Siebel Systems, Inc., a provider of customer relationship management (CRM) solutions, announced that it has signed a definitive agreement to acquire UpShot Corporation, a pioneer in delivering hosted CRM service over the Internet, in a cash transaction valued at up to $70 million. Under the terms of the deal, $50 million will be paid in cash upon closing, with potentially an additional $20 million to be paid in earn-outs during 2003 and 2004. The board of directors of each company has approved the acquisition, which is subject to customary closing conditions.

The acquisition is expected to accelerate Siebel Systems' penetration of the hosted CRM market and significantly expand customer choice in this market segment. Earlier this month, Siebel Systems and IBM jointly announced Siebel CRM OnDemand, a hosted offering specifically designed to meet the growing market demand for fast, easy and affordable CRM. Siebel Systems will offer UpShot's widely adopted solutions as well as its own Siebel CRM OnDemand solution, with a roadmap to converge the products.

Estimated to exceed $2.7 billion by 2006, the hosted CRM market is one of the fastest-growing segments of the overall CRM market. With its acquisition of UpShot, Siebel Systems will immediately establish a meaningful presence in the hosted CRM market.

Privately held UpShot was the first company to offer a hosted CRM solution, followed by a series of innovations for the hosted CRM market – including the first solutions for wireless, offline, and advanced Microsoft Outlook integration. Today, UpShot has more than 1,000 customers – including Fortune 500 companies such as General Motors Acceptance Corporation (GMAC) and Xerox Corporation.

Siebel Systems will provide prebuilt integration for both Siebel CRM OnDemand and UpShot's CRM solutions to Siebel on premise enterprise applications. This will give customers the choice of running their CRM system in a hosted environment, on premise, or in any combination. Over time, Siebel plans to combine Siebel CRM OnDemand and UpShot's products into a common offering, leveraging Siebel's CRM product architecture and UpShot's best practices for hosted CRM. Siebel will support both offerings and enable seamless transition from UpShot to Siebel CRM OnDemand, thus providing investment protection for existing UpShot customers. Customers who elect to continue using the existing UpShot product will receive support indefinitely.

In a related announcement Siebel Systems, Inc. acquired the assets of Motiva Inc., a provider of enterprise incentive management (EIM) software. Siebel Systems is targeting availability for the enhanced integrated offering in the fourth quarter of 2003.

Siebel Incentive Compensation allows business users to design incentive plans, monitor progress, and analyze the results of sophisticated incentive compensation strategies. The incorporation of Motiva's services-processing architecture will enable users of Siebel Incentive Compensation to handle a much broader variety of compensation plans with greater flexibility and increased performance. These enhancements will allow users to better address the variety of compensation approaches that can differ considerably by industry. Examples of compensation techniques that will be easier to implement include 'weighted attainment' across multiple products, automatic graduation of sales professionals from one compensation plan to the next, and variations in commission rates at different times in a financial period. Motiva also provides a comprehensive modeling environment that will become part of the Siebel Incentive Compensation product line.

More information, visit www.siebel.com.

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