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<SEC-DOCUMENT>0001178913-05-000039.txt : 20050110
<SEC-HEADER>0001178913-05-000039.hdr.sgml : 20050110
<ACCEPTANCE-DATETIME>20050110085116
ACCESSION NUMBER:		0001178913-05-000039
CONFORMED SUBMISSION TYPE:	F-3/A
PUBLIC DOCUMENT COUNT:		8
FILED AS OF DATE:		20050110
DATE AS OF CHANGE:		20050110

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			BOS BETTER ONLINE SOLUTIONS LTD
		CENTRAL INDEX KEY:			0001005516
		STANDARD INDUSTRIAL CLASSIFICATION:	COMPUTER COMMUNICATIONS EQUIPMENT [3576]
		IRS NUMBER:				0000000
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		F-3/A
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-117529
		FILM NUMBER:		05519611

	BUSINESS ADDRESS:	
		STREET 1:		100 BOS RD
		CITY:			TERADION ISRAEL
		STATE:			L3
		ZIP:			00000

	MAIL ADDRESS:	
		STREET 1:		TERADION INDUSTRIAL PARK
		CITY:			BEIT RABIN
		STATE:			L3
		ZIP:			20179
</SEC-HEADER>
<DOCUMENT>
<TYPE>F-3/A
<SEQUENCE>1
<FILENAME>zk51229.txt
<TEXT>


As filed with the Securities and Exchange Commission on January 10, 2005
                                                     Registration No. 333-117529

================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                               ------------------

                                 AMENDMENT NO 2.
                                       TO
                                    FORM F-3
                             REGISTRATION STATEMENT
                        UNDER THE SECURITIES ACT OF 1933

                               ------------------

                       B.O.S BETTER ONLINE SOLUTIONS LTD.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                   ISRAEL                                      NOT APPLICABLE

(STATE OR OTHER JURISDICTION OF INCORPORATION                 (I.R.S. EMPLOYER
              OR ORGANIZATION)                               IDENTIFICATION NO.)

                            Beit Rabin, 100 BOS Road
                            Teradyon Industrial Park,
                              Misgav, 20179, Israel
                                (+972) 4-990-7500
   (ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)


                           Corporation Service Company
                     1133 Avenue of the Americas, Suite 3100
                               New York, NY 10036
                               Tel: (212) 299-9100
            (NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)

                               ------------------
                                   Copies To:

  BRIAN BRODRICK, ESQ.                        SHLOMO LANDRESS, ADV.
   PHILLIPS NIZER LLP            AMIT, POLLAK, MATALON & BEN-NAFTALI, EREZ & CO.
    666 FIFTH AVENUE                   NYP TOWER, 17 YITZHAK SADEH STREET
NEW YORK, NEW YORK 10103                     TEL AVIV 67775, ISRAEL
    (212) 841-0700                              972-3-561-5268

     APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this registration statement becomes effective.

     If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]

     If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. [X]

     If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_] _______

     If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_] ________

     If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]

                               ------------------


                         CALCULATION OF REGISTRATION FEE


<TABLE>
<CAPTION>
                                                                PROPOSED MAXIMUM  PROPOSED MAXIMUM      AMOUNT OF
             TITLE OF EACH CLASS                AMOUNT TO BE     OFFERING PRICE       AGGREGATE       REGISTRATION
       OF SECURITIES TO BE REGISTERED            REGISTERED         PER SHARE      OFFERING PRICE         FEE
                                                --------- --       ----------       ------------       ----------
<S>                                           <C>                  <C>           <C>                <C>
Ordinary Shares, par value NIS 4.00 per
share                                           357,143(2)(3)      $   2.00(1)      $  714,286(1)      $    90.50

Ordinary Shares, par value NIS 4.00 per
share                                           833,085(3)(4)      $   4.04(5)      $3,365,663(5)      $   426.43

Total                                         1,190,228            $   3.42         $4,079,949         $   516.93(6)
</TABLE>


(1)  Estimated solely for the purpose of determining the registration fee
     pursuant to Rule 457(c) of the Securities Act on the basis of the average
     of the high and low sales prices of the Registrant's ordinary shares on The
     Nasdaq National Market on July 16, 2004.

(2)  Represents ordinary shares registered for resale by two selling
     shareholders.


<PAGE>


(3)  Pursuant to Rule 416 of the Securities Act of 1933, as amended, this
     Registration Statement also includes additional ordinary shares issuable
     upon stock splits, stock dividends or similar transactions.

(4)  Represents shares issuable upon conversion of $2 million in principal
     amount of the Registrant's secured convertible term note due June 2007 (the
     "Note") and shares issuable upon conversion of interest thereon solely to
     the extent of the mandatory interest conversion feature set forth in
     Section 2.1(b) of the Note , at a fixed conversion price (subject to
     adjustments) of $3.08 per share and upon exercise of warrants that were
     issued to the purchaser of the Note, at an exercise price of $4.04 per
     ordinary share.

(5)  Calculated pursuant to Rule 457(g) of the Securities Act.

(6)  Previously paid in connection with the filing of the original registration
     statement on August 20, 2004.

     THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

<PAGE>


THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. NO
SELLING SHAREHOLDER MAY SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS
IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO
BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

================================================================================

                  SUBJECT TO COMPLETION, DATED JANUARY 10, 2005
PROSPECTUS

                       B.O.S BETTER ONLINE SOLUTIONS LTD.

                         UP TO 1,190,228 ORDINARY SHARES
                               ------------------


The selling shareholders identified in this prospectus, may offer to sell up to
an aggregate of 1,190,228 of our ordinary shares, consisting of the following:

     o    357,143 ordinary shares that were issued to two selling shareholders
          in a private placement completed on December 14, 2003. The ordinary
          shares were issued at a price per share of $2.80. As part of the
          transaction, BOS agreed to grant to the selling shareholders certain
          incidental registration rights.

     o    Up to 833,085 ordinary shares issuable upon the conversion of a
          convertible note due June 10, 2007 and upon the exercise of a warrant,
          both of which were issued by BOS to the a selling shareholder in a
          private placement transaction on June 10, 2004 and shares that are to
          be issued in lieu of cash interest payments on the convertible note
          solely pursuant to the mandatory interest conversion feature of such
          note.

BOS is filing the registration statement of which this prospectus is a part at
this time primarily to fulfill a contractual obligation to do so, which the
company undertook at the time of the sale of the convertible note and warrant.

Our ordinary shares are traded on the Nasdaq National Market, or NMS, under the
symbol "BOSC" and on the Tel-Aviv Stock Exchange under the symbol "BOSC". On
January 5, 2005, the last reported sale price of our ordinary shares on the NMS
was $3.00 per share. You are urged to obtain current market quotations for the
ordinary shares.

We will not receive any of the proceeds from the sale of these ordinary shares
other than the exercise price payable to us upon the exercise of the warrants
held by a certain selling shareholder. We have agreed to bear all of the
expenses in connection with the registration and sale of these ordinary shares
other than underwriting discounts and sales commissions.

You should read both this prospectus and any prospectus supplement, together
with the additional information described under the heading "Incorporation of
Certain Documents by Reference" before you decide to invest in our ordinary
shares.


     INVESTING IN OUR ORDINARY SHARES INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 4 OF THIS PROSPECTUS TO READ ABOUT FACTORS YOU SHOULD
CONSIDER BEFORE PURCHASING OUR ORDINARY SHARES.

     NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.


                               ------------------

                  The date of this prospectus is ________, 2005

<PAGE>


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                ITEM                                 PAGE
                ----                                 ----
<S>                                                   <C>
Prospectus Summary                                     3
Risk Factors                                           4
Forward-Looking Statements                            12
Recent Developments                                   12
Use of Proceeds                                       12
Selling Shareholders                                  12
Plan of Distribution                                  14
Validity of Securities                                16
Experts                                               16
Where You Can Find More Information                   17
Incorporation of Certain Documents by Reference       17
Enforceability of Civil Liabilities                   18
</TABLE>



     You should rely only on the information contained or incorporated by
reference in this prospectus or any supplement. We have not authorized any other
person to provide you with different information. If anyone provides you with
different or inconsistent information, you should not rely on it. We are not,
and any underwriter or agent is not, making an offer to sell these securities in
any jurisdiction where the offer or sale is not permitted. You should assume
that the information appearing in this prospectus is accurate only as of the
date on the front cover of this prospectus. Our business, financial condition,
results of operations and prospects may have changed since that date.


                                       2
<PAGE>


                               PROSPECTUS SUMMARY

ABOUT THIS PROSPECTUS

     This prospectus is part of a registration statement that we filed with the
United States Securities and Exchange Commission, or the SEC, utilizing a
"shelf" registration process. Under this shelf process, the selling shareholders
may offer up to a total of 1,190,228 ordinary shares, from time to time, in one
or more offerings in any manner described under the section in this prospectus
entitled "Plan of Distribution."

     This prospectus does not contain all of the information set forth in the
registration statement, certain parts of which are omitted in accordance with
the rules and regulations of the SEC. Accordingly, you should refer to the
registration statement and its exhibits for further information about us and our
ordinary shares. Copies of the registration statement and its exhibits are on
file with the SEC. Statements contained in this prospectus concerning the
documents we have filed with the SEC are not intended to be comprehensive, and
in each instance we refer you to copy of the actual document filed as an exhibit
to the registration statement or otherwise filed with the SEC.

     We have not authorized anyone to provide you with information different
from that contained or incorporated by reference in this prospectus. The selling
shareholders are offering to sell, and seeking offers to buy, our ordinary
shares only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus is accurate only as of the date of this
prospectus, regardless of the time of delivery of this prospectus or of any sale
of ordinary shares.


     Unless the context otherwise requires, all references in this prospectus to
"BOS," "we," "our," "our company," "us" and the "Company" refer to BOS Better
Online Solutions Ltd. and its consolidated subsidiaries.

     All references in this prospectus to "ordinary shares" refer to our
ordinary shares, par value NIS 4.00 per share.

     All references in this prospectus to "dollars" or "$" are to United States
dollars.

     All references in this prospectus to "shekels" or "NIS" are to New Israeli
Shekels.


THE COMPANY

We were incorporated in Israel in 1990 and are subject to the Israel Companies
Law 1999 - 5759. Our headquarters and manufacturing facilities are located at
100 Bos Road, Teradyon Industrial Zone, Misgav 20179 Israel. Our telephone
number is 972-4-990-7555. Our website address is www.boscorporate.com. The
information contained on, or linked from, our website is not a part of this
prospectus.

BOS develops, manufactures and markets multi-purpose communications and network
products for companies and organizations. We operate in three main business
product lines: Connectivity, Software Utilities and Communications Solutions. We
create innovative and powerful solutions for seamless integration of personal
computers and Local Area Networks into the midrange host environment. We also
design, integrate, test, market and support superior products that provide
efficient solutions to personnel connecting personal computers to IBM midrange
hosts. These connectivity products account for a majority of our sales. Under
software utilities, we offer innovative and powerful solutions for document
design, distribution and management solutions for a wide range of operating
systems, including mainframe and UNIX. Our communication solutions include a
series of intelligent and highly versatile VoIP communication products designed
for the corporate market. We sell and support our products worldwide through
distributors, and value-added resellers.



THE OFFERING

This prospectus relates to 1,190,228 ordinary shares that may be offered for
sale by the selling shareholders, as follows:

     o    A total of 357,143 ordinary shares were issued to two selling
          shareholders in a private placement completed on December 14, 2003.
          The ordinary shares were issued at a price per share of $2.80. BOS
          granted to such selling shareholders incidental registration rights.


                                       3
<PAGE>


     o    Up to 833,085 ordinary shares are issuable upon the conversion of a
          convertible note due June 10, 2007 and upon the exercise of warrants,
          both of which were issued by BOS to a certain selling shareholder in a
          private placement transaction on June 10, 2004 and shares that are to
          be issued in lieu of cash interest payments on the convertible note
          solely pursuant to the mandatory interest conversion feature of such
          note. For additional details see "Selling Shareholders".


BOS is filing the registration statement of which this prospectus is a part at
this time primarily to fulfill its contractual obligation to do so. Registration
of the ordinary shares does not necessarily mean that all or any portion of such
ordinary shares will be offered for sale by the selling shareholders.



                                  RISK FACTORS

     YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW AND ALL THE
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE INTO THIS PROSPECTUS BEFORE
MAKING AN INVESTMENT DECISION REGARDING OUR ORDINARY SHARES. THE RISKS DESCRIBED
BELOW ARE NOT THE ONLY RISKS FACING OUR COMPANY. OUR BUSINESS, FINANCIAL
CONDITION OR RESULTS OF OPERATIONS COULD BE MATERIALLY ADVERSELY AFFECTED BY ANY
OF THESE RISKS. THE TRADING PRICE OF OUR ORDINARY SHARES COULD DECLINE DUE TO
ANY OF THESE RISKS, AND YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT.

RISKS RELATING TO OUR BUSINESS.


OUR SALES IN THE US DEPEND ON ONE MASTER DISTRIBUTOR. IN THE EVENT THAT WE
ENCOUNTER PROBLEMS WORKING WITH THE MASTER DISTRIBUTOR, WE MAY EXPERIENCE AN
INTERRUPTION IN SALES UNTIL AN ALTERNATIVE SOURCE OF DISTRIBUTION CAN BE FOUND,
WHICH MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS.

Up until the fourth quarter of 2002, we marketed our BOScom products through a
US subsidiary (the BOS US division of PacInfoSystems). Currently, we market our
products through one master distributor, Bosanova Inc. The sales of our products
in the US market currently account for more than 50% of our sales. In the event
that we encounter problems working with the master distributor, we may
experience an interruption in sales until an alternative source of distribution
can be found, which may have a material adverse effect on our business.


                                       4
<PAGE>


IN EARLY 2002 WE TRANSFORMED OUR CORPORATE STRUCTURE INTO A HOLDING COMPANY
SPECIALIZING IN TECHNOLOGY. LATER IN 2002, WE DECIDED THAT WE WOULD FOCUS ON
VOIP PRODUCTS, THE CORE BUSINESS OF OUR ISRAELI SUBSIDIARY, BOSCOM LTD. OUR
STATUS AS A HOLDING COMPANY MAY PROVE BURDENSOME WHICH WOULD ADVERSELY AFFECT
OUR LONG-TERM GROWTH, AND OUR DECISION TO CONCENTRATE ON OUR CORE BUSINESS MAY
NOT PROVE PROFITABLE.

Our decision to operate as a holding company may increase costs and not prove
profitable, and the focus on the VOIP products of our Israeli subsidiary, BOScom
Ltd., has not yet proven to be successful. There can be no assurance that this
focus on VOIP, rather than seeking a wide-range of technology investments, shall
be successful and profitable in the future, and such focus may materially
adversely affect our business condition and results of operations.

WE ARE ENGAGED IN A HIGHLY COMPETITIVE INDUSTRY, AND IF WE ARE UNABLE TO KEEP UP
WITH OR AHEAD OF THE TECHNOLOGY OUR SALES COULD BE ADVERSELY AFFECTED.
ADDITIONALLY, WE ARE FAIRLY NEW PLAYERS IN THE HIGHLY COMPETITIVE VOIP SECTOR,
AND THERE ARE NO ASSURANCES THAT WE WILL BE ABLE TO EFFECTIVELY COMPETE WITH THE
MORE ESTABLISHED BUSINESSES IN THE SECTOR.

IBM sells competing products to our own, and can exercise significant customer
influence and technology control in the IBM host connectivity market. We may
experience increased competition in the future from IBM or other companies,
which may adversely affect our ability to continue to market our products and
services successfully.

We also compete against various companies that offer computer communications
products based on other technologies that in certain circumstances can be
competitive in price and performance to our products. There can be no assurance
that these or other technologies will not capture a significant part of the
existing or potential IBM midrange computer communications market.

The market for our products is also characterized by significant price
competition. We may therefore face increasing pricing pressures. There can be no
assurance that competitors will not develop features or functions similar to
those of our products, or that we will be able to maintain a cost advantage or
that new companies will not enter these markets. We believe, however, that our
significant proprietary know-how and experience in emulation technology gives us
long-term advantages.

The VOIP market is very competitive with large companies such as Cisco competing
for the same market segment. There can be no assurance that we will be able to
successfully penetrate the market or realize significant revenues from our line
of products and become profitable.

Some of our current and potential competitors have longer operating histories,
greater name recognition, access to larger customer bases and significantly
greater financial, technical and marketing resources than ours. As a result,
they may be able to adapt more quickly to new or emerging technologies and
changes in customer requirements or to devote greater resources to the promotion
and sale of their products, than us.

IN LATE 2002 WE DECIDED TO WIND UP THE BUSINESS OF OUR SUBSIDIARY, PACIFIC
INFORMATION SYSTEMS, INC. ("PACINFOSYSTEMS"), DUE TO ITS SEVERE FINANCIAL
SITUATION. PACINFOSYSTEMS HAS ALREADY SETTLED WITH A MAJORITY OF ITS EXTERNAL
CREDITORS.

In May 2002, we announced our intention to sell PacInfoSystems due to a change
in our business strategy. PacInfoSystems was our wholly owned U.S. subsidiary
that resold, installed and provided computer networking products to various
business entities. Later, we decided to wind up PacInfoSystems instead of
selling it due to its severe financial situation. As of this date, a settlement
has been reached with a majority of PacInfoSystems' creditors, however, there
can be no assurance that such a settlement will be reached with the remainder of
the creditors, thus resulting in additional costs to us.

Furthermore, certain actions involving PacInfoSystems, if occurred before the
end of 2003, may have triggered a tax event for Mr. Jacob Lee, who sold
PacInfoSystems to us in 1998. In such event, we may be obligated, under the
purchase agreement, to grant Mr. Lee a loan on a full recourse basis for certain
tax payments Mr. Lee may be liable for, currently estimated at approximately
$1.5 million. The purchase agreement provides that we are to receive a security
interest in shares of our company that Mr. Lee holds at the time of the loan
with a fair market value as of the date of the loan of at least 125% of the
amount of the loan as security for the repayment of the loan. In addition, in
the event we are required to loan such sum to Mr. Lee, we may also be required
to reimburse Mr. Lee for certain interest on taxes that he may owe. It is
possible that the windup of PacInfoSystems during 2002 and 2003 may have
triggered such a tax event for Mr. Lee, which would result in an obligation by
us to loan Mr. Lee such amount and to reimburse him for interest expenses
incidental to the tax event. Such a loan and reimbursement may have a material
adverse effect on our business condition and results of operations.


                                       5
<PAGE>


IF ACTUAL MARKET CONDITIONS PROVE LESS FAVORABLE THAN THOSE PROJECTED BY
MANAGEMENT, ADDITIONAL INVENTORY WRITE-DOWNS MAY BE REQUIRED

Inventories may be written down for estimated obsolescence based upon
assumptions about future demand and market conditions and could adversely affect
our business condition and results of operations. As of December 31, 2003,
inventory is presented net of $300,000 general provision for technological
obsolescence and slow moving items (see also Note 5 to the Consolidated
Financial Statements included in our Annual Report on Form 20-F for the fiscal
year ended December 31, 2003, incorporated by reference hereto).

OUR FUTURE LEVELS OF SALES AND PROFITABILITY ARE UNPREDICTABLE.

Our ability to maintain and improve future levels of sales and profitability
depends on many factors. These factors include:

     o    the continued demand for our existing products;

     o    our ability to develop and sell new products to meet customer needs;

     o    management's ability to control costs and successfully implement our
          business strategy; and

     o    our ability to manufacture and deliver products in a timely manner.

There can be no assurance that we will experience any growth in sales or
profitability in the future or that the levels of historic sales or
profitability experienced during previous years will continue in the future.

WE DEPEND ON CERTAIN KEY PRODUCTS FOR THE BULK OF OUR SALES AND IF SALES OF
THESE PRODUCTS DECLINE, IT WOULD HAVE A MATERIAL ADVERSE EFFECT ON US.

