Volkswagen of America Selects Interactive Distance Learning System From Arel.

ATLANTA--(BUSINESS WIRE)--May 25, 1999--

Satellite Network to Reach North American Dealerships

Arel Communications & Software, Ltd. (NASDAQ: ARLCF, ARLWF) today announced that Volkswagen of America, Inc. has selected Arel's interactive distance learning (IDL) network which will allow the top-selling European importer in the United States to provide training programs to its Volkswagen and Audi dealerships across the United States and Canada.

The value of the IDL system being delivered to Volkswagen, including certain hardware being delivered, is approximately $2.5 million.

Based in Auburn Hills, Mich., Volkswagen will use Arel's IDEAL (Interactive Distance Education and Learning) system to improve the reach, frequency and timeliness of its training programs for its dealers. The company's subject matter experts will offer programs including technical service, after sales, sales training, product information and updates via the IDEAL system.

Convergent Media Systems, a value-added reseller of Arel IDEAL systems and the leading integrator of satellite business television networks and interactive learning systems, will deploy the Arel IDEAL system at all Volkswagen remote sites. Convergent also will operate and staff the new Volkswagen Learning Center, as well as integrate two new automated television studios at the Auburn Hills headquarters location. Convergent will support the Volkswagen "MAX Network" with help desk, space segment management, installation and maintenance services.

IDEAL is a one-to-many system which enables an instructor to broadcast, control and conduct a fully interactive session from one center to a large number of participants in remote locations in real time. Participants in "virtual classrooms" can actively participate in the lecture and interact with the instructor by using personal interactive response units connected to a PC-based site control unit.

IDEAL is a software-based, open architecture platform, which operates in Windows 95/98 and NT environments. The interactive distance learning session includes broadcasting live video and two-way audio and data.

"We have been providing off-site training for our dealers for years," said Joseph Tate, Team Leader, Learning & Transformation, Volkswagen of America. "Establishing an interactive distance learning network adds a new component to our training program and allows our dealers to remain at their dealership for many of our programs.

"We looked at several systems and selected Arel because it offered the features we wanted, including the ability to connect with our dealer extranet to enable the development of web-based training programs in the future."

The selection of IDEAL by Volkswagen of America follows the Arel system's recent adoption by Canadian Automotive Repair and Service (CARS), a non-profit group that provides training to the car and truck industry in Canada.

"The Arel IDEAL system provides an effective and real-time way for companies and organizations with locations spread across a wide geographic region -- such as automobile dealers -- to bring important information to members or employees," said Ben Yishai, president, Arel Communications and Software, Inc.

Founded in 1955, Volkswagen of America, Inc. is headquartered in Auburn Hills, MI. It is a wholly-owned subsidiary of Volkswagen AG, headquartered in Wolfsburg, Germany. The third-largest producer of passenger cars in the world and Europe's largest, the Volkswagen Group operates some 35 manufacturing facilities in 15 countries across five continents. Brands in the Volkswagen Group include Volkswagen, Audi, Seat, Skoda and, most recently, Rolls Royce, Lamborghini and Bugatti.

Convergent Media Systems pioneered the satellite-delivered business television industry in 1980 and today operates 70 percent of the world's business television networks. The company's IntraCommunications offering helps companies design, develop, deliver and evaluate content for internal communications and distance learning objectives. Convergent clients include Fortune 1000 companies such as Federal Express, Unisys Corporation, Bank of America, Compaq Computers, and Advance Auto, as well as agencies of the federal government and state educational institutions. Convergent is based in Atlanta and has offices in Dallas, Detroit, New York and Washington, D.C., and Media Centers in New Jersey and Boston.

Arel Communications & Software, Ltd. (NASDAQ: ARLCF, ARLWF), Yavne, Israel, and its Atlanta-based U.S. subsidiary, Arel Communications & Software, Inc., market the IDEAL (Interactive Distance and Education Learning) family of interactive distance learning products. The Company's ArelNet Ltd. subsidiary designs, develops, produces and markets value-added communication and IP telephony products for telephone carriers, Internet service providers (ISPs) and other network operators worldwide.

For more information about Arel Communications and Software and the IDEAL system, please call Ben Yishai at [phone], ext. 201 or visit the Arel website at www.arel.net.

Certain statements made herein that are not historical are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. The words "estimate", "project", "intend", "expect", "believe", "hopeful" and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known unknown risks and uncertainties. Many factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in general economic and business conditions, inability to maintain market acceptance to the Company's products, inability to timely develop and introduce new technologies, products and applications, rapid changes in the market for the Company's products, loss of market share and pressure on prices resulting from competition, introduction of competing products by other companies, inability to manage growth and expansion, loss of key partners, inability to attract and retain qualified personnel, inability to protect the Company's proprietary technology and risks associated with the Company's international operations and its location in Israel. For additional information regarding these and other risks and uncertainties associated with the Company's business, reference is made to the Company's reports filed from time to time with the Securities and Exchange Commission.

This press release is available on the KCSA Worldwide web site at www.kcsa.com.