Wednesday November 28, 4:15 pm Eastern Time

Formula Systems (1985) Ltd Continues Restructuring; Formula Vision Exercises Option to Acquire Private Companies From Formula

HERZLIYA, Israel, Nov. 28 /PRNewswire/ -- Formula Systems Ltd. (Nasdaq: FORTY - news), a leading provider of information technology products, solutions and services, today announced that another step was completed in its corporate restructuring. In July 2001, Formula announced the spin-off of the shares it held in Mashov Computers Ltd. to Formula's shareholders. At the time, Mashov, which has since changed its name to Formula Vision Technologies (f.v.t) Ltd. ("Formula Vision"), was granted an option to acquire the interests held by Formula in privately-held companies that develop products and services intended primarily for international markets. This restructuring move would enable Formula's shareholders to separately hold interests in publicly-traded companies through their Formula shares, and in smaller, privately-held companies through Formula Vision. Formula Vision advised Formula today of its exercise of the option granted in July on the terms described below.

Dan Goldstein, Chairman and Chief Executive Officer of Formula, said: "We believe the separation of our venture capital activities from our large, public subsidiaries such as Magic Software Enterprises Ltd., Crystal Systems Ltd. and New Applicom Ltd., will result in a more efficient corporate structure for Formula, enabling us to achieve improved operating results and further enhance shareholder value."

Under the transaction (the "Transaction"), Formula Vision will acquire from Formula the interests held by Formula and its subsidiaries in certain privately-held companies (the "Transferred Companies"), including related obligations, in consideration of a debenture in the aggregate principal amount of NIS 260 million ($61 million) (the "Debenture"), reflecting the book value of the Transferred Companies, plus amounts invested by Formula in the Transferred Companies since July 26, 2001. The Debenture will be linked to the Israeli consumer price index and bear interest at an annual interest rate of 5% and is required to be repaid in five equal annual payments, subject to adjustment based on the income of Formula Vision during each of the five years. Any amounts which remain outstanding will be payable at the end of the five year period. On April 1, 2002, Formula will provide Formula Vision with an additional NIS 40 million ($10 million) of debt financing, and may provide additional financing related to Formula Vision's assumption of certain guarantees provided by Formula relating to the Transferred Companies, up to NIS 52 million ($12 million) (such amount to cover those guarantees which have not been assumed by such time by Formula Vision). The terms of the additional financing will be the same as those of the Debenture. In the event that, during the term of the indebtedness, Formula Vision has outstanding a class of publicly-traded convertible debentures, Formula will have the right to convert the indebtedness into the convertible debentures. In addition, Formula has the right, for a period of 3 years, to repurchase from Formula Vision up to 10% of the purchased shares of each of the Transferred Companies, at the same purchase price as that paid by Formula Vision to Formula.

The agreement also provides for certain options with respect to the shares of three of the Transferred Companies. Under separate agreements with third parties, Formula may be required to purchase from such third parties shares in those Transferred Companies, in return for ordinary shares of Formula and/or cash. If Formula repurchases those shares, under the terms of the Transaction Formula Vision will purchase such shares from Formula. Prior to the Transaction, one of the third parties exercised its right under the separate agreement and Formula has repurchased shares of three of its subsidiaries, two of which are Transferred Companies (such shares in the Transferred Companies being transferred to Formula Vision as part of the Transaction), in exchange for 1,000,000 ordinary shares of Formula and cash (subject to adjustment in accordance with the repurchase arrangements). Under the terms of the repurchase arrangement, at any time prior to January 31, 2002, the third party is restricted from selling the ordinary shares of Formula on the Stock Exchange. In the event the third party has not sold the ordinary shares of Formula by January 31, 2002, Formula may be required to repurchase the remaining shares at a price per share equal to the price calculated under the terms of the repurchase arrangement.

The closing of the Transactions is subject to customary conditions and is expected to be completed by the end of this year.

Formula Systems (1985) Ltd. (Nasdaq: FORTY - news):
Formula Systems (1985) Ltd. is a global information technology company principally engaged, through its subsidiaries and affiliates, in providing software consulting services, developing proprietary software products and providing computer-based business solutions.

Formula Vision Technologies (f.v.t) Ltd.:
Formula Vision currently holds interests in, among others: Babylon.com, which produces an information translation and conversion tool; TeleSpear, which provides web-enabling helpdesks; and U-callnet Inc., which develops ASP voice-enabled applications. Formula Vision also holds securities of Walla! and Paradigm Geophysical Ltd.

Safe Harbor Statement under the Private Securities Litigation Reform Act Of 1995:
Statements contained in this press release that are not historical facts

are forward-looking statements. Such statements involve various risks that may cause actual results to differ materially. These risks and uncertainties include, but are not limited to the consummation by the companies of the proposed transaction, market demand for the companies' products, dependence on strategic partners, integration of new business, successful implementation of the companies' products, economic and competitive factors, international market conditions, management of growth, technological developments, the ability to finance operations and other factors which are detailed in Formula's U.S. Securities and Exchange Commission filings, including its most recent annual report on Form 20-F. Formula undertakes, no obligation to publicly release any revision to any forward-looking statement.