B.O.S Signs Memorandum of Understanding for a Private Placement of $9.275 Million

B.O.S - Better Online Solutions (Nasdaq:BOSC) announced today the signing of a memorandum of understanding with a group of private investors led by Dovrat & Co. Ltd., Isal Amlat Investments (1993) Ltd., SUNY Electronics Ltd., The M.D. Sass group, and TDA Capital Partners Inc., under which the Investors will invest $9.275 million in the Company in consideration for 1 million ordinary shares (approximately 9.2% of the outstanding share capital of the Company after the completion of the investment).

The shares are locked for up to two years. In addition, the Investors will be issued 650,000 warrants to purchase additional ordinary shares of the Company exercisable at a price of $12 per share during a three-year period.

The completion of the investment is subject to the signing of definitive agreements to be approved by the respective Boards of Directors and certain regulatory and other customary conditions. The existing major shareholders and the Investors will enter into a voting agreement under which each group will be entitled to equal representation on the Board of Directors, and Mr. Aharon Dovrat Chairman of Dovrat & Co. and of Isal Amlat Investments - will be appointed as Chairman of the Board.

"The contemplated investment offers several potential significant benefits to the Company" stated Israel Gal, CEO of B.O.S. "The Investors bring with them the knowledge and the experience of managing global high-tech companies, which will be a valuable asset to the Company. This investment will allow B.O.S. to continue developing its high quality, state-of-the-art connectivity solutions, to extend its marketing and sales operations, and to provide working capital to implement the Company's strategy."

"We are very pleased with our contemplated investment in B.O.S.", stated Aharon Dovrat. "We were impressed with the technology of B.O.S., its potential for future growth and expansion, and its achievements".

B.O.S. develops and markets innovative and powerful Internet solutions including VoIP and e-commerce tools. In June 1998, B.O.S acquired Pacific Information Systems ("Pacinfo"), a rapidly growing, end-to-end enterprise solutions provider, which is recognized by IBM and Cisco systems as a premier business partner. Pacinfo was featured in VAR Business Magazine and INC.500 for its impressive growth and reputation. Current efforts at B.O.S. are focused on IP Telephony, including integration of Web-to-Phone "Click & Talk" technology into e-business applications, via Lynk, a B.O.S. subsidiary.

B.O.S. currently owns approximately 25% of Surf Communication Solutions Ltd., a developer and supplier of software-based access solutions that are integrated into manufacturers' original equipment in the telecommunications, data communications, telephony and consumer electronics industries. Surf has recently received equity investments from strategic partners such as Intel Corporation, Texas Instruments Inc., and DS Polaris Ltd.

Dovrat & Co. Ltd. is an Israeli private holding company, which is active in high-tech investments, that is owned and headed by Messrs. Aharon Dovrat and Shlomo Dovrat. Aharon Dovrat served in senior positions in various investment and holding companies in Israel, including Chief Executive Officer of Clal (Israel) Ltd., one of the largest conglomerates in Israel, and Chairman of Dovrat Shrem & Co., one of Israel's most highly regarded financial institutions. Dovrat also serves as the Chairman of the Board of Isal Amlat Investments Shlomo Dovrat served as President of Oshap Technologies, and currently serves as Chairman of Tecnomatix Technologies (Nasdaq:TCNO). Isal Amlat Investments is an Israeli public holding company whose shares are traded on the Tel Aviv Stock Exchange. Isal's main investments are in the fields of high-tech, industry, services, and real estate.

SUNY Electronics is an Israeli public company whose shares are traded on the Tel-Aviv Stock Exchange. The company is engaged, via its subsidiaries, in the marketing and sale of wireless terminals and related peripherals and in the development of Internet-oriented business applications and services.

The M.D. Sass group of companies, is an investment management complex with $18 billion under management based in New York and serving institutions, as well as high net worth individuals, since 1972.

TDA Capital Partners is an investment manager that specializes in emerging markets' private equity investments in selected countries worldwide. TDA currently manages private equity partnerships and funds in excess of $120 million. TDA has offices in Warsaw, Poland; Tel-Aviv, Israel; Mumbai, India; and Greenwich, USA.

Published by Israel's Business Arena on February 29, 2000.

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