Wednesday February 7, 9:03 am Eastern Time

Magic Software Enterprises Signs Agreement With IBM Subsidiary, Proxima, to Develop Complementary CRM Solutions for the Italian Market

IRVINE, Calif.--(BUSINESS WIRE)--Feb. 7, 2001--Magic Software Enterprises (Nasdaq: MGIC - news), a leading provider of state-of-the-art technology and business solutions, Wednesday announced that it has entered into a partnership agreement with Proxima Information Srl (Proxima), a wholly owned subsidiary of IBM and the largest ERP integrator in Southern Europe.

Under the terms of the agreement, Proxima will use Magic's sophisticated development technology to create complementary customer relationship management (CRM) applications geared specifically for the Italian market that can be easily and quickly integrated with JD Edwards' ERP systems, as well as Magic's own CRM solutions.

In addition, Magic announced that Italy's prestigious MICA Prize was given to the Bonfiglioli Group for its innovative business-to-business e-commerce site developed using Magic eMerchant(TM). Companies sponsoring the award included Oracle, IBM, Microsoft and Sun Microsystems.

The prize was presented to Bonfiglioli Riduttori, parent company of the Bonfiglioli Group, at the recent SMAU trade show, Italy's largest IT trade show and the second largest IT exposition in Europe.

The Perfect Choice
Proxima chose to work with Magic for three important reasons:

Magic's development technology is extremely powerful and productive, allowing fully functional, custom Web-based solutions to be developed rapidly to meet specific customer and market needs Magic solutions can be quickly and easily integrated with third party, as well as other Magic applications

Magic applications are highly customizable and extremely cost effective "Magic was the perfect choice for Proxima," said Mark Rutherford, general manager for e-business for Proxima.

"The company is unique in that it provides highly productive, state-of-the-art development technology that can be used to quickly create solutions tailored to the Italian market, as well as powerful Web-based e-business and CRM solutions that leverage the technology's inherent flexibility and integration capabilities.

"By working with Magic, we will be able to provide our customers with very personalized and cost-effective total solutions."

Proxima will market and sell the highly targeted, Magic-based solution to its existing and new customers within Italy. In addition, Proxima plans to market and sell Magic's CRM products (Magic eService(TM) and Magic eContact(TM)) to existing and potential Italian customers.

Magic eService is a Web-based customer service and support solution, while Magic eContact is a comprehensive contact management solution. Magic eMerchant, which was used to create the award-winning Bonfiglioli site, is the company's highly functional and easily customizable e-commerce solution.

"Magic is extremely pleased with the success we are having in the Italian market, as evidenced by our relationships with both Proxima and Bonfiglioli," said David Leichner, vice president of Worldwide Marketing for Magic.

"Magic's ERP integration capabilities make it an excellent choice for companies seeking to broaden the scope of their enterprise-wide Web-based operations, while Magic's solutions provide companies an innovative and cost-effective way to maximize their impact on their marketplaces."

About Proxima
Proxima Informatica Srl is a wholly owned subsidiary of IBM Global Services that specializes in providing its customers effective, collaborative e-business solutions. Proxima has five offices in Italy and is the largest ERP integrator in Southern Europe.

About Bonfiglioli
Bonfiglioli Riduttori has been the leading Italian manufacturer in power transmission for more than 40 years, producing a broad range of gear boxes and gear motors suitable for a wide spectrum of industrial applications. Its production line ranges all the way from wingdings to mechanical speed variators.

The company has headquarters in Italy and maintains several offices and manufacturing facilities around the globe.

About Magic Software Enterprises
Magic Software Enterprises, a member of the Formula Group (Nasdaq: FORTY - news), develops, markets and supports software development and deployment technology that enables enterprises to accelerate the process of building and deploying applications that can be rapidly customized and integrated with existing systems.

The company's North American subsidiary is located at 1642 Kaiser Avenue, Irvine, Calif., 92614, telephone 949/250-1718, fax 949/250-7404, http://www.magicsoftware.com.

The Formula Group is an international information technology company principally engaged, through its subsidiaries and affiliates, in providing software consulting services, developing proprietary software products and producing computer-based solutions.

Except for the historical information contained herein, the matters discussed in this news release include forward-looking statements that may involve a number of risks and uncertainties. Actual results may vary significantly based upon a number of factors including, but not limited to, risks in product and technology development, market acceptance of new products and continuing product conditions, both here and abroad, release and sales of new products by strategic resellers and customers, and other risk factors detailed in the company's most recent annual report and other filings with the Securities and Exchange Commission.

Contact:
Magic Software Enterprises Ltd., Irvine
Katharine Hanley, 949/250-1718, ext. 220
khanley@magic-sw.com