Our IBM midrange related products account for most of our sales. We anticipate
that our IBM midrange related products will continue to account for a
significant portion of our sales and profitability. If sales of our IBM midrange
products were to decline significantly for any reason, or the profit margins on
such products were to decrease significantly for any reason (including in
response to competitive pressures), our financial results would be adversely
affected. Over the past few years there has been a continuous global decrease in
sales and revenues from the connectivity solutions sector (also known as the
legacy family products). Although our revenues in this sector have decreased as
a result, in comparison to other players in this field, we have fared quite
well, but there can be no assurance that we will continue to do so.

To reduce the risk of such a decline or decrease due to competitive pressures or
technical obsolescence, we are continually seeking to reduce costs, upgrade and
expand the features of our IBM related products, expand the applications for
which the products can be used and increase marketing efforts to generate new
sales.

Although we are developing and introducing new remote communications products
and increasing our marketing efforts, there can be no assurance that the planned
enhancements or the new developments will be commercially successful, or that we
will be able to increase sales of our IBM midrange products.

IF WE ARE UNSUCCESSFUL IN DEVELOPING AND INTRODUCING NEW PRODUCTS, WE MAY BE
UNABLE TO EXPAND OUR BUSINESS.

The market for some of our products is characterized by rapidly changing
technology and evolving industry standards. The introduction of products
embodying new technology and the emergence of new industry standards can render
existing products obsolete and unmarketable and can exert price pressure on
existing products.

We established our subsidiary Lynk, which is now known as BOScom, for the
purpose of developing, manufacturing and marketing new products for remote
networking connectivity and VOIP. However, the VOIP market has been unstable and
vulnerable over the past years, and competing in such a market may be a risky
endeavor. The VOIP market has suffered from low image due to availability,
reliability and quality problems. As such, there can be no assurance that we
will realize significant revenues from products developed and introduced by
BOScom.

Our ability to anticipate changes in technology and industry standards and
successfully develop and introduce new and enhanced products as well as
additional applications for existing products, in each case on a timely basis,
will be critical in our ability to grow and remain competitive. Although these
products are related to, and even incorporate our existing products, there can
be no assurance that we will be able to successfully develop and market any such
new products. If we are unable to develop products that are competitive in
technology and price and responsive to customer needs, for technological or
other reasons, our business will be materially adversely affected.


                                       6
<PAGE>


WE DEPEND ON KEY PERSONNEL AND NEED TO BE ABLE TO RETAIN THEM AND OUR OTHER
EMPLOYEES.

Our success depends, to a significant extent, on the continued active
participation of our executive officers, other members of management and key
technical and sales and marketing personnel. In addition, there is significant
competition for employees with technical expertise in our industry. Our success
will depend, in part, on:

     o    our ability to retain the employees who have assisted in the
          development of our products;

     o    our ability to attract and retain additional qualified personnel to
          provide technological depth and support to enhance existing products
          and develop new products; and

     o    our ability to attract and retain highly skilled computer operating,
          marketing and financial personnel.

We cannot make assurances that we will be successful in attracting, integrating,
motivating and retaining key personnel. If we are unable to retain our key
personnel and attract additional qualified personnel as and when needed, our
business may be adversely affected.

WE HAVE INDEMNIFICATION AGREEMENTS WITH OUR OFFICERS AND DIRECTORS, WHICH COULD
HAVE A MATERIALLY ADVERSE EFFECT ON OUR FINANCIAL CONDITION.

We have agreements with our directors and senior officers which provide, subject
to Israeli law, for us to indemnify these directors and senior officers for (a)
monetary liability imposed upon them in favor of a third party by a judgment,
including a settlement or an arbitral award confirmed by the court, as a result
of an act or omission of such person in his capacity as a director or officer of
is, and (b) reasonable litigation expenses, including attorney's fees, incurred
by such a director or officer or imposed on him by a court, in a proceeding
brought against him by or on behalf of us or by a third party, or in a criminal
action in which he was acquitted, or in a criminal action which does not require
criminal intent in which he was convicted, in each case relating to acts or
omissions of such person in his capacity as a director or officer of us. Such
indemnification may materially adversely affect our financial condition.


WE MAY BE UNABLE TO EFFECTIVELY MANAGE OUR GROWTH AND EXPANSION, AND AS A
RESULT, OUR BUSINESS RESULTS MAY BE ADVERSELY AFFECTED.

Our goal is to grow significantly over the next few years. The management of our
growth, if any, will require the continued expansion of our operational and
financial control systems, as well as a significant increase in our
manufacturing, testing, quality control, delivery and service capabilities.
These factors could place a significant strain on our resources.

Our inability to meet our manufacturing and delivery commitments in a timely
manner (as a result of unexpected increases in orders, for example) could result
in losses of sales, our exposure to contractual penalties, costs or expenses, as
well as damage to our reputation in the marketplace. Our inability to manage
growth effectively could have a material adverse effect on our business,
financial condition and results of operations.

WE HAVE LIMITED EXPERIENCE IN MAKING ACQUISITIONS.

We have been pursuing and may wish to pursue the acquisition of businesses,
products and technologies that are complementary to ours. However, to date, our
management has had limited experience in making acquisitions. In June 1998, we
acquired PacInfoSystems, which was based in Portland, Oregon, and in 2001
PacInfoSystems acquired Dean Technologies LLC ("Dean Tech"), which was based in
Grapevine, Texas. Both businesses have since ceased operations. In September
2004, we acquired the majority of the assets of Quasar Communications Systems
Ltd., and in November 2004 we acquired 63.6% of the outstanding shares of Odem
Electronic Technologies 1992 Ltd. from its existing shareholders. Acquisitions
involve a number of risks, including the difficulty of assimilating
geographically diverse operations and personnel of the acquired businesses or
activities and of maintaining uniform standards, controls, procedures and
policies. There can be no assurance that we will not encounter these and other
problems in connection with any acquisitions we have executed or may undertake.
There can be no assurance that we will ultimately be effective in executing
additional acquisitions. Any failure to effectively integrate our recent and any
future acquisitions could have an adverse effect on our business, operating
results or financial condition.


THE MEASURES WE TAKE IN ORDER TO PROTECT OUR INTELLECTUAL PROPERTY MAY NOT BE
EFFICIENT OR SUFFICIENT.

Our success is dependent upon our proprietary rights and technology. We
currently rely on a combination of trade secret, copyright and trademark law,
together with non-disclosure and invention assignment agreements, to establish
and protect the proprietary rights and technology used in our products. Much of
our proprietary information is not patentable. We generally enter into
confidentiality agreements with our employees, consultants, customers and
potential customers and limit the access to and the distribution of our
proprietary information. Despite these precautions, it may be possible for a
third party to copy or otherwise obtain and use our technology without
authorization, or to develop similar technology independently. We do not believe
that our products and proprietary rights infringe upon the proprietary rights of
others. However, there can be no assurance that any other party will not argue
otherwise. The cost of responding and adequately protecting ourselves against
any such assertion may be material, whether or not the assertion is valid.
Further, the laws of certain countries in which we sell our products do not
protect our intellectual property rights to the same extent as do the laws of
the United States. Substantial unauthorized use of our products could have a
material adverse effect on our business. We cannot make assurances that our
means of protecting our proprietary rights will be adequate or that our
competitors will not independently develop similar technology.


                                       7
<PAGE>


WE RELY ON CERTAIN KEY SUPPLIERS FOR THE SUPPLY OF COMPONENTS IN OUR PRODUCTS.

We purchase certain components and subassemblies used in our existing products
from a single supplier or a limited number of suppliers. In the event that any
of our suppliers or subcontractors become unable to fulfill our requirements in
a timely manner, we may experience an interruption in production until an
alternative source of supply can be obtained, although we are of the opinion
that the level of inventory held by us would probably be sufficient to cover
such a period.

FLUCTUATIONS IN OUR OPERATING RESULTS COULD RESULT IN LOWERED PRICES.

Our sales and profitability may vary in any given year, and from quarter to
quarter, primarily depending on the number of products sold in the United States
and in Europe. In order to maintain and increase sales to the United States and
to Europe, we may find it necessary to decrease prices. We will need to offer
competitive, low entry prices in order to enter into new markets with new
products and to continue our penetration into the European market with our VOIP
products.

WE HAVE LIMITED CAPITAL RESOURCES AND WE MAY ENCOUNTER DIFFICULTIES RAISING
CAPITAL.

The continued expansion into the VOIP market will require additional resources
and especially working capital. Our efforts to obtain a significant credit line
from a financial institution have not been successful, and therefore we plan to
raise additional capital and/or to enter into strategic alliances. However, the
VOIP market has been unstable and vulnerable and we may encounter difficulties
raising capital. If our efforts to raise capital do not succeed, our efforts to
increase the business and to compete with our competitors may be seriously
jeopardized, thus having a materially adverse effect on our business.

THERE CAN BE NO ASSURANCE THAT WE WILL NOT BE CLASSIFIED AS A PASSIVE FOREIGN
INVESTMENT COMPANY (A "PFIC").

Based upon its current and projected income, assets and activities, we do not
believe that at this time we are a passive foreign investment company (a "PFIC")
for US federal income tax purposes, but there can be no assurance that we won't
be classified as such in the future. Such classification may have grave tax
consequences for US shareholders. One method of avoiding such tax consequences
is by making a "qualified electing fund" election for the first taxable year in
which we are a PFIC. However, such an election is conditioned upon our
furnishing US shareholders annually with certain tax information. We do not
presently prepare or provide such information, and such information may not be
available to US shareholders if we are subsequently determined to be a PFIC.

WE HAVE SIGNIFICANT SALES WORLDWIDE AND COULD ENCOUNTER PROBLEMS IF CONDITIONS
CHANGE IN THE PLACES WHERE WE MARKET OUR PRODUCTS.

We have sold and intend to continue to sell our products in markets through
distributors in North America and Europe.

A number of risks are inherent in engaging in international transactions,
including -

     o    international sales and operations being limited or disrupted by
          longer sales and payment cycles,

     o    possible encountering of problems in collecting receivables,

     o    governmental controls, or export license requirements being imposed,

     o    political and economic instability in foreign countries,

     o    trade restrictions or changes in tariffs being imposed, and

     o    laws and legal issues concerning foreign countries.

If we should encounter such difficulties in conducting our international
operations, it may adversely affect our business condition and results of
operations.

AS PART OF A GLOBAL SLOWDOWN IN TECHNOLOGY MARKETS, TECHNOLOGY-FOCUSED
CORPORATIONS HAVE SUFFERED AND AS A RESULT THEIR SHARES HAVE DECLINED IN VALUE.

Our company, like other technology companies, has been significantly impacted by
the current market slowdown in the technology industry. Lately, the industry has
been showing initial signs of recovery, however, there can be no assurance that
the technology market will fully recover or that our operating results will not
continue to suffer as a consequence.


                                       8
<PAGE>


INFLATION AND FOREIGN CURRENCY FLUCTUATIONS SIGNIFICANTLY IMPACT OUR BUSINESS
RESULTS.

The vast majority of our sales are made in US Dollars and most of our expenses
are in US Dollars and New Israel Shekels ("NIS"). The Dollar cost of our
operations in Israel is influenced by the extent to which any increase in the
rate of inflation in Israel over the rate of inflation in the United States is
offset by the devaluation of the NIS in relation to the Dollar. Our Dollar costs
in Israel will increase if inflation in Israel exceeds the devaluation of the
NIS against the Dollar or if the timing of such devaluations lags behind
inflation rate increases in Israel.

IF WE ARE FORCED TO REPAY OUR SECURED CONVERTIBLE NOTE IN CASH, WE MAY NOT HAVE
ENOUGH CASH TO FUND OUR OPERATIONS AND MAY NOT BE ABLE TO OBTAIN ADDITIONAL
FINANCING.

Our secured convertible term note issued in June 2004, contains certain
provisions and restrictions, which if violated, could result in the full
principal amount together with interest and other amounts becoming immediately
due and payable in cash. If such an event occurred and if the holder of such
note demanded repayment, we might not have the cash resources to repay such
indebtedness when due. The note is repayable in 33 monthly installments
commencing on October 1, 2004, with principal payments which start at $20,000
and increase to $73,600. Subject to certain conditions, the monthly principal
and interest payment on the note may be paid in cash or ordinary shares. If we
make the payments on the note in cash rather than ordinary shares, it would
reduce the amount of cash available to fund operations. Also, in connection with
the issuance of the note, we agreed to certain restrictions upon incurring
additional indebtedness. The existence of debt service obligations and the terms
and anti-dilution provisions of the note may limit our ability to obtain
additional financing on favorable terms, or at all.

IF THE INVESTOR IN OUR RECENT FINANCING CONVERTS OR EXERCISES ITS WARRANTS, OR
IF WE ELECT TO PAY PRINCIPAL AND/OR INTEREST ON THE NOTE WITH OUR ORDINARY
SHARES, OUR EXISTING STOCKHOLDERS WILL BE DILUTED. IN ADDITION, SALES OF
SUBSTANTIAL AMOUNTS OF OUR ORDINARY SHARES COULD CAUSE THE MARKET PRICE TO GO
DOWN.

To the extent that the note is converted and/or the warrants that were issued
with the note are exercised, a significantly greater number of our ordinary
shares will be outstanding and the interests of our existing shareholders will
be diluted. If these additional shares are sold into the market, it could
decrease the market price of our ordinary shares and encourage short sales
although the purchaser of the note has agreed to not engage in short sales of
our ordinary shares. Short sales and other hedging transactions could place
further downward pressure on the price of our ordinary shares. We cannot predict
whether or how many of our ordinary shares will become issuable as a result of
these provisions. Additionally, we may elect to make payments of principal of
and interest on the note in ordinary shares, which could result in increased
downward pressure on our share price and further dilution to our existing
shareholders.

RISKS RELATED TO OUR LOCATION IN ISRAEL


POLITICAL, ECONOMIC, AND SECURITY CONDITIONS IN ISRAEL AFFECT OUR OPERATIONS AND
MAY LIMIT OUR ABILITY TO PRODUCE AND SELL OUR PRODUCTS OR PROVIDE OUR SERVICES.

We are incorporated under the laws of the State of Israel, where we also
maintain our headquarters and our principal manufacturing, research and
development facilities. Political, economic, security and military conditions in
Israel directly influence us. We could be adversely affected by any major
hostilities involving Israel, the interruption or curtailment of trade between
Israel and its trading partners or a significant downturn in the economic or
financial condition of Israel. The future of the "peace process" with the
Palestinians is uncertain and has deteriorated due to Palestinian violence.
Furthermore, the threat of a large-scale attack by Palestinians on Israeli
civilians and key infrastructure remains a constant fear. The past three years
of renewed terrorist attacks by the Palestinians has severely affected the
Israeli economy in many ways. In addition, several countries still restrict
business with Israel and with companies doing business in Israel. We could be
adversely affected by adverse developments in the "peace process" or by
restrictive laws or policies directed towards Israel or Israeli businesses.

Generally, all nonexempt male adult citizens and permanent residents of Israel,
including some of our officers and employees, are obligated to perform military
reserve duty annually, and are subject to being called to active duty at any
time under emergency circumstances. While we have operated effectively under
these requirements since its incorporation, we cannot predict the full impact of
such conditions on us in the future, particularly if emergency circumstances
occur. If many of our employees are called for active duty, our business may be
adversely affected.


                                       9
<PAGE>


Additionally, in recent years Israel has been going through a period of
recession in economic activity, resulting in low growth rates and growing
unemployment. Our operations could be adversely affected if the economic
conditions in Israel continue to deteriorate. Also, due to significant economic
reforms proposed by the Israeli government, there have been several general
strikes and work stoppages in 2003 and 2004, affecting all banks, airports and
ports. These strikes have had an adverse effect on the Israeli economy and on
business. Following the passing of laws to implement economic measures, the
Israeli trade unions have threatened further strikes or work stoppages, and
these may have an adverse effect on the Israeli economy and our business.

IF THE ISRAELI GOVERNMENT PROGRAMS THAT WE BENEFIT FROM ARE REDUCED OR
TERMINATED, OUR COSTS AND TAXES MAY INCREASE.

Under the Israeli Law for Encouragement of Capital Investments, 1959, facilities
that meet certain conditions can apply for "Approved Enterprise" status. This
status confers certain benefits including tax benefits. Our existing facilities
have been designated as Approved Enterprises. If we attain taxable income in
Israel, these tax benefits will help reduce our tax burden.

In addition, in order to maintain our eligibility for the grants and tax
benefits we receive, we must continue to satisfy certain conditions, including
making certain investments in fixed assets and operations and achieving certain
levels of exports. If we fail to satisfy such conditions in the future, we could
be required to refund tax benefits which may have been received with interest
and linkage differences to the Israeli Consumer Price Index.

The law and regulations prescribing the benefits provide for an expiration date
for the grant of new benefits. The expiration date has been extended several
times in the past. The expiration date currently in effect is December 31, 2004,
and no new benefits will be granted after that date unless the expiration date
is again extended. There can be no assurance that new benefits will be available
after December 31, 2004, or that existing benefits will be continued in the
future at their current level or at any level. The Israeli Government
authorities have indicated that the government may reduce or eliminate these
benefits in the future. A termination or reduction of certain programs and tax
benefits (particularly benefits available to us as a result of the Approved
Enterprise status of our facilities and programs) or a requirement to refund the
tax benefits already received, would have a material adverse effect on our
business, operating results and financial condition.

Under the Law for the Encouragement of Industrial Research and Development, 1984
(the "Research Law"), research and development programs approved by a research
committee appointed by the Israeli Government are eligible for grants in
exchange for payment to the Government of royalties from the sale of products
developed in accordance with the Program. Regulations issued under the Research
Law generally provide for the payment of royalties to the Office of the Chief
Scientist equal to 3.5% of sales of products developed as a result of a research
project so funded until 100% of the dollar-linked grant is repaid. Royalties
payable with respect to grants received under programs approved by the Office of
Chief Scientist after January 1, 1999, are subject to interest on the U.S.
dollar-linked value of the total grants received at the annual rate of LIBOR
applicable to U.S. dollar deposits on the date the grants were received.

The Research Law requires that the manufacture of any product developed as a
result of research and development funded by the Israeli Government take place
in Israel. It also provides that know-how from the research may not be
transferred to third parties without the approval of the Israeli Office of the
Chief Scientist in the Ministry of Industry, Trade & Labor.

THE ANTI-TAKEOVER EFFECTS OF ISRAELI LAWS MAY DELAY OR DETER A CHANGE OF
CONTROL.

Under the Israeli Companies Law, a merger is generally required to be approved
by the shareholders and board of directors of each of the merging companies.
Shares held by a party to the merger and certain of its affiliates are not
counted toward the required approval. If the share capital of the company that
will not be the surviving company is divided into different classes of shares,
the approval of each class is also required. A merger may not be approved if the
surviving company will not be able to satisfy its obligations. At the request of
a creditor, a court may block a merger on this ground. In addition, a merger can
be completed only after all approvals have been submitted to the Israeli
Registrar of Companies and 70 days have passed from the time that a proposal for
approval of the merger was filed with the Registrar.

The Israeli Companies Law provides that an acquisition of shares in a public
company must be made by means of a tender offer, if as a result of the
acquisition, the purchaser would become a holder of 25% or more of the voting
power at general meetings, and no other shareholder owns a 25% stake in us.
Similarly, the Israeli Companies Law provides that an acquisition of shares in a
public company must be made by means of a tender offer if, as a result of the
acquisition, the purchaser would become a holder of 45% or more of the voting
power at general meetings, unless someone else already holds a majority of the
voting power. These rules do not apply if the acquisition is made by way of a
merger.


