Thursday February 21, 10:22 am Eastern Time

Dan and Gad Goldstein Amend Terms of Agreement With Iscal Holdings Ltd.

HERZLIYA, Israel, Feb. 21 /PRNewswire-FirstCall/ -- Formula Systems (1985) Ltd. (Nasdaq: FORTY - news), a leading provider of information technology products, solutions and services, today announced that Dan Goldstein, its Chairman and Chief Executive Officer, and Gad Goldstein, its President, have amended the terms of their August 2001 agreement with Iscal Holdings Ltd., a publicly traded company in the Tel Aviv Stock Exchange. Pursuant to a binding memorandum of understanding, the parties have agreed that certain adjustments to the ownership levels of Formula ordinary shares will be made, and that the provisions of the original agreement regarding the voting of Formula ordinary shares and the nomination of directors by Iscal will be null and void. After giving effect to this transaction, as well as the recent purchase by Messrs. Goldstein of Formula ordinary shares from Shamrock Holdings of California, Inc., Messrs. Goldstein will own an aggregate of 22.5% of the total outstanding share capital of Formula and Iscal will own approximately 13% of the total outstanding share capital of Formula. The parties have agreed to enter into definitive agreements in connection with this binding memorandum of understanding within thirty days.

Messrs. Goldstein also advised Formula that if within a specified period of time Iscal acquires additional Formula ordinary shares in an amount such that it will have a level of ownership similar to Messrs. Goldstein (including acquisitions through a tender offer, if required under applicable law), then Messrs. Goldstein and Iscal will enter into a shareholders agreement that will include provisions relating to voting rights and the nomination of directors. The agreement will also include customary provisions relating to transfer restrictions, rights of first refusal and certain rights among the parties to participate in future sales by such parties of Formula ordinary shares. The parties expect to finalize the terms of this shareholders agreement in connection with the execution of the definitive agreements discussed above.

Dan Goldstein, Chairman and Chief Executive Officer of Formula, said: "We are pleased to announce that we are increasing our direct ownership of Formula and we look forward to continuing to lead the company to greater achievements."

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

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: successful consummation of the transactions contemplated in this press release, market demand for the companies' products, dependence on strategic partners, integration of new business, successful implementation of Formula's 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 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.