AMERICA ONLINE PARTNERS WITH VDONET TO EXTEND VIRTUAL PLACES WITH AUDIO AND
VIDEO COMMUNICATION

PALO ALTO, CA & VIENNA, VA -- America Online (AOL) and VDOnet Corporation
today announced that the two companies have reached an agreement for AOL
to license a version of the VDOPhone to enable multimedia capabilities of
Virtual Places (also announced today).

Virtual Places is AOL's new user friendly environment for chat and
community on the Web. The addition of the VDOPhone capability will allow
all Virtual Places users to be able to talk to their correspondents. With
additional enhancements -- which will be available from VDOnet -- users
will also be able to have videophone conversations with each other.

"Virtual Places is designed to open up worlds of communication to users of
the Net," said Udi Shapiro, president of the Ubique Ltd., an America
Online company, which developed Virtual Places. "The VDOPhone, with its
Internet voice and video telephony capabilities, can dramatically enhance
this experience by allowing participants of Virtual Places to talk to and
see each other, if they choose to."

The VDOPhone was launched in mid-April and was the first product to enable
anyone with a dial-up modem and regular phone lines to have full-color
videophone conversations over the Internet. With the VDOPhone -- which is
a software product that can be easily downloaded from the Internet --
Internet users can see and talk to colleagues, business associates, or
friends and family all over the world. To date, nearly 10,000 users all
over the world have downloaded the VDOPhone from VDOnet's Web site.

"Virtual Places is a unique way to enjoy the community aspects of the Net,"
said Asaf Mohr, president and CEO of VDOnet. "It is an excellent tool to
bring people together."

Specifically under the terms of the agreement between AOL and VDOnet, AOL
has licensed the audio-only version of the VDOPhone and will work closely
with VDOnet to make the fully capable version of the VDOPhone available to
Virtual Places users. VDOPhone capabilities will be available with Virtual
Places later this quarter.

"Virtual Places is an excellent, flexible, and extendible open platform,"
Mohr said. "Its API's allow us to easily add video telephony, extend the
power of our software, and thereby enhance the community-building aspects
of Virtual Places."

The VDOPhone uses VDOnet's unique technology, which is optimized for the
Internet, since it adjusts to the available bandwidth on-the-fly. This is
called "bandwidth scalability" and is important because video being
transmitted over the Net needs to be able to accommodate any connection,
any time. To accomplish this, VDOnet uses two core technologies. The first
is a set of scalable algorithms that not only can compress video down
small enough to run over the small bandwidth portions of the Internet, but
also allows the quality of the video to increase with the size and quality
of the connection at the other end. The second core technology -- the
heart of VDOnet's overall technology -- is a set of protocols which
maintains the integrity of the video as it makes its way through the
"bumpy roads" of the Internet. The relative benefit of these combined
technologies is that motion video from VDOnet's products can be used by
virtually anyone on the Internet, regardless of their connection.

America Online, Inc., (NASDAQ: AMER), based in Vienna, VA., is the largest
and fastest growing provider of online services in the world with the most
active subscriber base. AOL offers its more than five million subscribers
a wide variety of services including electronic mail, conferencing,
software, computing support, interactive magazines and newspapers and
online classes, as well as easy, affordable access to services of the
Internet. AOL has a global workforce consisting of more than 4,000 people.
Founded in 1985, AOL has established strategic alliances with dozens of
companies, including Capital Cities/ABC, Viacom, Bertlesmann, Hachette,
IBM, Compaq and American Express. Personal computer owners can obtain
American Online software at major retailers and bookstores, or by calling
(800) 827- 6364.

VDOnet Corporation, based in Palo Alto, CA, has developed and markets
technology and products for Internet video broadcasting and desktop video
conferencing on the Internet and over regular telephone lines. The company
was founded in 1995 and has offices in California, New York, and Israel.
VDOnet's Web site can be located on the Internet at
http://www.vdolive.com. VDOnet is a private company and has raised $10
million from Battery Ventures and private sources.

For more VDOnet customer information, please contact: VDOnet Corp., Palo
Alto, CA, (415)846-7700/Fax: (415)846-7900; info@vdolive.com
 
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