                                       10
<PAGE>


The Israeli Companies Law provides specific rules and procedures for the
acquisition of shares held by minority shareholders, if the majority shareholder
holds more than 90% of the outstanding shares. Israeli tax law treats specified
acquisitions, including a stock-for-stock swap between an Israeli company and a
foreign company, less favorably than does U.S. tax law.

These laws may have the effect of delaying or deterring a change in control of
us, thereby limiting the opportunity for shareholders to receive a premium for
their shares and possible affecting the price that some investors are willing to
pay for our securities.


ALL OF OUR DIRECTORS AND OFFICERS ARE NON-U.S. RESIDENTS AND ENFORCEABILITY OF
CIVIL LIABILITIES AGAINST THEM IS UNCERTAIN.

All of our directors and officers reside outside of the United States. Service
of process upon them may be difficult to effect within the United States.
Furthermore, because the majority of our assets are located in Israel, any
judgment obtained in the United States against us or any of our directors and
officers may not be collectible within the United States.

RISKS RELATED TO OUR ORDINARY SHARES

OUR SHARE PRICE HAS BEEN AND MAY CONTINUE TO BE VOLATILE, WHICH COULD RESULT IN
SUBSTANTIAL LOSSES FOR INDIVIDUAL SHAREHOLDERS

The market price of our ordinary shares has been and may continue to be highly
volatile and subject to wide fluctuations. Since December 2003 through December
2004, the price of our ordinary shares has ranged from $ 1.51 to $5.75 per
share. We believe that these fluctuations have been in response to a number of
factors including the following, some of which are beyond our control:

     o    actual or anticipated variations in our quarterly operating results;

     o    announcements of technological innovations or new products or services
          or new pricing practices by us or our competitors;

     o    increased market share penetration by our competitors;

     o    announcements by us or our competitors of significant acquisitions,
          strategic partnerships, joint ventures or capital commitments;

     o    additions or departures of key personnel; and

     o    sales of additional ordinary shares.

In addition, the stock market in general, and stocks of technology companies in
particular, have from time to time experienced extreme price and volume
fluctuations. This volatility is often unrelated or disproportionate to the
operating performance of these companies. These broad market fluctuations may
adversely affect the market price of our ordinary shares, regardless of our
actual operating performance.

OUR SHARES MAY BE DELISTED FROM THE NASDAQ NATIONAL MARKET FOR FAILURE TO MEET
NASDAQ'S REQUIREMENTS.

In late 2002 and early 2003 we received notice from the Nasdaq Stock Market that
our ordinary shares were subject to delisting from the Nasdaq National Market
for failure to meet Nasdaq's minimum bid price and shareholders' equity
requirements ($10 million) for continued listing on the National Market. As a
result of the hearing requested by us and supplemental information presented by
us to the Nasdaq Listing Qualifications Panel, the Panel determined to continue
the listing of our securities on the Nasdaq National Market pursuant to a
detailed exception to the Nasdaq National Market Rules, and we successfully met
all the conditions set forth in the exception.

On August 30, 2004, we received notice from the Nasdaq Stock Market that our
ordinary shares are subject to delisting from the Nasdaq National Market for
failure to meet Nasdaq's minimum market value of publicly held shares
requirement ($5 million) for continued listing on the National Market. On
November 4, 2004 we were notified by Nasdaq that we have regained compliance
with this requirement. There can be no assurance that we will be able to
continue to meet this or other Nasdaq requirements to maintain our Nasdaq
National Market listing, in which case we will need to apply for a transfer of
our ordinary shares to the Nasdaq Small Cap Market.


                                       11
<PAGE>


                           FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that are intended to be, and
are hereby identified as, forward looking statements for the purposes of the
safe harbor provisions of the Private Securities Reform Act of 1995. These
statements address, among other things: our strategy; the anticipated
development of our products; our anticipated use of proceeds; our projected
capital expenditures and liquidity; our development of additional revenue
sources; our development and expansion of relationships; the market acceptance
of our products; and our technological advancement. Actual results could differ
materially from those anticipated in these forward-looking statements as a
result of various factors, including all the risks discussed below and elsewhere
in this prospectus. You should therefore not rely on these forward-looking
statements, which are applicable only as of the date hereof.

     We urge you to consider that statements which use the terms "believe", "do
not believe", "expect", "plan", "intend", "estimate", "anticipate",
"projections", "forecast" and similar expressions are intended to identify
forward-looking statements. These statements reflect our current views with
respect to future events and are based on assumptions and are subject to risks
and uncertainties. Except as required by applicable law, including the federal
securities laws of the United States, we do not intend to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. We disclaim any obligation to publicly revise any such
statements to reflect any change in expectations or in events, conditions, or
circumstances on which any such statements may be based.

     Market data and forecasts used in this prospectus have been obtained from
independent industry sources. We have not independently verified the data
obtained from these sources and we cannot assure you of the accuracy or
completeness of the data. Forecasts and other forward-looking information
obtained from these sources are subject to the same qualifications and
additional uncertainties accompanying any estimates of future market size.

                               RECENT DEVELOPMENTS

On September 29, 2004 we purchased the majority of the assets of Quasar
Communication Systems Ltd., an Israeli company engaged in the business of
developing, manufacturing and selling cellular communication gateways. In
consideration for the acquired assets, we issued to Quasar 285,000 of our
ordinary shares.

On November 18, 2004, we purchased 63.6% of the issued and outstanding shares of
Odem Electronic Technologies 1992 Ltd. from Odem's existing shareholders. The
consideration for Odem's shares was comprised of cash in the amount of
$1,970,895 and 290,532 of our ordinary shares. Odem, an Israeli company, is a
major solution provider and distributor of electronics components and advance
technologies in the Israeli market.

For additional information on the Quasar and Odem transactions, see our filings
on Form 6-K, filed with the SEC on September 29, 2004, November 3, 2004 and
November 29, 2004, and which are incorporated by reference into this prospectus.

RECENT FINANCIAL RESULTS

For a discussion of our results of operations and liquidity and capital
resources for the nine months ended September 30, 2003 and September 30, 2004,
see our Form 6-K which was filed with the SEC on January 10, 2005 and which is
incorporated by reference into this Prospectus.


                                 USE OF PROCEEDS

     All of the proceeds from the sale of the ordinary shares offered under this
prospectus are for the account of the selling shareholders. Accordingly, we will
not receive any proceeds from the sales of these shares other than the exercise
price payable to us upon the exercise of warrants held by one of the selling
shareholders.


                              SELLING SHAREHOLDERS

This prospectus relates to 1,190,228 ordinary shares that may be offered for
sale by the selling shareholders, as follows:


                                       12
<PAGE>


     o    A total of 357,143 ordinary shares were issued to Hillswood Holdings
          Ltd. and Vamos Inc. in a private placement completed on December 14,
          2003. The ordinary shares were issued at a price per share of $2.80.
          BOS granted to such selling shareholders incidental registration
          rights.

     o    Up to 833,085 ordinary shares are issuable upon the conversion of a
          convertible note due June 10, 2007 and upon the exercise of warrants,
          both of which were issued by BOS to Laurus Master Fund Ltd. in a
          private placement transaction on June 10, 2004.

The convertible note has an aggregate principal amount of $2.0 million and a
conversion price of $3.08 per share. The principal amount of the note is
repayable in monthly installments commencing as of October 1, 2004, in the
initial amount of $20,000 eventually increasing to $73,600. The interest on the
note is payable in monthly installments, together with the principal monthly
repayment. The principal and the interest may be paid in cash or, under certain
conditions described below, in ordinary shares.

The note conversion price is subject to proportional adjustment in the event of
stock spits, combinations, subdivisions of the ordinary shares or if dividend is
paid on the ordinary shares in ordinary shares. In addition, if BOS issues stock
in certain types of transactions at a price lower than the initial conversion
price, then the conversion price will be adjusted to a lower price based on a
weighted average formula.

The convertible note bears interest at a fluctuating interest rate equal at all
times to the prime rate plus 3%, subject to reduction in any particular month,
if the average closing price of our ordinary shares for any five consecutive
trading days during the fifteen days immediately prior to the last business day
of the previous month, exceeded the conversion price by at least 25%. The
interest reduction rate is 100 basis points (1.0%) for each incremental twenty
five percent increase, or 200 basis points (2.0%) for such increase, if the
ordinary shares shall have already been, at that time, registered pursuant to an
effective registration statement.

Each month, the note holder may elect to convert all or a portion of the
convertible note monthly payments (comprised of principal amortization and
interest) into ordinary shares. If the market price of the ordinary shares at
the time of payment is at least 10% greater than the conversion price per
ordinary share, the monthly payment shall be made in the form of ordinary
shares, and the ordinary shares issuable upon such mandatory interest conversion
are registered hereunder for sale by Laurus.

Under our registration rights agreement with Laurus, a delay in the
effectiveness of the registration of our ordinary shares beyond a certain date
(which has already lapsed) subjects us to payment to Laurus of liquidated
damages equal to 2.0% of the outstanding principal amount of the note for each
thirty day period of delay (prorated for partial periods).

The note is secured by a first priority floating charge on all of our company's
assets and by a first priority fixed charge on all of our company's right, title
and interest in our wholly-owned subsidiary, BOScom Ltd.

The warrants are exercisable at $4.04 per share. The warrants may be exercised
in whole or in part, and payment of the exercise price may be made either in
cash or in a "cashless" exercise (or in a combination of both methods). The
warrant exercise price is also subject to proportional adjustment in the event
of combinations, subdivisions of the ordinary shares or if dividend is paid on
the ordinary shares in ordinary shares.

Conversion of the note and exercise of the warrants are limited as follows: at
no time shall the note be convertible (or the warrants be exercised) into that
number of ordinary shares which, when added to the number of ordinary shares
otherwise beneficially owned by the note (or warrants) holder, exceed (i) 4.99%
of our outstanding ordinary shares, or (ii) 25% of the aggregate dollar trading
volume of the ordinary shares for the 30-day trading period immediately
preceding the conversion or exercise notice. These limitations expire, however,
in an event of default under the note or with 75 days prior notice by the
holder, provided that in no time shall the holder's beneficial ownership of
ordinary shares exceed 19.9% of our ordinary shares. In addition, the number of
ordinary shares issuable under the note and/or the warrants shall not exceed an
aggregate of 833,085 ordinary shares (subject to certain adjustments).


The table sets forth below certain information concerning the number of ordinary
shares owned by the selling shareholders as of December 31, 2004, and the number
of ordinary shares that may be offered from time to time by the selling
shareholders under this prospectus. Because the selling shareholders may offer
all or some portion of the ordinary shares, BOS has assumed for the purposes of
the table below that the selling shareholders will sell all of the ordinary
shares they have acquired from us.


                                       13
<PAGE>

<TABLE>
<CAPTION>

                            SHARES OWNED OR UNDERLYING
                              CONVERTIBLE SECURITIES     SHARES BEING    SHARES BENEFICIALLY OWNED
                                PRIOR TO OFFERING          OFFERED          AFTER THE OFFERING
                          ----------------------------     -------        -----------------------
                          Number              Percent                     Number          Percent
                          -------              -------                    ------          -------
<S>                       <C>                 <C>          <C>            <C>             <C>
LAURUS MASTER FUND,       833,085(2)          14.95%(3)    833,085             0             0%
LTD. (1)
825 Third Avenue,
14th Floor
New York, NY 10022
HILLSWOOD HOLDINGS
LTD. (4)
PO Box 3136, Akara
Building, Suite 8,        297,719              6.28%(3)    267,857        29,862          0.63%(3)
Wickams Cay 1, Road
Town
Tortola, BVI
VAMOS INC. (5)
c/o GISE
37 G. Sisini Street
Athens 115 28              89,286              1.88%(3)     89,286             0             0%
Greece
</TABLE>


- ----------

(1)  Laurus Capital Management, LLC is the investment manager of Laurus Master
     Fund Ltd., and in accordance with Rule 13d-3 under the Securities Exchange
     Act of 1934, as amended, may be deemed a control person of the ordinary
     shares owned by Laurus Master Fund Ltd. Messrs. David Grin and Eugene Grin
     are the managing members of Laurus Capital Management, LLC and as such
     share sole voting and investment control over the ordinary shares owned by
     Laurus Master Fund Ltd., and each disclaims beneficial ownership of such
     shares.


(2)  Number of shares represents the maximum number of shares receivable by
     Laurus Master Fund, Ltd. ("Laurus") upon conversion of the full amount of
     the convertible note (including applicable interest assuming mandatory
     conversion of all interest payments) and full exercise of the warrants into
     ordinary shares. However, the terms of the convertible note and the
     warrants expressly limit the number of shares that Laurus can convert, and
     beneficially own at any one time pursuant to such conversions or exercises
     (as defined in Rule 13d-3 of the Securities Exchange Act of 1934, as
     amended) to 4.99% of the total outstanding ordinary shares , provided that
     Laurus has the right to waive this limitation upon at least 75 days prior
     written notice to us.


(3)  Calculated based upon 4,737,703 ordinary shares outstanding as of December
     31, 2004.

(4)  Hillswood Holdings Ltd. is indirectly owned by a trust whose principal
     beneficiary is Mr. Robert Haggiag. By virtue of such relationship, Mr.
     Haggiag may be deemed to have sole dispositive power over the shares owned
     by Hillswood Holdings Ltd.

(5)  Vamos Inc. is controlled by Messrs. Minos A. Zombanakis and Costi
     Zombanakis, who by virtue of such relationship may be deemed to share sole
     dispositive power over the shares owned by Vamos Inc.



                              PLAN OF DISTRIBUTION


The selling shareholders and any of their pledgees, donees, assignees,
transferees, and successors in interest, may sell any or all of their securities
from time to time on any stock exchange or automated interdealer quotation
system on which the securities are listed, in the over-the-counter market, in
privately negotiated transactions or otherwise, at fixed prices that may be
changed, at market prices prevailing at the time of sale, at prices related to
prevailing market prices or at prices otherwise negotiated. The selling
shareholders may sell the securities by one or more of the following methods,
without limitation:

                                       14
<PAGE>

     o    block trades in which the broker or dealer so engaged will attempt to
          sell the securities as agent but may position and resell a portion of
          the block as principal to facilitate the transaction;

     o    purchases by a broker or dealer as principal and resale by the broker
          or dealer for its own account pursuant to this prospectus;

     o    an exchange distribution in accordance with the rules of any stock
          exchange on which the securities are listed;

     o    ordinary brokerage transactions and transactions in which the
          broker-dealer solicits purchases, which may include long sales or
          short sales effected after the effective date of the prospectus of
          which this registration statement is part;

     o    privately negotiated transactions;

     o    "at the market" or through market makers or into an existing market
          for the shares;

     o    through the writing or settlement of options or other hedging
          transactions on the securities, whether through an options exchange or
          otherwise;

     o    through the distribution of the securities by any selling shareholder
          to its partners, members or shareholders;

     o    one or more underwritten offerings on a firm commitment or best
          efforts basis;

     o    any combination of any of these methods of sale; and

     o    any other method permitted pursuant to applicable law.

A selling shareholder may also transfer the securities by gift. We do not know
of any arrangements by any of the selling shareholders for the sale of any of
the securities.

A selling shareholder may engage brokers and dealers, and any brokers or dealers
may arrange for other brokers or dealers to participate in effecting sales of
the securities. These brokers, dealers or underwriters may act as principals, or
as an agent of the selling shareholder. Broker-dealers may agree with the
selling shareholder to sell a specified number of the securities at a stipulated
price per security. If the broker-dealer is unable to sell securities acting as
agent for the selling shareholder, it may purchase as principal any unsold
securities at the stipulated price. Broker-dealers who acquire securities as
principals may thereafter resell the securities from time to time in
transactions in any stock exchange or automated interdealer quotation system on
which the securities are then listed, at prices and on terms then prevailing at
the time of sale, at prices related to the then-current market price or in
negotiated transactions. Broker-dealers may use block transactions and sales to
and through broker-dealers, including transactions of the nature described
above. A selling shareholder may also sell the securities in accordance with
Rule 144 under the Securities Act, rather than pursuant to this prospectus,
regardless of whether the securities are covered by this prospectus.

From time to time, a selling shareholders may pledge, hypothecate or grant a
security interest in some or all of the securities owned by it. The pledgees,
secured parties or persons to whom the securities have been hypothecated will,
upon foreclosure in the event of default, be deemed to be selling shareholders.
The number of the selling shareholder's securities offered under this prospectus
will decrease as and when it takes such actions. The plan of distribution for a
selling shareholder's securities will otherwise remain unchanged.

To the extent required under the Securities Act, the aggregate amount of the
selling shareholder's securities being offered and the terms of the offering,
the names of any agents, brokers, dealers or underwriters and any applicable
commission with respect to a particular offer will be set forth in an
accompanying prospectus supplement. Any underwriters, dealers, brokers or agents
participating in the distribution of the securities may receive compensation in
the form of underwriting discounts, concessions, commissions or fees from the
selling shareholder and/or purchasers of selling shareholders' securities, for
whom they may act (which compensation as to a particular broker-dealer might be
in excess of customary commissions).

                                       15
<PAGE>


The selling shareholder and any underwriters, brokers, dealers or agents that
participate in the distribution of the securities may be deemed to be
"underwriters" within the meaning of the Securities Act, and any discounts,
concessions, commissions or fees received by them and any profit on the resale
of the securities sold by them may be deemed to be underwriting discounts and
commissions.

A selling shareholder may enter into hedging transactions with broker-dealers
and the broker-dealers may engage in short sales of the securities in the course
of hedging the positions they assume with that selling shareholder, including,
without limitation, in connection with distributions of the securities by those
broker-dealers.

The anti-manipulation provisions of Regulation M under the Exchange Act will
apply to purchases and sales of ordinary shares by the selling shareholders.
Under Regulation M, the selling shareholders or their agents may not bid for,
purchase, or attempt to induce any person to bid for or purchase our ordinary
shares while such selling shareholders are distributing ordinary shares covered
by this prospectus. The selling shareholders are not permitted to cover short
sales by purchasing ordinary shares while the distribution is taking place.
Furthermore, Regulation M provides for restrictions on market-making activities
by persons engaged in the distribution of the ordinary shares.

A selling shareholder may enter into option or other transactions with
broker-dealers that involve the delivery of the securities offered hereby to the
broker-dealers, who may then resell or otherwise transfer those securities. A
selling shareholder may also loan or pledge the securities offered hereby to a
broker-dealer and the broker-dealer may sell the securities offered hereby so
loaned or upon a default may sell or otherwise transfer the pledged securities
offered hereby.

We have agreed to indemnify in certain circumstances the selling shareholders of
the securities covered by the registration statement, against certain
liabilities, including liabilities under the Securities Act. The selling
shareholders have agreed to indemnify us in certain circumstances against
certain liabilities, including liabilities under the Securities Act.

The securities offered hereby were originally issued to the selling shareholders
pursuant to an exemption from the registration requirements of the Securities
Act.

We have agreed to pay certain fees and expenses in connection with this
offering, not including any selling commissions. We will not receive any
proceeds from sales of any securities by the selling shareholder.

We cannot assure you that the selling shareholder will sell all or any of the
securities offered for sale under this prospectus.


                             VALIDITY OF SECURITIES

     The validity of the ordinary shares, including the ordinary shares issuable
upon exercise of the warrants, will be passed upon for us by Amit, Pollak,
Matalon & Ben-Naftali, Erez & Co. our Israeli counsel.


                                     EXPERTS

     Our consolidated financial statements, included in our Annual Report on
Form 20-F for the year ended December 31, 2003, as amended on January 6, 2005,
have been audited by Kost Forer Gabbay & Kasierer, independent registered public
accounting firm and a member of Ernst & Young Global as set forth in their
report thereon included therein and incorporated herein by reference. Such
consolidated statements are incorporated herein by reference in reliance upon
such report given on the authority of such firm as experts in auditing and
accounting.

