools allow agents to access both structured and unstructured knowledge sources and contribute new solutions in the workflow, ensuring a robust knowledge base solution. Leading organizations have implemented ServiceWare software including HP, EDS, H&R Block, Cingular Wireless, Green Mountain Energy, Reuters, and QUALCOMM.

About Kanisa

Kanisa is a leading provider of service resolution management applications that drive efficiency, revenue and customer satisfaction. Its suite of knowledge-empowered customer service applications automate the resolution process across multiple channels including contact centers, service portals, and Web sites. Industry-leaders including Novell, Merrill Lynch, McAfee, Sprint, Ford, Wachovia and Novartis rely on Kanisa applications to deliver superior customer service. Kanisa is headquartered in Cupertino, CA.