     The consolidated financial statements of Surf Communication Solutions Ltd.,
included in our Annual Report for the year ended December 31, 2003, as amended
on January 6, 2005, have been audited by Kost Forer Gabbay & Kasierer,
independent registered public accounting firm and a member of Ernst & Young
Global as set forth in their report thereon included therein and incorporated
herein by reference. Such consolidated statements are incorporated herein by
reference in reliance upon such report given on the authority of such firm as
experts in auditing and accounting.

     The consolidated financial statements of Odem Electronic Technologies 1992
Ltd., included in our current report on Form 6-K filed with the Securities and
Exchange Commission on January 10, 2005 have been audited by Kesselman &
Kesselman, independent registered public accounting firm, as set forth in their
report thereon included therein and incorporated herein by reference. Such
consolidated statements are incorporated herein by reference in reliance upon
such report given on the authority of such firm as experts in auditing and
accounting.

     The financial statements of Quasar Communication Systems Ltd., included in
our current report on Form 6-K filed with the Securities and Exchange Commission
on January 10, 2005 have been audited by Chaikin, Cohen, Rubin & Gilboa,
independent registered public accounting firm, as set forth in their report
thereon included therein and incorporated herein by reference. Such financial
statements are incorporated herein by reference in reliance upon such report
given on the authority of such firm as experts in auditing and accounting.

     The value attributed to our holdings in Surf Communication System Ltd., was
supported by an external valuation prepared by Vega Consultants Ltd.


                                       16
<PAGE>


                       WHERE YOU CAN FIND MORE INFORMATION

     We have filed with the SEC a registration statement on Form F-3 under the
Securities Act, with respect to the securities offered by this prospectus.
However, as is permitted by the rules and regulations of the SEC, this
prospectus, which is part of our registration statement on Form F-3, omits
certain non-material information, exhibits, schedules and undertakings set forth
in the registration statement. For further information about us, and the
securities offered by this prospectus, please refer to the registration
statement.

     We are subject to the reporting requirements of the Securities Exchange Act
of 1934, as amended, or the Exchange Act, that are applicable to a foreign
private issuer. In accordance with the Exchange Act, we file reports, including
annual reports on Form 20-F by June 30 of each year. We also furnish to the SEC
under cover of Form 6-K material information required to be made public in
Israel, filed with and made public by any stock exchange or distributed by us to
our shareholders.

     The registration statement on Form F-3 of which this prospectus forms a
part, including the exhibits and schedules thereto, and reports and other
information filed by us with the SEC may be inspected without charge and copied
at prescribed rates at the SEC's Public Reference Room at 450 Fifth Street,
N.W., Washington, D.C. 20549. Copies of this material are also available by mail
from the Public Reference Section of the SEC, at 450 Fifth Street, N.W.,
Washington D.C. 20549, at prescribed rates. The public may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers, such as us, that file
electronically with the SEC (http://www.sec.gov).

     As a foreign private issuer, we are exempt from the rules under the
Exchange Act prescribing the furnishing and content of proxy statements to
shareholders and our officers, directors and principal shareholders are exempt
from the "short-swing profits" reporting and liability provisions contained in
Section 16 of the Exchange Act and related Exchange Act rules.

                 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

     The SEC allows us to "incorporate by reference" the information we file
with or submit to it, which means that we can disclose important information to
you by referring to those documents. The information incorporated by reference
is considered to be part of this prospectus, and later information filed with or
submitted to the SEC will update and supersede this information. We incorporate
by reference into this prospectus the documents listed below:

     (a)  Our annual report on Form 20-F for the fiscal year ended December 31,
          2003, filed with the SEC on June 17, 2004 (SEC File No. 001-14184), as
          amended on January 6, 2005;

     (b)  The description of our ordinary shares contained in our registration
          statement on Form 8-A filed with the SEC on April 1, 1996;

     (c)  Our current reports on Form 6-K filed with the SEC on August 5, 2004,
          on August 23, 2004 (to the extent designated therein),on September 1,
          2004, on September 29, 2004, on November 3, 2004, on November 29, 2004
          and on January 10, 2005.


     In addition, all subsequent annual reports on Form 20-F filed prior to the
termination of this offering and any reports on Form 6-K subsequently submitted
to the SEC or portions thereof that we specifically identify in such forms as
being incorporated by reference into the registration statement of which this
prospectus forms a part, shall be considered to be incorporated into this
prospectus by reference and shall be considered a part of this prospectus from
the date of filing or submission of such documents.

     As you read the above documents, you may find inconsistencies in
information from one document to another. If you find inconsistencies between
the documents and this prospectus, you should rely on the statements made in the
most recent document.

     We will deliver to each person (including any beneficial owner) to whom
this prospectus has been delivered a copy of any or all of the information that
has been incorporated by reference into this prospectus but not delivered with
this prospectus. We will provide this information upon written or oral request,
and at no cost to the requester. Requests should be directed to:

         B.O.S. Better Online Solutions Ltd.
         Beit Rabin, 100 BOS Road
         Teradyon Industrial Park,
         Misgav 20179, Israel
         Tel.:      (+972) 4-990-7500
         Fax:       (+972) 4-999-0334
         Attn.:     Nehemia Kaufman, CFO


                                       17
<PAGE>


                       ENFORCEABILITY OF CIVIL LIABILITIES


     We have been informed by our legal counsel in Israel, Amit, Pollak, Matalon
& Ben-Naftali, Erez & Co., that there is doubt concerning the enforceability of
civil liabilities under the Securities Act and the Exchange Act in original
actions instituted in Israel. However, subject to specified time limitations,
Israeli courts may enforce a United States final executory judgment in a civil
matter, including a monetary or compensatory judgment in a non-civil matter,
obtained after due process before a court of competent jurisdiction according to
the laws of the state in which the judgment is given and the rules of private
international law currently prevailing in Israel. The rules of private
international law currently prevailing in Israel do not prohibit the enforcement
of a judgment by Israeli courts provided that:

     o    the judgment is enforceable in the state in which it was given;

     o    adequate service of process has been effected and the defendant has
          had a reasonable opportunity to present his arguments and evidence;

     o    the judgment and the enforcement of the judgment are not contrary to
          the law, public policy, security or sovereignty of the State of
          Israel;

     o    the judgment was not obtained by fraud and does not conflict with any
          other valid judgment in the same matter between the same parties; and

     o    an action between the same parties in the same matter is not pending
          in any Israeli court at the time the lawsuit is instituted in the
          foreign court.


     We have appointed Corporation Service Company as our agent to receive
service of process in any action against us in any competent court of the United
States arising out of this offering or any purchase or sale of securities in
connection with this offering.

     If a foreign judgment is enforced by an Israeli court, it generally will be
payable in Israeli currency, which can then be converted into non-Israeli
currency and transferred out of Israel. The usual practice in an action before
an Israeli court to recover an amount in a non-Israeli currency is for the
Israeli court to issue a judgment for the equivalent amount in Israeli currency
at the rate of exchange in force on the date of the judgment, but the judgment
debtor may make payment in foreign currency. Pending collection, the amount of
the judgment of an Israeli court stated in Israeli currency ordinarily will be
linked to the Israeli consumer price index plus interest at an annual statutory
rate set by Israeli regulations prevailing at the time. Judgment creditors must
bear the risk of unfavorable exchange rates.


                                       18
<PAGE>


                        BOS BETTER ONLINE SOLUTIONS LTD.

                         UP TO 1,190,228 ORDINARY SHARES

- --------------------------------------------------------------------------------
                                   PROSPECTUS
















                                       19
<PAGE>


                                     PART II
                     INFORMATION NOT REQUIRED IN PROSPECTUS

                ITEM 8. INDEMNIFICATION OF DIRECTORS AND OFFICERS

     Consistent with the provisions of the Israeli Companies Law, 1999 (the
"Companies Law"), the amended Articles of Association of the Registrant (the
"Articles") include provisions permitting the Registrant to procure insurance
coverage for its "office holders", exempt them from certain liabilities and
indemnify them, to the maximum extent permitted by law. An "office holder" is
defined in the Companies Law and the Articles as a director, managing director,
chief business manager, executive vice president, vice president, other manager
reporting directly to the managing director and any other person assuming the
responsibilities of any of the foregoing positions without regard to such
person's title.

     INSURANCE

     Under the Companies Law, a company may obtain insurance for any of its
office holders for: (i) a breach of his duty of care to the company or to
another person; (ii) a breach of his duty of loyalty to the company provided
that the office holder acted in good faith and had reasonable cause to assume
that his act would not prejudice the company's interests; or (iii) a financial
liability imposed upon him in favor of another person concerning an act
preformed by him in his capacity as an office holder.

     We have obtained directors' and officers' liability insurance covering our
officers and directors and those of our subsidiaries.

     INDEMNIFICATION

     The Companies Law provides that a company may indemnify an officer holder
against: (i) a financial liability imposed on him in favor of another person by
any judgment concerning an act preformed in his capacity as an office holder;
and (ii) reasonable litigation expenses, including attorneys' fees, expended by
the office holder or charged to him by a court relating to an act preformed in
his capacity as an office holder in connection with: (a) proceedings the company
institutes against him or instituted on its behalf or by another person; (b) a
criminal charge from which he was acquitted; or (c) a criminal charge in which
he was convicted for a criminal offence that does not require proof of criminal
intent. The Articles of the Registrant authorize the Registrant to indemnify its
office holders to the fullest extent permitted under the law. The Companies Law
also authorizes a company to undertake in advance to indemnify an office holder,
provided that the undertaking is: (a) limited to the categories of events which
the board of directors determines that can be anticipated; and (b) limited in
amount determined by the board of directors to be reasonable for the
circumstances.

We have entered into indemnification agreements with directors and some officers
providing for indemnification under certain circumstances for acts and omissions
which may not be covered (or not be covered in full) by any directors' and
officers' liability insurance. Such indemnification agreement appears in our
Current Report on Form 6-K as filed with the Securities and Exchange Commission
on January 17, 2003.


     EXEMPTION

Under the Companies Law, an Israeli company may not exempt an office holder from
liability for a breach of his duty of loyalty, but may exempt in advance an
office holder from his liability to the company, in whole or in part, for a
breach of his duty of care. The Articles authorize the Registrant to exempt any
office holder from liability to the Registrant to the extent permitted by law.
Both the Companies Law and the Articles provide that the Registrant may not
exempt or indemnify an office holder nor enter into an insurance contract which
would provide coverage for liability incurred as a result of any of the
following: (a) a breach by the office holder of his duty of fidelity (however,
the Registrant may insure such breach if the office holder acted in good faith
and had a reasonable basis to believe that the act would not prejudice the
Registrant); (b) a breach by the office holder of his duty of care if the breach
was done intentionally or recklessly; (c) any act of omission done with the
intent to derive an illegal personal benefit; or (d) any fine or monetary
penalty levied against the office holder.


                                       20
<PAGE>


                                ITEM 9. EXHIBITS

<TABLE>
<CAPTION>

EXHIBIT NO.                                     DESCRIPTION
- -----------                                     -----------
<S>             <C>
4.2*           Form of share certificate.

5.1**           Opinion of Amit, Pollak, Matalon & Ben-Naftali, Erez & Co. Israeli counsel for B.O.S Better
                Online Solutions Ltd., as to the validity of the ordinary shares.

10.1***         Share Purchase Agreement, dated as of February 23, 2003, and Option Agreement and
                Registration Rights Agreement, dated as of March 30, 2003, by and between Catalyst
                Investments L.P. and the Registrant.

10.2***         Share Purchase Agreement and Registration Rights Agreement, dated as of December 14, 2003, by
                and among Hillswood Holdings Limited,  Vamos Inc. and the Registrant.

10.3***         Securities Purchase Agreement, dated as of June 10, 2004, by and between Laurus Master Fund
                Ltd. and the Registrant.
10.4****        Amendment No. 1 to the Securities Purchase Agreement, by and between
                Laurus Master Fund Ltd. and the Registrant, dated November 16, 2004.

10.5****        Asset Purchase Agreement dated as of the September 29, 2004 by and between Quasar
                Communication Systems Ltd. and the Registrant.

10.6****        Share Purchase Agreement, dated as of  November 2, 2004, by and between Sara and Jacob Neuhof
                and the Registrant.

10.7****        Share Purchase Agreement, dated as of  November 2, 2004, by and between Telsys Ltd. and the
                Registrant.

23.1**          Consent of Amit, Pollak, Matalon & Ben-Naftali, Erez & Co. (included in Exhibit 5.1).

23.2****        Consent of Kost Forer Gabbay & Kasierer, a Member Firm of Ernst & Young Global.

23.3****        Consent of Vega Consultants Ltd.

23.4****        Consent of Chaikin, Cohen, Rubin & Gilboa

23.5****        Consent of  Kesselman & Kesselman

24.1**          Power of Attorney (included on signature page).

99.1            Secured Convertible Term Note, incorporated by reference to Exhibit 4.6 of the Company's Form
                20-F filed on June 17, 2004.

99.2            Ordinary Shares Purchase Warrant, incorporated by reference to Exhibit 4.6 of the Company's
                Form 20-F filed on June 17, 2004.
</TABLE>


- -------------

*    Previously filed with the SEC on November 24, 2003 as Exhibit 4.1 to the
     Company's Registration Statement on Form S-8, SEC File Number 333-110696,
     and incorporated herein by reference.

**   Previously filed

***  Previously filed as an exhibit to the Registrant's annual report on Form
     20-F for the fiscal year ended December 31, 2003, filed with the SEC on
     June 17, 2004 (SEC File No. 001-14184), and incorporated herein by
     reference.

**** Filed herewith.

                              ITEM 10. UNDERTAKINGS


(a)  The undersigned registrant hereby undertakes:

     (1)  To file, during any period in which offers or sales are being made, a
          post-effective amendment to this registration statement:

               (i) To include any prospectus required by Section 10(a)(3) of the
               Securities Act of 1933;

               (ii) To reflect in the prospectus any facts or events arising
               after the effective date of the registration statement (or the
               most recent post- effective amendment thereof) which,
               individually or in the aggregate, represent a fundamental change
               in the information set forth in the registration statement.
               Notwithstanding the foregoing, any increase or decrease in volume
               of securities offered (if the total dollar value of securities
               offered would not exceed that which was registered) and any
               deviation from the low or high end of the estimated maximum
               offering range may be reflected in the form of prospectus filed
               with the Commission pursuant to Rule 424(b) if, in the aggregate,
               the changes in volume and price represent no more than a 20%
               change in the maximum aggregate offering price set forth in the
               "Calculation of Registration Fee" table in the effective
               registration statement;

               (iii) To include any material information with respect to the
               plan of distribution not previously disclosed in the registration
               statement or any material change to such information in the
               registration statement;

     PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
     the information required to be included in a post-effective amendment by
     those paragraphs is contained in periodic reports filed with or furnished
     to the Commission by the registrant pursuant to Section 13 or 15(d) of the
     Securities Exchange Act of 1934 that are incorporated by reference in the
     registration statement.

     (2)  That, for the purpose of determining any liability under the
          Securities Act of 1933, each such post-effective amendment shall be
          deemed to be a new registration statement relating to the securities
          offered therein, and the offering of such securities at that time
          shall be deemed to be the initial bona fide offering thereof.


                                       21
<PAGE>


     (3)  To remove from registration by means of a post-effective amendment any
          of the securities being registered which remain unsold at the
          termination of the offering.

     (4)  To file a post-effective amendment to the registration statement to
          include any financial statements required by Item 8.A of Form 20-F at
          the start of any delayed offering or throughout a continuous offering.
          Financial statements and information otherwise required by Section
          10(a)(3) of the Act need not be furnished, provided that the
          registrant includes in the prospectus, by means of a post-effective
          amendment, financial statements required pursuant to this paragraph
          (a)(4) and other information necessary to ensure that all other
          information in the prospectus is at least as current as the date of
          those financial statements. Notwithstanding the foregoing, with
          respect to registration statements on Form F-3, a post-effective
          amendment need not be filed to include financial statements and
          information required by Section 10(a)(3) of the Act Item 8.A of Form
          20-F if such financial statements and information are contained in
          periodic reports filed with or furnished to the Commission by the
          registrant pursuant to Section 13 or Section l5(d) of the Securities
          Exchange Act of 1934 that are incorporated by reference in the Form
          F-3.

(b)  The undersigned registrant hereby undertakes that, for purposes of
     determining any liability under the Securities Act of 1933, each filing of
     the registrant's annual report pursuant to Section 13(a) or Section 15(d)
     of the Securities Exchange Act of 1934 (and, where applicable, each filing
     of an employee benefit plan's annual report pursuant to Section l5(d) of
     the Securities Exchange Act of 1934) that is incorporated by reference in
     the registration statement shall be deemed to be a new registration
     statement relating to the securities offered therein, and the offering of
     such securities at that time shall be deemed to be the initial bona fide
     offering thereof.

(c)  Insofar as indemnification for liabilities arising under the Securities Act
     of 1933 may be permitted to the directors, officers and controlling persons
     of the registrant pursuant to the provisions described under "Item 8.
     Indemnification of Directors and Officers" above, or otherwise, the
     registrant has been advised that in the opinion of the Securities and
     Exchange Commission such indemnification is against public policy as
     expressed in the Act and is, therefore, unenforceable. In the event that a
     claim for indemnification against such liabilities (other than the payment
     by the registrant of expenses incurred or paid by a director, officer or
     controlling person of the registrant in the successful defense of any
     action, suit or proceeding) is asserted by such director, officer or
     controlling person in connection with the securities being registered, the
     registrant will, unless in the opinion of our counsel the matter has been
     settled by controlling precedent, submit to a court of appropriate
     jurisdiction the question whether such indemnification by it is against
     public policy as expressed in the Act and will be governed by the final
     adjudication of such issue.


                                       22
<PAGE>


                                   SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form F-3 and has duly caused this Amendment No. 2 to
its registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Misgav, in the State of Israel, on January 10,
2005.

                                      B.O.S. BETTER ONLINE SOLUTIONS LTD.
                              --------------------------------------------------

                         BY:  /s/ Adiv Baruch            /s/ Nehemia Kaufman
                              ---------------------      -----------------------
                       NAME:  Adiv Baruch                Nehemia Kaufman

                      TITLE:  President and Chief        Chief Financial Officer
                              Executive Officer




Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 2 to the Registration Statement has been signed by the following
persons in the capacities and on the dates indicated:


<TABLE>
<CAPTION>

           SIGNATURE                                         TITLE                                      DATE
           ---------                                         -----                                      ----
<S>                                           <C>                                                <C>
               *                              Chairman of the Board of Directors                 January 10, 2005
- ---------------------------------
Mr. Edouard Cukierman



               *                           President and Chief Executive Officer of              January 10, 2005
- ---------------------------------                   the Board of Directors
        Mr. Adiv Baruch                          (Principal Executive Officer)



               *                                    Chief Financial Officer                      January 10, 2005
- ---------------------------------        (Principal Financial and Accounting Officer)
      Mr. Nehemia Kaufman



               *                                           Director                              January 10, 2005
- ---------------------------------
         Mr. Israel Gal



               *                                           Director                              January 10, 2005
- ---------------------------------
        Mr. Yair Shamir




               *                                           Director                              January 10, 2005
- ---------------------------------
        Mr. Ronen Zavlik



               *                                           Director                              January 10, 2005
- ---------------------------------
   Mr. Andrea Mandel-Mantello
</TABLE>


<PAGE>


<TABLE>
<CAPTION>
<S>                                                        <C>                                   <C>
               *                                           Director                              January 10, 2005
- ---------------------------------
       Mr. Avishai Gluck




               *                                           Director                              January 10, 2005
- ---------------------------------
         Dr. Yael Ilan



               *                                           Director                              January 10, 2005
- ---------------------------------
        Prof. Adi Raveh
</TABLE>



AUTHORIZED REPRESENTATIVE IN THE U.S.:
Corporation Service Company

BY:      *
- ----------------------
NAME: David Nickelson

TITLE: Assistant Secretary

DATE: January 10, 2005

*BY /s/ ADIV BARUCH
- -------------------
(ATTORNEY-IN-FACT)





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>2
<FILENAME>exhibit_10-4.txt
<TEXT>

                                                                    EXHIBIT 10.4

                 AMENDMENT NO.1 TO SECURITIES PURCHASE AGREEMENT

                                November 16, 2004

     Reference is hereby made to that certain Securities Purchase Agreement
dated as of June 10, 2004, by and among B.O.S. BETTER ON-LINE SOLUTIONS LTD., a
corporation incorporated under the laws of the State of Israel (p.c. number
520042565) (the "Company"), BOScom Ltd., a corporation incorporated under the
laws of the State of Israel (organizational identification number (51-2236431)
(solely with respect to the representations and warranties pertaining to it)
(the "Subsidiary"), and Laurus Master Fund, Ltd., a Cayman Islands company (the
"Purchaser") (the "Securities Purchase Agreement"). Capitalized terms used but
not defined herein shall have the meanings given them in the Securities Purchase
Agreement.

     WHEREAS, Purchaser, the Company and the Subsidiary desire to clarify
certain aspects of the transaction contemplated by the Securities Purchase
Agreement;

                                    AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises, representations, warranties and covenants hereinafter set forth and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

     The Securities Purchase Agreement is hereby amended to add the following
immediately after the period in the last sentence of section 11.2 thereof:

     "11.3 Remittances. All payments and reimbursements to Purchaser, for its
own account and/or for the benefit of Purchaser, made under this Agreement or
any Related Agreement shall be free and clear of and without deduction for all
taxes, levies, imposts, deductions, assessments, charges or withholdings, and
all liabilities with respect thereto of any nature whatsoever. If the Company
shall be required by law to deduct any such amounts from or in respect of any
sum payable under this Agreement or any Related Agreement to Purchaser, for its
own account, then the sum payable to Purchaser, shall be increased as may be
necessary so that, after making all required deductions, Purchaser receives an
amount equal to the sum it would have received had no such deductions been
made."

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.1 to
the Securities Purchase Agreement effective as of June 10, 2004.

                                           B.O.S. BETTER ON-LINE SOLUTIONS LTD.


                                           By:_________________________________
                                           Name:
                                           Title:


                                           BOSCOM LTD.




                                           By:_________________________________
                                           Name:
                                           Title:

                                           LAURUS MASTER FUND LTD.


                                           By:_________________________________
                                           Name:
                                           Title:

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>3
<FILENAME>exhibit_10-5.txt
<TEXT>


                                                                    EXHIBIT 10.5
                            ASSET PURCHASE AGREEMENT

     THIS ASSET PURCHASE AGREEMENT is dated as of the 29th day of September,
2004 by and among B.O.S Better Online Solutions Ltd., an Israeli company No.
520042565, having its address at Beit Rabin, Teradyon Industrial Park, Misgav
20179, Israel (the "BUYER"); and Quasar Communication Systems Ltd., an Israeli
company No. 511842460, having its address at 2 Pekris Street, Science Park,
Rehovot 76702, Israel (the "SELLER").

     WHEREAS, the Seller is engaged, INTER ALIA, in the business of developing,
manufacturing and selling of cellular communication gateways (the "BUSINESS");
and

     WHEREAS, the Buyer desires to purchase from Seller all of Seller's
activity, assets and rights, tangible and intangible, relating to, or used in
connection with, the Business, which includes, subject to the limitations and
exclusions described bellow in this Agreement, the following: (i) all equipment
of the Seller; (ii) assignment of all ASSIGNABLE agreements of the Seller with
its customers and suppliers, or in connection with the Business, and the
Seller's rights and obligations under said agreements, from the Closing date and
thereafter [together with the confirmation and consent of the parties to said
agreements to such assignment]; (iii) all of Seller's intellectual property
rights and industrial rights (iv) all of Seller's know-how, (v) all of Seller's
technology, (vi) all of Seller's trade secrets, (vii) all of Seller's licenses,
(viii) all of Seller's assignable existing distribution channels and markets;
and (ix) all of Seller's goodwill, all on the terms and conditions, and for the
consideration, set forth herein.

     NOW, THEREFORE, in consideration of the mutual promises and agreements set
forth herein, the Buyer and the Seller agree as follows:

     1. PURCHASE AND SALE.

     1.1. ACQUIRED ASSETS. Subject to the terms and conditions set forth in this
Agreement, at the Closing referred to in Section 4 hereof, the Seller shall
sell, assign, transfer and deliver to the Buyer, and the Buyer shall purchase,
acquire and take assignment and delivery of, all of the assets and rights of the
Seller relating to, or used in connection with, the Business (all of which
assets and rights are hereinafter referred to collectively as the "ACQUIRED
ASSETS"), including, without limitation, the following assets and rights:

          (a) Any and all fixtures, machinery, installations, equipment
     (including, without limitation, all production equipment), hardware,
     software, furniture, tools, spare parts, supplies, materials, product
     lines, fixed assets, and other personal property relating to, or used in
     connection with, the Seller's conduct of the Business, including those
     items described on SCHEDULE 1.1(A) (the "EQUIPMENT");

<PAGE>


          (b) All of the Seller's assignable rights and obligations under the
     purchase orders, contracts and agreements described on SCHEDULE 1.1(B)
     hereto (which Seller represents to constitute all of the purchase orders,
     contracts and agreements of the Seller related to the Business and its
     activity, which are currently in force and effect), and under all other
     purchase orders, contracts and agreements of the Seller entered into in the
     ordinary course of business following the date hereof but prior to the
     Closing, consistent with the Seller's obligations under Section 7 hereof
     (the purchase orders, contracts and agreements referred to in this
     paragraph (b) being referred to collectively as the "OTHER CONTRACTS");

          (c) All of the Seller's rights under license agreements pursuant to
     which the Seller has been granted, and holds, a license (the "LICENSE
     AGREEMENTS"); all of the License Agreements are listed on SCHEDULE 1.1(C);

          (d) All of the Seller's rights under the assignable permits, approvals
     and licenses, both governmental and private, described on SCHEDULE 1.1(D)
     hereto (the "PERMITS");

          (e) All of the Seller's trademarks, trade names, trade secrets,
     corporate names, copyrights, designs, patents, licenses (as licensee or
     licensor), other agreements and applications with respect to the foregoing,
     production records, know how, technical information, manufacturing
     know-how, processes, trade secrets, customer lists, inventions, , product
     processes and techniques, research and development information,
     copyrightable works, trade-names (whether registered or not), mask works,
     logos, the trade names "Quasar", financial, marketing and business data,
     pricing and cost information, business and marketing plans and customer and
     supplier lists and all other intangible assets of any kind, all to the
     extent that they relate to, or are used in connection with, the Business,
     including, without limitation, those described on SCHEDULE 1.1(E) hereto
     (the "INTANGIBLES");

          (Without derogation from the generality of the aforesaid, it is
     agreed, based on the Seller's representation, that the Intangibles include
     all intellectual property rights which enable and/or secure and/or
     facilitate the performance of the Business).

          (f) All of the Seller's, information systems and all other documents
     and records relating to, or used in connection with, the Acquired Assets;

          (g) All of the Seller's rights under the insurance policies described
     on SCHEDULE 1.1(G) hereto (the "INSURANCE POLICIES");


          (h) All of the Seller's assignable distribution channels, markets and
     goodwill associated with the Business.


                                     - 2 -
<PAGE>


     1.2. ACQUIRED INVENTORY. Subject to the terms and conditions set forth in
this Agreement, at the Closing referred to in Section 4 hereof, Seller
undertakes to sell and assign to the Buyer, and the Buyer undertakes to purchase
and acquire, the Inventory (as defined below) of the Seller relating to, or used
in connection with the Business as existed at the Closing . Inventory shall mean
the Seller's inventory specified in SCHEDULE 1.2 hereto, which schedule shall be
approved by physical counting by Buyer, to be completed within 10 days from the
date on which Buyer will receive from Seller its inventory report as of 30
September, 2004. Schedule 1.2 shall reflect the inventory existed on September
30, 2004 as stated on the Company's financial statements dated September 30,
2004 but not including any inventory designated as obsolete on the Company's
financial statements for June 30, 2004.

     2. EXCLUDED ASSETS AND NO ASSUMPTION OF OBLIGATIONS

     2.1. EXCLUDED ASSETS. Notwithstanding the foregoing, the Seller is not
selling and the Buyer is not purchasing, pursuant to this Agreement, and the
term "ACQUIRED ASSETS" shall not include, the following assets (the "EXCLUDED
ASSETS"):

     (a)  the consideration received by the Seller pursuant to this Agreement;
          and

     (b)  the rights of the Seller under this Agreement.

     (c)  All of the Seller's rights and obligations under any lease agreement.

     (d)  Seller's rights and undertakings with respect to Sellers' employees.

     (e)  Seller's rights and obligations whatsoever which are not related to
          the Business;

     (f)  Seller's rights and obligations with respect to the Business and
          Acquired Assets accrued up and until the Closing Date (even if has to
          be performed thereafter) including Seller's accounts receivable and
          account payable;

     (g)  Seller's debts, warranties, guaranties or obligations to 3rd parties,
          other than the customary 6 months warranties to clients;

     (h)  Any item that the Buyer shall refuse to purchase, excluding Other
          Contracts, provided that Buyer refusal shall be forward to Seller in
          writing not later than 45 days from the Closing Date; provided that
          Buyer decision not to purchase any portion or item of the Purchased
          Assets shall have no effect on any of the consideration described in
          Section 3 hereinbelow.

     2.2. EXCLUDED LIABILITIES The Buyer shall not assume, and shall not be
deemed to have assumed, any liability or obligation of the Seller whatsoever,
including, without limitation: (i) any liabilities or obligations for
Indebtedness, (ii) any liabilities or obligations for Taxes, or any liabilities
or obligations relating to any of the Seller's employees, as of the Closing
Date, including any of the Seller's employees hired by the Buyer as of the
Closing Date or thereafter.


                                     - 3 -
<PAGE>


     3. PURCHASE PRICE.

     3.1 CONSIDERATION SHARES. In consideration for the sale, assignment,
transfer and delivery of all of the Acquired Assets (other than the Inventory),
at the Closing referred to in Section 4 hereof, the Buyer will issue to Seller a
share certificate representing 285,000 Ordinary Shares, of Buyer, par value NIS
4.00 each, (the "CONSIDERATION SHARES") free and clear from any claims, liens,
charges, pledges, security interests, encumbrances and any third party rights.
In addition to the consideration under Section 3.2 below, the issuance of said
shares to the Seller shall be the sole consideration, monetary or otherwise, to
be paid by the Buyer and/or to which the Seller may be entitled in connection
with the transactions contemplated in this Agreement. Upon the consummation of
the Closing, the Seller shall have no rights, of any nature, relating to or in
connection with the Business and/or the Buyer, other than its holdings of the
Consideration Shares and the rights attached to the Consideration Shares, as set
out in the Buyer corporate documents. Notwithstanding the said, Seller shall be
granted at the Closing a non revocable, free of any charge license to use the
name Quasar Communication Systems Ltd. for the purposes of securing Seller's
rights with respect to the Business and Acquired Assets accrued up and until the
Closing Date and/or for the purposes of any legal proceedings to which the
Seller is a party to on the Closing Date.

     Subject to the terms and restrictions specified herein, the Consideration
Shares will be subject to an absolute "lock-up" for a period of one year
following the Closing. Notwithstanding the above and subject to any applicable
law, Seller will be entitled to transfer the Consideration Shares or any part
thereof to any of Seller's currently existing shareholders during the lock - up
period provided that each transferee of said Consideration Shares shall be
subject to abovementioned lock-up provision and shall confirm in writing that he
undertakes to comply with such restriction for the said one year period
following the Closing. Furthermore, Seller and Seller's currently existing
shareholders will be entitled to pledge the Consideration Shares or any part
thereof to their creditor banks, provided that each creditor bank will be
subject to all restrictions and lock up period and provided rurther that upon
receipt of the Consideration Shares by Seller, Seller undertake to pledge the
Consideration Shares to Bank Leumi subject to the lifting of its floating charge
on Seller's assets. The lock-up under this agreement is in addition to any
restriction applied by operation of law.

     3.2 PURCHASE OF INVENTORY. Buyer shall purchase from Seller the Inventory,
as defined above, in the ordinary course of business and in accordance with
Buyer's needs for the conducting and operating of the purchased Business, for a
cash consideration equal to the book value of Seller's Inventory as stated on
Schedule 1.2 ("Inventory Consideration"). Seller shall invoice Buyer for each
purchase order of Seller's Inventory, title shall be transferred to Buyer at
each purchase order and payment of the consideration for each order shall be
paid by Buyer at times and in such amounts as shall be determined by mutual
agreement of the parties. The Parties agree that no later then 31 December 2004
they will set the terms of sale and payments (sums and dates of payments) of the
balance between payments actually paid to Seller on account of the Inventory
Consideration until to that date and the Inventory Consideration (the "Balance")
and such Balance shall be paid in full by Buyer to Seller not later than
December 31, 2005.


                                     - 4 -
<PAGE>


     4. CLOSING.

     4.1. TIME AND PLACE. The closing of the the transactions contemplated by
this Agreement (the "CLOSING") shall be held at the offices of Amit, Pollak,
Matalon, & Ben Naftali, Erez & Co., NYP Tower, 19th Floor, 17 Yitzhak Sadeh
Street, Tel Aviv, 67775, Israel, or at such other place as the Buyer and the
Seller may agree, upon the signature on this Agreement. The date on which the
Closing is actually held hereunder is sometimes referred to herein as the
"CLOSING DATE."

     4.2. TRANSACTIONS AT CLOSING. At the Closing, the following actions shall
occur, which actions shall be deemed to take place simultaneously and no action
shall be deemed to have been completed or any document delivered until all such
actions have been completed and all required documents delivered:

          (a) By signing this Agreement the Seller shall duly sell, transfer and
     deliver to the Buyer title to all and ownership on all of the Acquired
     Assets, in each case not subject to any Encumbrance (as defined in Section
     5.9).

          (b) The Buyer shall issue to the Seller, the Consideration Shares.

          (c ) The Buyer shall provide the Seller a true and correct copy of the
     resolutions of the Buyer's Board of Directors authorizing the issuing of
     the Consideration Shares to the Seller pursuant to this Agreement together
     with opinion of legal counsel in this reference as set forth in SCHEDULE
     4.2(C);

          (d) The Seller shall provide the Buyer a true and correct copies of
     resolutions of the Seller's Board of Directors authorizing the transactions
     contemplated under this Agreement;

          (e) The Seller shall deliver to the Buyer the consent of Bank Leumi to
     release its charges from the Acquired Assets in the form attached hereto as
     SCHEDULE 4.2(E);.

          (f) By signing this Agreement each of the parties hereto undertakes to
     do its best efforts to execute and deliver each of the documents required
     to be signed/delivered by such party pursuant to Sections 9 and 10, not
     later than 60 days from the date hereof. Notwithstanding the said, the
     Buyer shall provide the Escrow (as defined in Section 13) a share
     certificate representing the Consideration Shares and shall register the
     allotment of the Consideration Shares to the Seller with the Registrar of
     Companies within 14 days from the date hereof

     5. REPRESENTATIONS AND WARRANTIES OF THE SELLER. Acknowledging that the
Buyer is relying on the representations and warranties set forth in this Section
5, the Seller, 3 Pen Technologies Ltd. and Noa Investments Ltd. (the "Major
Shareholders") hereby represents and warrants to the Buyer as follows:


                                     - 5 -
<PAGE>


     5.1. ORGANIZATION OF SELLER; AUTHORITY. The Seller is a corporation duly
organized and validly existing under the laws of Israel. The Seller has all
requisite power and authority to own and hold the Acquired Assets owned or held
by it, to carry on the Business as such business is now conducted, and to
execute and deliver this Agreement and the other documents, instruments and
agreements contemplated hereby or thereby (collectively, the "TRANSACTION
Documents") to which it is a party and to carry out all actions required of it
pursuant to the terms of the Transaction Documents.

     5.2. CORPORATE APPROVAL; BINDING EFFECT. Prior to the Closing Date, The
Seller will obtain all necessary authorizations and approvals from its Board of
Directors and its Shareholders required for the execution and delivery of the
Transaction Documents to which it is a party and the consummation of the
transactions contemplated hereby and thereby. On the Closing Date each of the
Transaction Documents will be duly executed and delivered by the Seller.

     5.3. NON-CONTRAVENTION. The execution and delivery by the Seller of the
Transaction Documents to which it is a party and the consummation by the Seller
of the transactions contemplated hereby and thereby will not (a) violate or
conflict with any provision of the Memorandum and Articles of Association of the
Seller, each as amended to date; or (b) constitute a violation of, or be in
conflict with, or constitute or create a default under, or, unless otherwise
stipulated in Schedule 5.3, result in the creation or imposition of, any
Encumbrance upon any property of the Seller (including any of the Acquired
Assets) pursuant to (i) any agreement or instrument to which the Seller is a
party or by which the Seller or any of its properties (including any of the
Acquired Assets) is bound or to which the Seller or any of such properties
(including any of the Acquired Assets) is subject, or (ii) any statute,
judgment, decree, order, regulation or rule of any court or governmental or
regulatory authority.

     5.4. GOVERNMENTAL CONSENTS; TRANSFERABILITY OF LICENSES, ETC. To the best
knowledge of the Seller, except as set forth on SCHEDULE 5.4, no consent,
approval or authorization of, or registration, qualification or filing with, any
governmental agency or authority is required for the execution and delivery by
the Seller of the Transaction Documents to which it is a party or for the
consummation by the Seller of the transactions contemplated hereby or thereby.
The Seller has and maintains, and the Permits listed on SCHEDULE 1.1(F) hereto
include, all licenses, permits and other authorizations from all governmental
authorities as to the best knowledge of the Seller, are necessary and/or
desirable for the conduct of the Business and/or in connection with the
ownership or use of the Acquired Assets. Except as expressly designated on
SCHEDULE 5.4, all of the Permits are transferable to the Buyer without any
conditions and/or limitations and the actual transfer thereof to the Buyer
pursuant to the terms hereof shall not in any manner limit and/or otherwise
adversely affect the rights and/or permissions and/or authorizations granted
thereby, and true and complete copies of such Permits have previously been
delivered to the Buyer.


                                     - 6 -
<PAGE>


     5.5. FINANCIAL STATEMENTS. The Seller has delivered the following financial
statements (the "FINANCIAL STATEMENTS") to the Buyer, and they are attached as
SCHEDULE 5.5 hereto. The Financial Statements sets forth a true, correct and
complete copy of the audited financial statement for the fiscal year ended
December 31, 2003 and of reviewed financial statements as of June 30, 2004. The
Company Financial Statements have been prepared in conformity with Israeli
generally accepted accounting principles ("GAAP"), applied on a consistent basis
throughout the periods indicated and with each other. The Company Financial
Statements are consistent in all material respects with the books and records of
the Company and fairly present the position of the Company as of the dates
thereof and the results of operations and cash flows of the Company for the
periods shown therein, subject, in the case of the unaudited financial
statements only, to normal and recurring year end adjustments. Nothing has come
to the attention of the Company since such respective dates that would indicate
that such financial statements are not true and correct in all material respects
as of the dates thereof.

     5.6. ABSENCE OF CERTAIN CHANGES. Except as set forth on SCHEDULE 5.6, since
June 30, 2004, the Seller has carried on its business only in the ordinary
course, and there has not been (a) any material adverse change in the assets,
liabilities, sales, income or business of the Seller or in its relationships
with suppliers, customers or lessors, other than changes which were both in the
ordinary course of business and have not been, either in any case or in the
aggregate, adverse; (b) any acquisition or disposition by the Seller of any
asset or property other than sales of inventory in the ordinary course of
business; (c) any damage, destruction or loss, whether or not covered by
insurance, adversely affecting, either in any case or in the aggregate, the
Business or any of the Acquired Assets; (e) any mortgage, pledge (fixed or
floating), lien, lease, security interest or other charge or encumbrance on any
of the Acquired Assets.

     5.7. LITIGATION, ETC. To the best knowledge of the Seller, except as set
forth on SCHEDULE 5.7 hereto, no action, suit, proceeding or investigation is
pending or threatened, relating to, connected with, or affecting any of the
Acquired Assets or the Business, or which questions the validity of the
Transaction Documents or challenges any of the transactions contemplated hereby
or thereby, nor, to the best knowledge of the Seller, is there any basis for any
such action, suit, proceeding or investigation.

     5.8. CONFORMITY TO LAW. Except as set forth on SCHEDULE 5.8, to the best of
its knowledge, the Seller has complied with, and is in compliance with (a) all
laws, statutes, governmental regulations applicable to the Business or the
Acquired Assets and all judicial or administrative tribunal orders, judgments,
writs, injunctions, decrees or similar commands applicable to the Seller and
which pertain to the Business or any of the Acquired Assets (including any
labor, environmental, occupational health, zoning or other law, regulation or
ordinance) and (b) all unwaived terms and provisions of all contracts,
agreements and indentures to which the Seller is a party and which pertain to
the Business or any of the Acquired Assets, or by which any of the Acquired
Assets is subject. Except as set forth in SCHEDULE 5.8 hereto, the Seller has
not committed, been charged with, or, to the knowledge of the Seller, been under
investigation with respect to, nor does there exist, any violation of any
provision of any federal, state or local law or administrative regulation in
respect of the Business or any of the Acquired Assets.


                                     - 7 -
<PAGE>


     5.9. TITLE TO ACQUIRED ASSETS. The Seller is the lawful sole owner of and
possesses all other rights in, and has good and valid record and marketable
title to, all of the Acquired Assets, and no third party has any rights thereto
or therein. The Seller has the full right to sell, convey, transfer, assign and
deliver the Acquired Assets, without the need to obtain the consent or approval
of any other party, other than the consents and approvals listed on SCHEDULE
5.9. Except for liens described on SCHEDULE 5.9 hereto which secure Indebtedness
and which will be discharged at or prior to the Closing, all of the Acquired
Assets are entirely free and clear of any security interests, liens,
attachments, claims (including claims of the Israeli government or any agency
thereof), charges, options, mortgages, debts, leases (or subleases), conditional
sales agreements, title retention agreements, encumbrances of any kind, defects
as to title or restrictions against the transfer or assignment thereof
(collectively, "ENCUMBRANCES"). All of the Acquired Assets are in good condition
and repair (reasonable wear and tear excepted) and are adequate and sufficient
to carry on the Business as presently conducted and as proposed to be conducted.
At and as of the Closing, the Seller will convey the Acquired Assets to the
Buyer by deeds, bills of sale, certificates of title and other instruments of
assignment and transfer effective in each case to vest in the Buyer, and the
Buyer will have, good and valid record and marketable title to all of the
Acquired Assets, free and clear of all Encumbrances, other than as stated in
SCHEDULE 5.9.

     5.10. REAL PROPERTY; SAFETY, ZONING AND ENVIRONMENTAL MATTERS.

          (a) The Seller owns no real property. The Seller leases its premises
     at 2 Pekris Street, Science Park, Rehovot, Israel, (the "REAL PROPERTY")
     from Rorberg Contructing and Investments (1963) Ltd. (the "Lessor")
     pursuant to a lease agreement dated June 21, 1999 and the amendments
     thereto a true and correct copy of which has been provided to the Buyer
     (the "Lease Agreement"). The Lease Agreement constitutes the full and
     entire agreement relating to the Seller's lease of the Real Property. The
     Seller has fully complied with all of its obligations, covenants and
     undertakings set forth in the Lease Agreement, and the Seller believes that
     the Lessor has fully complied with all of its obligations, covenants and
     undertakings set forth in the Lease Agreement. The Seller has not received
     any notice that either the whole or any portion of the Real Property is to
     be condemned, requisitioned or otherwise taken by public authority.

          (b) Except as set forth on SCHEDULE 5.10:

               (i) the Seller is not in violation or alleged violation of any
          judgment, decree, order, law, license, rule, regulation or ordinance
          pertaining to health, safety or the environment in respect of the
          Business or relating to, or in connection with, any of the Acquired
          Assets (hereinafter "ENVIRONMENTAL LAWS");

               (ii) the Seller has not received notice from any third party,
          including any federal, state or local governmental authority, (A) that
          any hazardous waste, any hazardous substance, any pollutant or
          contaminant or any toxic substance, oil or hazardous material or other
          chemical or substance regulated by any Environmental Laws ("HAZARDOUS
          SUBSTANCES") which the Seller has generated, transported or disposed
          of has been found at any site at which any agency or other third party
          has conducted or has ordered that the Seller conduct a remedial
          investigation, removal or other response action pursuant to any
          Environmental Law; or (B) that the Seller is or shall be a named party
          to any claim, action, cause of action, complaint, (contingent or
          otherwise) legal or administrative proceeding arising out of any third
          party's incurrence of costs, expenses, losses or damages of any kind
          whatsoever related to, or in connection with, the release of Hazardous
          Substances;


                                     - 8 -
<PAGE>


     5.11. EQUIPMENT. SCHEDULE 1.1(B) hereto sets forth a complete and accurate
list of all of the Equipment, and includes all equipment and property owned by
the Seller used in the Business. The Equipment and all other Acquired Assets are
utilized by the Seller in the ordinary course of business.

     5.12. INVENTORIES. The Inventories are fairly reflected on the books of
account of the Seller, stating items of Inventory at the lower of cost or market
value in accordance with GAAP, consistently applied, with adequate allowance for
excessive or obsolete inventories.

     5.13. INSURANCE. SCHEDULE 5.13 hereto lists all policies of fire,
liability, workmen's compensation, life, property and casualty and other
insurance owned or held by the Seller relating to, or connected with, the
Acquired Assets. Such policies of insurance are maintained with financially
sound and reputable insurance companies, funds or underwriters and are of the
kinds and cover such risks and are in such amounts and with such deductibles and
exclusions as are consistent with prudent business practice. All such policies
(a) are in full force and effect, (b) are sufficient for compliance by the
Seller with all requirements of law related to the Acquired Assets and all
agreements to which the Seller is a party in relation thereto, (c) provide that
they will remain in full force and effect through the respective dates set forth
in such Schedule, and (d) will not in any way be affected by, or terminate or
lapse by reason of, the transactions contemplated by this Agreement. The Seller
is not in default with respect to its obligations under any of such insurance
policies and has not received any notification of cancellation of any such
insurance policies.

     5.14. CONTRACTS. SCHEDULE 5.14 sets forth a complete and accurate list of
all contracts to which the Seller is a party or by which the Seller is bound
with respect to any of the Acquired Assets, except contracts entered into in the
ordinary course of business after the date hereof and prior to the Closing,
which will be identified to the Buyer in writing prior to the Closing. As used
in this Section 5.14, the word "CONTRACT" means and includes every agreement or
understanding of any kind, written or oral, and specifically includes (a)
contracts and other agreements with respect to the Acquired Assets with any
current or former officer, director, employee, consultant or shareholder or any
partnership, corporation, joint venture or any other entity in which any such
person has an interest; (b) agreements with any labor union or association
representing any employee whose employment duties relate to, or are connected
with, the Business; (c) contracts and other agreements for the provision of
services by the Seller related to, or connected with, the Business; (d) bonds or
other security agreements provided by any party in relation to, or in connection
with, the Business; (e) contracts and other agreements for the sale of any of
the Acquired Assets other than in the ordinary course of business or for the
grant to any person of any preferential rights to purchase any of the Acquired
Assets; (f) joint venture agreements relating to, or connected with, the
Acquired Assets or the Business or by or to which the Business or any of the
Acquired Assets are bound or subject; (g) any contracts or other agreements with
regard to Indebtedness relating to, or connected with, the Business; or (i) any
other contract or other agreement whether or not made in the ordinary course of
business. The Seller has delivered to the Buyer true, correct and complete
copies of all such contracts, together with all modifications and supplements
thereto. Unless specifically stated otherwise on SCHEDULE 5.14, each of the
contracts listed on SCHEDULE 5.14 hereto or any of the other Schedules hereto is
in full force and effect, the Seller is not in breach of any of the provisions
of any such contract, nor, to the knowledge of the Seller, is any other party to
any such contract in default thereunder, nor does any event or condition exist
which with notice or the passage of time or both would constitute a default
thereunder. The Seller has in all material respects performed all obligations
required to be performed by it to date under each such contract. Subject to
obtaining any necessary consents by the other party or parties to any such
contract (the requirement of any such consent being reflected on SCHEDULE 5.14),
no contract includes any provision the effect of which may be to enlarge or
accelerate any obligations of the Buyer to be assumed thereunder or give
additional rights to any other party thereto or will in any other way be
affected by, or terminate or lapse by reason of, the transactions contemplated
by this Agreement.


                                     - 9 -
<PAGE>


     5.15. EMPLOYMENT MATTERS.

          (a) SCHEDULE 5.15 hereto sets forth a full and accurate description,
     as of the date hereof, of the names, positions and ranks (if any), dates of
     commencement of employment, salaries and terms and conditions of
     employment, of all employees and officers of the Seller that are primarily
     engaged in activities related to, or connected with, the Business. Except
     as set forth in SCHEDULE 5.15 hereto, there is no person or entity
     (including "agents", "distributors", "independent contractors",
     "consultants" or employees or manpower companies or other service
     providers) that may be deemed to be an employee of the Seller who are
     engaged in activities related to, or connected with, the Business.

          (b) With respect to the employees listed on SCHEDULE 5.15 hereto,
     individually and in the aggregate, no event has occurred and no condition
     or set of circumstances exists in connection with which the Seller could be
     subject to any liability that could have an adverse effect on the Business.

          (c) Except as set forth in SCHEDULE 5.15 hereto, there is no labor
     strike, slowdown or stoppage pending (or, to the best knowledge of the
     Seller, any labor strike or stoppage threatened or contemplated) against or
     affecting the Seller, and there have been no disputes between the Seller
     and any number or category of employees listed on SCHEDULE 5.15 hereto and
     there are no present circumstances which are reasonably likely to give rise
     to any such dispute.


                                     - 10 -
<PAGE>


     5.16. TRADEMARKS, PATENTS, ETC. SCHEDULE 5.16 (1) hereto sets forth a
complete and accurate list of all of the Seller's trademarks, trade names, trade
secrets, corporate names, copyrights, designs, patents, licenses (as licensee or
licensor), other agreements and applications with respect to the foregoing,
production records, technical information, manufacturing know-how, processes,
trade secrets, customer lists, and other intangible assets of any kind, all to
the extent that they are related to, or connected with, the Business. Except to
the extent set forth in SCHEDULE 5.16 (1), the Seller owns or has the sole,
exclusive, unlimited and perpetual (subject to applicable law) right to use all
patents, trademarks, trade names and copyrights listed thereon, and has the
right, without restrictions, to use all technology, inventions, know-how and
processes, used, necessary and/or desirable for conducting the Business as
presently conducted and as proposed to be conducted, and the consummation of the
transactions contemplated hereby will not alter or impair any such right. Except
as set forth in SCHEDULE 5.16 (2), no claims have been asserted, and no claims
are pending, by any person regarding the use of any such patents, trademarks,
trade names, copyrights, technology, know-how or processes, or challenging or
questioning the validity or effectiveness of any license or agreement, and, to
the knowledge of the Seller, there is no basis for such claim. To the best of
its knowledge, the use by the Seller of such patents, trademarks, trade names,
copyrights, technology, inventions, know-how or processes in the ordinary course
of the Business (as currently conducted and as contemplated to be conducted)
does not infringe on the rights of any person. With respect to each item of
Intellectual Property that the Company uses pursuant to a license, sublicense,
agreement, or permission, to the best knowledge of the Company: (i) the license,
sublicense, agreement, or permission covering the item is legal, valid, binding,
enforceable, and in full force and effect; (ii) the license, sublicense,
agreement, or permission will continue to be legal, valid, binding, enforceable,
and in full force and effect on identical terms following the Closing; (iii) no
party to the license, sublicense, agreement, or permission is in breach or
default, and no event has occurred which with notice or lapse of time would
constitute a breach or default or permit termination, modification, or
acceleration thereunder; (iv) no party to the license, sublicense, agreement, or
permission has repudiated any provision thereof; (v) with respect to each
sublicense, the representations and warranties set forth in subsections (i)
through (iv) above are true and correct with respect to the underlying license;
(vi) the underlying item of Intellectual Property is not subject to any
outstanding injunction, judgment, order, decree, ruling, or charge; and (vii) no
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand is pending or, to the knowledge of the Company is threatened which
challenges the legality, validity, or enforceability of the underlying item of
Intellectual Property. The Company did not grant any sublicense or similar right
with respect to any such license, sublicense, agreement, or permission.

     5.17. SUPPLIERS AND CUSTOMERS. SCHEDULE 5.17 hereto sets forth the
suppliers and customers of the Business as of the date hereof. The relationships
of the Seller with such suppliers and customers are good commercial working
relationships and, except as set forth on SCHEDULE 5.17, no supplier or customer
of material importance to the Business has cancelled or otherwise terminated, or
threatened to cancel or otherwise to terminate, its relationship with the Seller
or has during the last twelve (12) months decreased materially, or threatened to
decrease or limit materially, its services, supplies or materials for use in the
Business or its usage or purchase of the services or products of the Seller
except for normal cyclical changes related to customers' businesses. The Seller
has no knowledge that any such supplier or customer intends to cancel or
otherwise substantially modify its relationship with the Seller or to decrease
materially or limit its services, supplies or materials supplied to the Seller,
or its usage or purchase of the Seller's services or products, and to the
knowledge of the Seller, the consummation of the transactions contemplated
hereby will not adversely affect the relationship with any such supplier or
customer.


                                     - 11 -
<PAGE>


     5.18. ACQUIRED ASSETS COMPLETE. The Acquired Assets, when utilized with a
labor force substantially similar to that currently employed by the Seller who
are engaged in the Business, are adequate and sufficient to conduct the Business
as currently conducted and as proposed to be conducted by the Buyer.

     5.19. NO UNDISCLOSED LIABILITIES. Except to the extent (a) incurred in the
ordinary course of business, or (b) described on any Schedule hereto, the Seller
has no material liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise (including as guarantor or otherwise with
respect to obligations of others) related to, or in connection with, the
Business or the Acquired Assets.

     5.20. TAXES. Neither the Income Tax Authority of the State of Israel nor
any other taxing authority is now asserting or threatening to assert against the
Seller any deficiency or claim for additional Taxes or interest thereon or
penalties in relation thereto, or in connection therewith, or any adjustment
that would have an adverse effect on the Business.

     5.21. BROKER. The Seller has not retained, utilized or been represented by
any broker, agent, finder or intermediary in relation to, or connection with,
the negotiation or consummation of the transactions contemplated by this
Agreement.

     5.22. POTENTIAL CONFLICTS OF INTEREST. Except as set forth on SCHEDULE
5.22, no officer, director of the Seller, 3 Pen Technologies Ltd. nor Noa
Investments Ltd. (a) engage, anywhere in the world, in any business organization
that is engaged or becomes engaged in activities which are directly competitive
with the Business or is an officer, director, employee or consultant of any
Person which is a competitor, lessor, lessee, customer or supplier of the
Seller; (b) owns, directly or indirectly, in whole or in part, any tangible or
intangible property which the Seller is using or the use of which is necessary
for the business of the Seller; or (c) has any cause of action or other claim
whatsoever against, or owes any amount to, the Seller.

     5.23. INDEBTEDNESS. Except for Indebtedness described on SCHEDULE 5.23
hereto, the Seller has no Indebtedness outstanding at the date hereof with
respect to the Business or the Acquired Assets. Except as disclosed on SCHEDULE
5.23 hereto, the Seller is not in default with respect to any outstanding
Indebtedness with respect to the Business or the Acquired Assets or any
instrument relating thereto, or connected therewith. Complete and correct copies
of all material instruments (including all amendments, supplements, waivers and
consents) relating to, or in connection with, any Indebtedness of the Seller
with respect to the Business or the Acquired Assets have been furnished to the
Buyer.


                                     - 12 -
<PAGE>


     5.24. DISCLOSURE. No representation or warranty by the Seller in this
Agreement or in any exhibit, schedule, written statement, certificate or other
document delivered or to be delivered to the Buyer pursuant hereto or in
connection with the consummation of the transactions contemplated hereby
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact required to be stated therein or necessary to
make the statements contained therein not misleading or necessary in order to
provide the Buyer with proper and complete information as to the Seller and the
identity, value and usability of the Acquired Assets. There is no fact relating
to, or in connection with, the Acquired Assets or the Business which may
materially and adversely affect the same and which has not been disclosed to the
Buyer in writing.

     5.26. GOVERNMENT GRANT PROGRAMS. SCHEDULE 5.26 hereto provides a complete
list of all pending and outstanding grants, tax benefits, incentives and
subsidies from the Government of the State of Israel or any agency thereof, or
from any foreign governmental or administrative agency, to the Seller related
to, or connected with, the Business or the Acquired Assets (collectively,
"GRANTS") including (i) Approved Enterprise Status granted by the Investment
Center and programs related thereto or connected therewith, and (ii) grants from
the Office of the Chief Scientist (the "OCS") and programs relating thereto or
connected therewith. The Seller has made available to the Buyer, prior to the
date hereof, correct copies of all applications for Grants submitted by the
Seller and of all letters of approval, and supplements thereto, granted to the
Seller related to, or in connection with, the Acquired Assets or the Business as
well as copies of all material correspondence with agencies which have provided
a Grant. SCHEDULE 5.26 details all material undertakings of the Seller given in
relation to, or connection with, the Grants. Without limiting the generality of
the above, SCHEDULE 5.26 includes the aggregate amounts of each Grant, and the
aggregate outstanding obligations thereunder of the Seller with respect to
royalties, or the outstanding amounts to be paid by the OCS to the Seller, and
the composition of such obligations or amount by the product or product family
that it relates to or is in connection with. The Seller is in full compliance
with the terms and conditions of the Grants and related programs and, except as
disclosed in SCHEDULE 5.26, has duly fulfilled all of its undertakings and
covenants relating thereto or in connection therewith. The Seller is not aware
of any event or other set of circumstances which might lead to the revocation or
material modification of any of the Grants.

     5.27 SCHEDULES. The parties agree that any and all schedules called for
under this Section shall be provided within 14 days of the date hereof, which
schedules shall reflect substantially the same information previously provided
to the Buyer, with the required updates resulting from the ordinary course of
business.

     6. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents and
warrants to the Seller as follows:

     6.1. ORGANIZATION OF BUYER; AUTHORITY. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Israel. The Buyer has all requisite power and authority to execute and deliver
the Transaction Documents to which it is a party and to carry out all of the
actions required of it pursuant to the terms of such Transaction Documents.


                                     - 13 -
<PAGE>


     6.2. CORPORATE APPROVAL; BINDING EFFECT. Subject to the other terms of this
Agreement the Buyer has obtained all necessary authorizations and approvals
required for the execution and delivery of the Transaction Documents to which it
is a party and the consummation of the transactions contemplated hereby and
thereby. Each of the Transaction Documents to which the Buyer is a party has
been duly executed and delivered by the Buyer and constitutes the legal, valid
and binding obligation of the Buyer, enforceable against the Buyer in accordance
with its terms, except as enforceability thereof may be limited by any
applicable bankruptcy, reorganization, insolvency or other laws affecting
creditors' rights generally or by general principles of equity.

     6.3. NON-CONTRAVENTION. The execution and delivery by the Buyer of the
Transaction Documents to which it is a party and the consummation by the Buyer
of the transactions contemplated hereby and thereby will not (a) violate or
conflict with any provisions of the articles of association of the Buyer; or (b)
constitute a violation of, or be in conflict with, constitute or create a
default under, or result in the creation or imposition of any lien upon any
property of the Buyer pursuant to (i) any agreement or instrument to which the
Buyer is a party or by which the Buyer or any of its properties is bound or to
which the Buyer or any of its properties is subject, or (ii) any statute,
judgment, decree, order, regulation or rule of any court or governmental
authority to which the Buyer is subject.

     6.4. GOVERNMENTAL CONSENTS. Other than as specified in SCHEDULE 6.4
hereunder, no consent, approval or authorization of, or registration,
qualification or filing with, any governmental agency or authority is required
for the execution and delivery by the Buyer of the Transaction Documents to
which it is a party or for the consummation by the Buyer of the transactions
contemplated hereby or thereby and the Buyer undertakes to receive all such
consent, approvals and authorizations within 60 days hereof.

     6.5. BROKER. The Buyer has not retained, utilized or been represented by
any broker, agent, finder or other intermediary in relation to, or connection
with, the negotiation or consummation of the transactions contemplated by this
Agreement.

     6.6 DUE DILIGENCE REVIEW. The Buyer's legal, financial and technical due
diligence review of the Business and the Acquired Assets have been completed.


     7. REPRESENTATIONS AND UNDERTAKINGS REGARDING THE CONSIDERATION SHARES

     7.1 INFORMATION AND ADVISE. The Seller confirms that it has received or
has had access to the information it considers necessary or appropriate to make
an informed decision with respect to this Agreement and the Consideration Shares
received by it hereunder. The Seller further confirms that it has had an
opportunity to ask questions and receive answers from the Buyer regarding the
Buyer's business, management and financial affairs and to obtain additional
information (to the extent the Company possessed such information or could
acquire it without unreasonable effort or expense) necessary to verify any
information furnished to the Seller or to which the Seller had access.


                                     - 14 -
<PAGE>


     7.2 AVAILABILITY OF EXEMPTIONS. The Buyer hereby represents to the Seller
that the Consideration Shares are being offered pursuant to an exemption or
exemptions from registration requirements of Israeli and US Federal and state
securities laws. The Seller understands that the Buyer is relying upon the truth
and accuracy of such Seller's representations, warranties, agreements,
acknowledgments and understandings set forth herein in order to determine the
applicability of such exemptions and the suitability of such Seller to receive
the Shares.


     7.3 LEGENDS. The Seller acknowledges and agrees that certificates
representing the Consideration Shares will contain one or more legends to the
effect that transfer of such securities is prohibited except pursuant to
registration under the Securities Act or pursuant to an available exemption from
registration:


          ""THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
          UNDER THE SECURITIES ACT OF 1933.. THE SHARES HAVE BEEN ACQUIRED FOR
          INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, IN THE ABSENCE
          OF AN EFFECTIVE REGISTRATION STATEMENT FOR THESE SHARES UNDER THE
          SECURITIES ACT OF 1933 OR, AN OPINION OF THE COMPANY"S COUNSELTHAT
          SUCH REGISTRATION IS NOT REQUIRED UNDER SAID ACT. IN ADDITION, THESE
          SHARES ARE SUBJECT TO A NO SALE COMMITMENT AND MAY NOT BE SOLD,
          TRANSFERRED, ASSIGNED, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR
          OTHERWISE DISPOSED OF, BEFORE SEPTEMBER 29,2005 WITHOUT THE PRIOR
          WRITTEN CONSENT OF B.O.S. BETTER ON-LINE SOLUTIONS LTD. ANY PURPORTED
          SALE OR DISPOSITION IN CONTRIVANCE OF THE ABOVE SHALL BE DEEMED VOID
          AND HAVE NO EFFECT ""

     7.4 CONTROL OVER THE SELLER. the Seller to the Buyer a complete and
detailed list of individuals who have or share voting and/or investment control
over the Seller for the limited purpose of providing such information by the
Buyer to the Office of Chief Scientist (the "OCS") and the Investment Center of
the Ministry of Industry, Trade and Labor (the "Investment Center"), whose
approvals of the transaction contemplated hereby are a condition to the Buyer's
obligations hereunder. The Seller shall update such list as reasonably requested
by the Buyer, to comply with any request for such information from any
regulatory body, including, without limitation the OCS and the Investment
Center.

     7.5 RESTRICTIONS ON TRANSFERABILITY AND HEDGING.


                                     - 15 -
<PAGE>


          7.5.1 The Seller understands that (i) the Consideration Shares have
     not been registered under the Securities Act of 1933, or under the laws of
     any other jurisdiction; (ii) such Consideration Shares are deemed to be
     "restricted securities" as defined in Rule 144 promulgated under the
     Securities Act, and cannot be sold, transferred or otherwise disposed of
     unless they are registered under the Securities Act and, where required,
     under the laws of other jurisdictions or unless an exemption from
     registration is then available; (iii) there is now no registration
     statement on file with the Securities and Exchange Commission with respect
     to the Consideration Shares to be received by such Seller.

          7.5.2 The Seller acknowledges that the Buyer will not register any
     transfer of Consideration Shares not made pursuant to registration under
     the Securities Act, or pursuant to an available exemption from registration
     or made in contravention of the lock-up provisions below.

          7.5.3 The Seller acknowledges, agrees and covenants not to engage in
     hedging transactions with regard to the Consideration Shares offered
     pursuant to this Agreement.

     7.6 OFFSHORE TRANSACTION. The Seller is not a "U.S. Person", as such term
is defined in Regulation S under the Securities Act of 1933, its principal
address is outside the United States and it has no present intention of becoming
a resident of (or moving its principal place of business to) the United States.
The Seller was located outside the United States at the time any offer to sell
and any other action in connection with such offer and sale was made to it and
at the time that the buy order was originated by the Seller. The Consideration
Shares are being acquired solely for such Seller's own account, and in no event
and without derogating from the foregoing, for the account or the benefit of a
U.S. person.

     7.7 INVESTMENT PURPOSES. The Consideration Shares are being acquired for
investment purposes. The Consideration Shares are not being purchased with a
view to, or for sale in connection with, any distribution or other disposition
thereof. The Seller has no present plans to enter into any contract,
undertaking, agreement or arrangement for any such resale, distribution or other
disposition and it will not divide its interest in the Consideration Shares with
others, resell or otherwise distribute the Consideration Shares in violation of
federal or state US Securities laws or the Israeli Securities Laws.

     7.8 LOCK UP. For a period of one year from the Closing the Seller shall not
sell, assign, transfer, pledge, hypothecate, mortgage or otherwise encumber or
impose any lien upon the Consideration Shares or dispose of, by gift or
otherwise any of the Consideration Shares, subject to Section 3.1 above.


     7.9 PIGGY-BACK REGISTRATION. If the Buyer, at any time starting from the
first anniversary of the date hereof and ending on the second anniversary of
this Agreement, shall determine to prepare and file with the Securities and
Exchange Commission a registration statement relating to an offering of its
equity securities, for its own account or the account of others (except with
respect to registration statements on Form F-4, Form S-8 or another form not
available for registering shares for sale to the public), each such time it will
give written notice to all holders of the Consideration Shares (the "Holders")
of its intention to do so. The Buyer shall, upon the written request of Holders,
received by the Buyer within 7 days after the giving of any such notice by the
Buyer, to register in the aggregate at least 50,000 Consideration Shares, use
its best efforts to cause such Consideration Shares to be included in the
registration statement proposed to be filed by the Buyer. In the event that any
registration pursuant to this Section shall be, in whole or in part, an
underwritten public offering, and the managing underwriter advises the Buyer
that the inclusion of all of the Consideration Shares requested to be included
in such registration would interfere with the successful marketing (including
pricing) of the offering, then the number of Consideration Shares to be included
in the offering shall be cut-back accordingly. Notwithstanding the foregoing
provisions, the Buyer may withdraw any registration statement referred to in
this Section without thereby incurring any liability to the Holders.


                                     - 16 -
<PAGE>


     7.10 NO SOLICITATION. At no time was the Seller presented with or solicited
by any leaflet, public promotional meeting, newspaper or magazine article, radio
or television advertisement or any other form of general advertising or general
solicitation in connection with the Consideration Shares and the transaction
contemplated hereby.

     7.11 BROKER-DEALER. The Seller is not a broker-dealer, nor is it an
affiliate of any broker-dealer.

     7.12 DISCLOSURE. The representations and warranties of the Seller contained
in this Section 7 as of the date hereof and as of the Closing, do not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated herein or necessary to make the statements herein, in
light of the circumstances under which they are made, not misleading. The Seller
understands and confirms that the Company will rely on the foregoing
representations in effecting the transaction contemplated hereby and other
transactions in securities of the Buyer.

     8. CONDUCT OF BUSINESS AFTER CLOSING. It is agreed that for a period of
time commencing on the Closing Date and ending not later than December 31, 2004,
Buyer shall conduct the Business acquired hereunder, and at Buyer's discretion,
it may conduct the Business through the Seller which shall act as Buyer's
sub-contractor and in full compliance with Buyer's instructions to be provided
from time to time, provided that all expenses in related to such instructions
shall be exclusively on the account of Buyer. Therefore Seller covenants and
agrees that from the Closing, except as otherwise specifically consented to or
approved by the Buyer in writing:

     8.1. FULL ACCESS. The Buyer shall have full access to all properties,
books, records, patents, patent filings (including all patent prosecution
documents), patent office actions, licenses and sub-licenses, research and
development agreements, vendor contracts and consulting agreements, contracts
and documents of the Seller relating to, or in connection with, the Business
and/or the Acquired Assets, and the Seller shall furnish or cause to be
furnished to the Buyer and its authorized representatives all assistance and
information with respect to the Acquired Assets and/or the Business as may be
requested.


                                     - 17 -
<PAGE>


     8.2. CARRY ON IN REGULAR COURSE. The Seller shall maintain the Acquired
Assets and Inventory in good operating condition and repair, and make all
necessary renewals, additions and replacements thereto provided that Buyer shall
bear all costs and expenses, and shall assist Buyer to enable Buyer to carry on
the Business diligently and substantially in the same manner as heretofore, in
the ordinary course consistent with past practice, and Buyer shall be entitled
to use all Seller's facilities and assets with no restriction whatsoever. Buyer
shall be entitled to use any of Seller's trade names (including Quasar
Communications or any similar name). Upon Buyer's request Seller shall give its
consent and approval to any Authority or Registrar in order to enable Buyer to
register a company, or trade name, as the case may be, using the name Quasar
Communications or any similar name. Not later then 31.12.2005 Seller shall
change its name and will ceased to use the name of Quasar (other as permitted
hereunder).

     8.3 SELLER'S EMPLOYEES. Seller shall outsource its employees listed on
SCHEDULE 8.3 hereto to Buyer. Any Seller's employees so selected by Buyer will
dedicate all of his work time to Buyer's affairs without being considered as
Buyer's employee. Notwithstanding the said, such employees will assist Seller in
the collection of all accounts receivable from Seller's customers. Any
resignation of Seller's employee shall not constitute breach of Seller's
obligation under this Section. In the event that Buyer shall decide not to
receive outsourcing services of any of the employees listed on Schedule 8.3,
Buyer shall provide Seller in advance and in writing with names of such
Employee. The term of such advance notice shall not be shorter then the term of
the advance notice which such employee is entitled to receive under his
employment agreement with Seller, provided, however, that Buyer shall be
notified in advance by Seller of those Employees, whose term of the required
advanced notice exceeds 30 days. Buyer shall reimburse Seller, in cash, for the
full cost of the salaries and benefits, not later then the date in which such
salaries and benefits shall be paid by the Seller (but not severance payments
and payments in lue of advanced notice) of the employees employed by Seller for
Buyer ,plus V.A.T. during the term in which such employees are outsourced. For
any payment under this Section 8.3 Seller shall issue to buyer an Invoice
("Cheshbonit Mass"). At all time Buyer is permitted to employ any of Seller's
Employees.

     Subject to applicable cogent law, the Seller shall not grant any general or
uniform increase in the rates of pay of employees of the Seller engaged in the
performance of the Business, nor grant any general or uniform increase in the
benefits under any bonus or pension plan or other contract or commitment to, for
or with any such employees; and the Seller shall not increase the compensation
payable or to become payable to any employee relating to, or connected with, the
Business, or increase any bonus, insurance, pension or other benefit plan,
payment or arrangement made to, for or with any such employee.

     During the 24_months period following the Closing, neither Seller nor its
Affiliates and any of its Major Shareholders and their respective Affiliates
("First Party"), shall directly or indirectly solicit or encourage any officer,
employee or consultant of Buyer or any of its Affiliates or subsidiaries
("Second Party") to leave its employment/engagement for employment/engagement by
or with such First Party or any competitor of the Second Party.

     8.4. INSURANCE. With respect to the Acquired Assets and Designated Area and
until all insurance policies assigned to Buyer, or new insurance policies issued
to Buyer, as the case may be, the Seller shall not terminate the insurance
described on SCHEDULE 5.13. The Buyer shall not renew any insurance policies
unless requested to do so by Buyer and provided that Buyer bears all costs and
expenses in relation to such renewals.


                                     - 18 -
<PAGE>


     8.5. NO DEFAULT. The Parties shall not do any act or omit to do any act, or
permit any act or omission to act, which will cause a material breach of any
contract, commitment or obligation of the Seller or Buyer with respect to the
Acquired Assets, or otherwise related to, or in connection with, the Business
and shall assist Buyer with the assignment of all agreements and other contracts
from Seller to Buyer .

     8.6. CONSENTS OF THIRD PARTIES. The Seller will employ its best efforts to
secure the consent, in form and substance satisfactory to the Buyer to the
consummation of the transactions contemplated by this Agreement by each party to
any of the Other Contracts, License Agreements, Permits, and Insurance Policies.

     9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. The obligation of the Buyer
to consummate the Closing shall be subject to the satisfaction at or prior to
the Closing of each of the following conditions (to the extent noncompliance is
not waived in writing by the Buyer):

     9.1. COMPLIANCE WITH AGREEMENT. The Seller shall have performed and
complied with all of its obligations and covenants under this Agreement to be
performed or complied with by it on or prior to the Closing Date.

     9.2. NO CHANGE. The Acquired Assets and the Business shall not have been,
and shall not be threatened to be, adversely affected in any way whatsoever.

     9.3. OPINION OF COUNSEL. ______________, counsel to the Seller, shall have
delivered to the Buyer a written opinion, addressed to the Buyer and dated as of
the Closing Date, substantially in the form of SCHEDULE 9.5 hereto.

     9.4. APPROVALS. All corporate and other approvals in relation to, or
connection with, the transactions contemplated by this Agreement and the form
and substance of all certificates and other documents delivered hereunder shall
be reasonably satisfactory in form and substance to the Buyer and its counsel
and Seller shall deliver to Buyer a true and correct copy of a resolution of the
Board of Directors of the Seller, approving this Agreement and the transactions
contemplated hereby.

     9.5. NO LITIGATION. No restraining order or injunction shall prevent the
transactions contemplated by this Agreement and no action, suit or proceeding
shall be pending or threatened before any court or administrative body: (a) in
which it will be or is sought to restrain or prohibit or obtain damages or other
relief relating to, or in connection with, this Agreement or the consummation of
the transactions contemplated hereby or (b) relating to, or in connection with,
any claim for damages against the Seller which has implications on the
transactions contemplated hereby.

     9.6. DISCHARGE OF ENCUMBRANCES. Each Encumbrance on any of the Acquired
Assets described on SCHEDULE 5.9 hereto shall have been discharged.


                                     - 19 -
<PAGE>


     9.7. CONSENTS OF THIRD PARTIES. The Seller shall have obtained the consent,
in form and substance satisfactory to the Buyer and the Buyer's counsel, to the
consummation of the transactions contemplated by this Agreement by each party to
any of the License Agreements, Permits, and Insurance Policies, under which
consummation of such transactions without obtaining such consent would: (i)
constitute a breach or a default; (ii) create obligations of the Buyer, (iii)
permit cancellation of any such, Other Contracts, License Agreements, Permits,
or Insurance Policies; or (iv) prevent the lawful and full transfer of one or
more Acquired Assets to the Buyer.

     9.8. PROCEEDINGS AND DOCUMENTS SATISFACTORY. All proceedings relating to,
or in connection with, the transactions contemplated by this Agreement and all
certificates and documents delivered to the Buyer which relate to, or are in
connection with, the transactions contemplated by this Agreement shall be
satisfactory in all respects to the Buyer and the Buyer's counsel, and the Buyer
shall have received the originals or certified or other copies of all such
records and documents as the Buyer may reasonably request.

     9.9. GOVERNMENT APPROVALS. The Seller will have obtained all required
approvals from Governmental authorities, including the OCS and the Investment
Center of the Ministry of Industry and Trade.

     9.10 Notwithstanding the above, the parties agree that the time for
compliance with the conditions set froth under sections 9.3-9.8____-- shall be
extend to 60 days after the Closing and Closing shall not be deemed contingent
upon or subject to their fulfillment.

     9.11 Seller shall furnish to Buyer Seller's reviewed financial statements
for the period ending September 30, 2004 upon receipt of same by Seller.

     10. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS. The obligation of the
Seller to consummate the Closing shall be subject to the satisfaction, at or
prior to the Closing, of each of the following conditions (to the extent
noncompliance is not waived in writing by the Seller):

     10.1. COMPLIANCE WITH AGREEMENT. The Buyer shall have performed and
complied with all of its obligations and covenants under this Agreement that are
to be performed or complied with by it at or prior to the Closing.

     10.2 APPROVALS. Buyer's Board of Directors has approved, and certain
creditors consented to, the transactions contemplated hereunder. Buyer has
obtained all applicable regulatory approvals (including, without any
limitations, Investment Center, OCS & Tel-Aviv Stock Exchange). All corporate
and other approvals in relation to, or connection with, the transactions
contemplated by this Agreement and the form and substance of all certificates
and other documents delivered hereunder shall be reasonably satisfactory in
substance to the Seller and its counsel and Buyer shall deliver to Seller a true
and correct copy of a resolution of the Board of Directors of the Seller,
approving this Agreement and the transactions contemplated hereby.


                                     - 20 -
<PAGE>


     10.3. OPINION OF COUNSEL. ______________, counsel to the Seller, shall have
delivered to the Seller a written opinion, addressed to the Buyer and dated as
of the Closing Date, substantially in the form of SCHEDULE 10.4 hereto.

     10.4. NO LITIGATION. No restraining order or injunction shall prevent the
transactions contemplated by this Agreement.

     10.5 Notwithstanding the above, the parties agree that the time for
compliance with the conditions set froth under sections 10.2 & 10.3 shall be
extend to 60 days after the Closing and Closing shall not be deemed contingent
upon or subject to their fulfillment.

     11. CERTAIN COVENANTS AND ARRANGEMENTS.

     11.1. CONFIDENTIAL INFORMATION. The Seller, 3 Pen Technologies, Mr. Shimon
Mamo, Noa Investments Ltd. And each of their respective officers, directors and
shareholders, hereby agree to keep in strict confidence any and all information
of a confidential nature which is related to, or connected with, the Business
and/or any of the Acquired Assets ("Confidential Information"), including,
without limitation, financial information, customers, suppliers, sales
representatives, and anything else having an economic or pecuniary benefit to
the Buyer. The Seller agrees and covenants not to use any Confidential
Information for any purpose whatsoever, and not to disclose any Confidential
Information to any third party. Notwithstanding the aforesaid, no provision of
this Agreement shall be construed to preclude such disclosure of Confidential
Information as may be required by court order or applicable law, provided that:
(i) prior notice of such contemplated disclosure (including reasonable details
relating thereto) is provided to the Buyer as early as practicably possible; and
(ii) such disclosure is effected only to the minimum extent required. This
Section 11.1 shall survive the termination or expiration of this Agreement.

     11.2. NON-COMPETITION. The Seller, its Affiliates (as defined below), the
Major Shareholders and each of their respective officers, directors and Major
Shareholders' shareholders shall not: (i) engage, anywhere in the world, in any
business organization that is engaged or becomes engaged in activities which are
directly competitive with the Business, or (ii) divert to any competitor of the
Buyer (or a subsidiary thereof) any customer of the Buyer (or a subsidiary
thereof) or otherwise interfere with the business relationships of the Buyer and
its subsidiaries. This Section 11.2 shall apply during the period commencing
upon the Closing Date and terminating upon the later of: (i) the expiration of
24 months from the Closing Date; The Seller shall be responsible for it's
Affiliates' full compliance with the provisions of this Section 11.2.

     11.3. ENFORCEABILITY. If at any time the provisions of Section 11.1 or
Section 11.2 shall be determined to be invalid or unenforceable, by reason of
being vague, unreasonable as to area, duration or scope of activity or similar
reasons, the applicable Section shall be considered divisible and shall become
and be immediately amended to only such area, duration and scope of activity as
shall be determined to be reasonable and enforceable by the court or other body
having jurisdiction over the matter; and it is hereby agreed that such Section
as so amended shall be valid and binding as though any invalid or unenforceable
provision had not been included therein.


                                     - 21 -
<PAGE>


     11.4 RENTAL ARRANGEMENT. The Buyer undertakes to pay to the Seller all the
lease fees under the Lease Agreement, for the term commences at the Closing and
ended on the end of June 2005, such payments shall be executed no later than the
dates in which the Seller shall pay such fees to the lessor under the Lease
Agreement. The Seller hereby agrees that subject to the terms of the Lease
Agreement, as long as Buyer conducting the Business in Seller current premises
and until the end of June 2005, the Buyer will be entitled to use, at the
Buyer's option, the Seller's facility. The area of the Seller's facility which
may be used by the Buyer (the "Designated Area") shall be the same area which is
currently occupied by the Business. Until the end of the calendar year 2004, the
Designated Area shall not be occupied by, or otherwise used by, the Seller or
any other party. In addition, Buyer shall pay to Seller the applicable
municipality taxes levied on the Designated Area until the end of June 2005 and
all direct expenses related thereto i.e. telephone, electricity and water
expenses, etc. Such payments shall be excuted and delivered to Seller no later
than the dates in which Seller shall pay such payments to the relevant third
parties and authorities.

     12. INDEMNIFICATION.

     12.1. INDEMNITY BY THE SELLER. The Seller hereby agrees to indemnify and
hold the Buyer harmless from and with respect to any and all claims,
liabilities, losses, damages, costs and expenses, including the reasonable fees
and disbursements of counsel (collectively, the "LOSSES"), related to, or
arising out of any of the following:

          (a) any failure or any breach by the Seller of any representation or
     warranty, covenant, obligation or undertaking made by the Seller in or
     pursuant to this Agreement (including the Schedules and Exhibits hereto) or
     any other statement, certificate or other instrument delivered pursuant
     hereto;

          (b) any claim, liability, obligation or damage with respect to the
     Excluded Liabilities, including, without limitation, the following:

               (i) any contractual product warranty claims arising out of
          defects in any product sold or manufactured by the Seller prior to the
          Closing Date; or

               (ii) any claim, obligation or liability arising in relation to,
          or in connection with, the employment or termination of employment of
          any persons involved in the conduct of the Business on, before or
          after the Closing Date, including any workmen's compensation claims,
          any employee grievances, any liabilities with respect to pension,
          medical or other employment benefits and any liabilities (including
          contingent liabilities) for accrued vacation, sick leave, bonus or
          severance payments for the period of employment of said employee by
          the Seller (including those who performed services to Buyer through
          the outsourcing of Seller).


                                     - 22 -
<PAGE>


     12.2. CLAIMS.

          (a) NOTICE. Buyer seeking indemnification from the Seller hereunder
     (the "INDEMNIFIED PARTY") shall promptly notify the Seller in writing (the
     "INDEMNIFYING PARTY") of any action, suit, proceeding, demand or breach (a
     "CLAIM") with respect to which the Indemnified Party claims indemnification
     hereunder, PROVIDED that failure of the Indemnified Party to give such
     notice shall not relieve the Indemnifying Party of its obligations under
     this Section 12 except to the extent, if at all, that such Indemnifying
     Party shall have been prejudiced thereby.

          (b) THIRD PARTY CLAIMS. If such Claim relates to, or is in connection
     with, any action, suit, proceeding or demand instituted against the
     Indemnified Party by a third party (a "THIRD PARTY CLAIM"), the
     Indemnifying Party shall be entitled to participate in the defense of such
     Third Party Claim after receipt of notice of such claim from the
     Indemnified Party. Within thirty (30) days after receipt of notice of a
     particular matter from the Indemnified Party, the Indemnifying Party may
     assume the defense of such Third Party Claim, in which case the
     Indemnifying Party shall have the authority to negotiate, compromise and
     settle such Third Party Claim.

     The Indemnified Party shall retain the right to employ its own counsel and
     to participate in the defense of any Third Party Claim, the defense of
     which has been assumed by the Indemnifying Party pursuant hereto, but the
     Indemnified Party shall bear and shall be solely responsible for its own
     costs and expenses relating to, or in connection with, such participation.

          (c) 3 Pen Technologies Ltd. and Noa Investments Ltd. shall undertake
     to indemnify the Seller subject to the conditions and limitations described
     above in this Section 12 and subject further to the following terms,
     provided that the aggregate sum of Buyer's Losses accounts to more than
     $100,000:

               (1) Buyer delivered 3 Pen Technologies and Noa Investments Ltd.
          each Claim and Third Party Claim simultaneously with the notice given
          to the Seller;

               (2) Buyer used all available actions against the Seller in oreder
          to enforce its rights under this Section and nevertheless was not
          fully indemnified by the Seller;

               (3) 3 Pen Technologies Ltd. shall be liable to indemnify Buyer
          only for 58% of the sums which it will be entitled to be indemnified
          by the Seller and in any case the liability of 3 Pen Technologies Ltd
          under this Section 12 shall not exceed US$290,000;


                                     - 23 -
<PAGE>


               (4) Noa Investments Ltd. shall be liable to indemnify Buyer only
          for 13% of the sums which it will be entitled to be indemnified by the
          Seller and in any case the liability of Noa Investments Ltd. under
          this Section 12 shall not exceed US$65,000;

     13. Escrow. The Buyer shall deposit the Share certificate representing the
Consideration Shares in escrow with Avital, Dromi & Co. Advocates which shall
release such certificate to the Sellers only upon the delivery to the Buyer of
all the Schedules to this Agreement.

     14. DEFINITIONS. As used herein the following terms not otherwise defined
have the following respective meanings:

     "AFFILIATE": As applied to any Person (as defined in this Section 14), any
Person controlling, controlled by or under common control with such Person.

     "CONTROL": With respect to any Person, the direct or indirect ownership of
more than 50% of the voting or income interest in such Person or the possession
otherwise, directly or indirectly, of the power to direct the management or
policies of such Person.

     "PERSON": A corporation, an association, a partnership, a limited liability
company, an organization, a business, an individual, a government or political
subdivision thereof or a governmental agency.

     "TAX": Any federal, state, local, foreign and other income, profits,
franchise, capital, withholding, unemployment insurance, social security,
occupational, production, severance, gross receipts, value added, sales, use,
excise, real and personal property, occupancy, transfer, employment, disability,
workers' compensation or other similar tax, duty, fee, assessment or other
governmental charge (including all interest and penalties thereon and additions
thereto).


                                     - 24 -
<PAGE>


     15. GENERAL.

     15.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Seller contained in this Agreement or otherwise made in
writing in relation to, or in connection with, the transactions contemplated
hereby shall, notwithstanding any investigation by the Buyer, be deemed to have
been relied on by the Buyer, and they shall survive the Closing Date and the
consummation of the transactions contemplated herein.

     Whenever a Representation is made "TO THE SELLER'S KNOWLEDGE" or is
qualified by any similar expression, the Seller shall be deemed: (i) to have
made due and careful inquiries about the facts stated in such Representation,
with the assistance (as the case may be) of any knowledgeable person within the
Seller, before making such a Representation; and (ii) to have knowledge of any
Breach of Representations if any or should reasonably have knowledge of such
Breach at the date of this Agreement.

     A legal entity (including any of the Parties as applicable) shall be deemed
to have knowledge of a particular fact if any of the directors, executive
officers or other executives or officers of the legal entity has knowledge or
should reasonably have knowledge of that fact.


                                     - 25 -
<PAGE>


     15.2. EXPENSES. Each party shall bear its legal fees and any other fees
incurred by it in connection with the transaction hereunder, including in
connection with the negotiations, due diligence and preparation of this
Agreement.

     15.3. STAMP TAX. The Parties shall bear, in equal parts, all stamp duty or
taxes which might resulted from the transaction/s contemplated hereunder
(including stamp duty with respect to the issuance of the Consideration Shares).

     15.4. NOTICES. All notices, demands and other communications hereunder
shall be in writing or by written telecommunication, and shall be deemed to have
been duly given if delivered personally or if mailed by certified or registered
mail, return receipt requested, postage prepaid, or if sent by overnight
courier, or sent by written telecommunication, as follows:

         If to the Buyer, to:

                  B.O.S Better Online Solutions Ltd.
                  Beit Rabin, Teradyon Industrial Park,
                  Misgav 20179, Israel
                  Attn: Mr. Adiv Boneh

         with a copy sent contemporaneously to:

                  Amit, Pollak, Matalon, & Co.
                  NYP Tower - 19th Floor
                  17 Yitzhak Sadeh Street
                  Tel Aviv, 67775, Israel
                  Facsimile:  972-3-5613620

                  Attn: Shlomo Landres, Adv.

         If to the Seller, to:

                  Quasar Communication Systems  Ltd
                  c/o 3 Pen Technologies Ltd.
                  3 Hchilason St. Ramat Gan
                  Facsimile:

                  Attn: Amiram Goldman

         If to 3 Pen Technologies Ltd:
         3 Pen Technologies Ltd.
                  3 Hchilason St. Ramat Gan
                  Facsimile:
                  Attn: Amiram Goldman


                                     - 26 -
<PAGE>


         If to NOA INVESTMENTS LTD.:

                  NOA INVESTMENTS LTD.
                  Habarzel St.
                  Kiriat Atidim Tel-Aviv
                  Att: Zohar Polovin

Any such notice shall be effective (a) if delivered personally, when received,
(b) if sent by reputable courier, the date of delivery by such courier, and (c)
if sent by facsimile, when transmitted with written confirmation of transmission
having been received.

     15.5. ENTIRE AGREEMENT. This Agreement contains the entire understanding of
the parties, supersedes all prior agreements and understandings relating to the
subject matter hereof and shall not be amended except by a written instrument
hereafter signed by both of the parties hereto.

     15.6. GOVERNING LAW. The validity and construction of this Agreement shall
be governed by and construed in accordance with the laws of the State of Israel.
Any dispute arising under or in relation to this Agreement shall be resolved in
the competent court of Tel Aviv-Jaffa district only, and each of the parties
hereby submits irrevocably to the exclusive jurisdiction of such court.

     15.7. SECTIONS AND SECTION HEADINGS. The headings of sections and
subsections are for reference only and shall not limit or control the meaning
thereof.

     15.8. ASSIGNS. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, successors and
permitted assigns. Neither this Agreement nor the obligations of any party
hereunder shall be assignable or transferable by such party without the prior
written consent of the other party hereto; PROVIDED, HOWEVER, that nothing
contained in this Section 14.7 shall prevent the Buyer, without the consent of
the Seller, from transferring or assigning this Agreement or its rights (but not
the obligations) hereunder, or any portion thereof, to an Affiliate of the
Buyer.

     15.9. SEVERABILITY. In the event that any covenant, condition, or other
provision herein contained is held to be invalid, void, or illegal by any court
of competent jurisdiction, the same shall be deemed to be severable from the
remainder of this Agreement and shall in no way affect, impair, or invalidate
any other covenant, condition, or other provision contained herein.

     15.10. FURTHER ASSURANCES. The parties agree, without any additional
consideration, to take such reasonable steps and execute such other and further
documents as may be necessary or appropriate to cause the terms and conditions
contained herein to be carried into effect.

     15.11. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.


                                     - 27 -
<PAGE>


     15.12. BEST EFFORTS TO SATISFY CLOSING CONDITIONS. The Seller and the Buyer
will use their best efforts to effect the Closing, as set forth herein. In no
event will either party bear any liability whatsoever (whether vis-a-vis the
other party or any third parties) in the event that it will elect not to
consummate the transactions contemplated herein if one or more of the conditions
to effect the Closing hereunder is not fully satisfied in a timely manner.

     15.13. PUBLICITY. Except as is necessary for governmental notification
purposes or to comply with applicable laws and regulations or to enforce its
rights under this Agreement, and except as otherwise agreed to by the parties
hereto in writing, the Seller shall (a) keep the material terms of this
Agreement confidential and (b) obtain the prior written consent of the Buyer to
any public announcement relating to the transactions contemplated by this
Agreement, including the text and the exact timing of any such announcement.

     15.14 INTERPRETATION. Words such as "herein", "hereinafter", "hereof" and
"hereunder" refer to this Agreement as a whole and not merely to a section or
paragraph in which such words appear, unless the context otherwise requires. The
singular shall include the plural, unless the context otherwise requires.
Whenever the word "include", "includes" or "including" appears in this
Agreement, it shall be deemed in each instance to be followed by the words
"without limitation."

     15.15 RULES OF CONSTRUCTION. The parties agree that they have participated
equally in the formation of this Agreement and that the language and terms of
this Agreement shall not be construed against any party by reason of the extent
to which such party or its professional advisors participated in the preparation
of this Agreement.


                                     - 28 -
<PAGE>


     IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have caused this Agreement to be duly executed and delivered as of the
date and year first above written.


                                             B.O.S BETTER ONLINE SOLUTIONS LTD


                                             By:________________________________
                                             Name:
                                             Title:


                                             QUASAR COMMUNICATION SYSTEMS  LTD.


                                             By:________________________________
                                             Name:
                                             Title:


                                             3 PEN TECHNOLOGIES LTD.

                                             By:________________________________
                                             Name:
                                             Title




                                             NOA INVESTMENTS LTD.

                                             By:________________________________
                                             Name:
                                             Title


                                     - 29 -



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>4
<FILENAME>exhibit_10-6.txt
<TEXT>

                                                                    EXHIBIT 10.6

                            SHARE PURCHASE AGREEMENT

     This Agreement (the "AGREEMENT") is made as of November 2, 2004, by and
among the persons and entities whose names and addresses are set out in SCHEDULE
A hereto (collectively the "SELLERS"); B.O.S Better Online Solutions Ltd., an
Israeli company No. 520042565, having its address at Beit Rabin, Teradyon
Industrial Park, Misgav 20179, Israel, or an affiliate thereof (the
"PURCHASER"); and Odem Electronic Technologies 1992 Ltd., an Israeli company
No.51-1687402, having its address at 20 Frieman Jacob Street, Rishon Le-Zion,
75358, Israel (the "COMPANY").

                              W I T N E S S E T H :

     WHEREAS, the Sellers are the owners of 75% of the issued and outstanding
capital share in the Company; and

     WHEREAS, the Sellers wish to sell to the Purchaser, in the aggregate, 137
ordinary shares of the Company, nominal value NIS 0.1 each (the "COMPANY
SHARES") reflecting 51.11%, as of Closing (as defined below), of the issued and
outstanding shares in the Company; and

     WHEREAS, The Purchaser wishes to acquire such Company Shares in the Company
in accordance with the terms of this Agreement; and

     WHEREAS, the Board of Directors of the Company agrees to the transfer of
the Company Shares, as set forth below;

     NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the parties hereby agree as follows:

1.   SALE AND PURCHASE OF SHARES.

     1.1  GENERAL. Each Seller, severally and not jointly, listed in SCHEDULE A
          shall sell, at the Closing, to Purchaser and the Purchaser shall
          purchase, at the Closing, all rights, title and interest in each
          Seller's Sold Shares (as defined below) on the terms of this
          Agreement, free from all claims, liens, charges, pledges, security
          interests, encumbrances and third party rights of any kind (the
          "SECURITY INTERESTS"), other than as currently existing under the
          Articles (as defined below), as shall be amended by the Amendment (as
          defined below), together with all rights, preferences and privileges
          attaching to, or conferred by, them. "SOLD SHARES" shall mean, in
          relation to a Seller, the Company Shares set forth opposite such
          Seller's name in SCHEDULE A.

     1.2  CONSIDERATION. Subject to Closing, the Purchaser shall, in
          consideration for the purchase from each Seller of the Sold Shares:
          (i) issue to the relevant Seller ordinary shares nominal value NIS
          4.00 each, of the Purchaser, as set forth in SCHEDULE A (the
          "CONSIDERATION SHARES"), reflecting a share price of $3.08 per
          Consideration Share and (ii) pay to the relevant seller cash in the
          amount set forth in SCHEDULE A hereto (the "CASH PAYMENT").

<PAGE>

2.   CLOSING OF SHARE EXCHANGE.

     2.1  CLOSING. The closing of the sale and purchase of the Sold Shares of
          each Seller listed in SCHEDULE A shall take place at a closing (the
          "CLOSING"), which will be held at the offices of Amit, Pollak, Matalon
          & Ben-Naftali, Erez & Co., Advocates and Notary, NYP Tower, 19th
          Floor, 17 Yitzhak Sadeh St., Tel-Aviv 67775 fourteen (14) days from
          the date hereof or on such other date, time and place as the Purchaser
          and the Sellers shall mutually agree, subject to the fulfillment to
          the Purchaser's satisfaction, or waiver of the conditions detailed in
          Section 10 below, and subject further to the fulfillment to the
          Sellers' satisfaction, or waiver, of the conditions detailed in
          Section 11 below.

     2.2  TRANSACTIONS AT CLOSING. At the Closing, the following transactions
          shall occur, which transactions shall be deemed to take place
          simultaneously and no transaction shall be deemed to have been
          completed or any document delivered until all such transactions have
          been completed and all required documents delivered:

          2.2.1 The Sellers and the Company shall deliver, or procure the
               delivery, to the Purchaser of the following documents:

               a.   Duly executed share transfer deeds with respect to the
                    transfer of all the Sold Shares to the Purchaser;

               b.   A true and correct copy of resolutions of the Board of
                    Directors of the Company, approving this Agreement and the
                    transactions contemplated hereby;

               c.   A validly executed share certificate covering the Sold
                    Shares, issued in the name of the Purchaser;

               d.   A certified copy of the Company's Shareholders Register,
                    updated to reflect the transfer of all of the Sold Shares to
                    the Purchaser. Promptly after the Closing, the Company shall
                    make all filings and registrations as may be necessary to
                    reflect such transfer and shall deliver copies thereof to
                    the Purchaser.

               e.   A certificate, duly executed by an executive officer of the
                    Company, dated as of the date of the Closing, confirming
                    that the representations and warranties made in Section 4
                    were true and correct in all material respects when made and
                    are true and correct in all material respects on and as of
                    the Closing Date, as though made on the Closing Date, and
                    that the Company has performed in all material respects all
                    obligations required under this Agreement to be performed by
                    it on or before the Closing;

               f.   Certificates of each of the Sellers dated as of the date of
                    the Closing, confirming that the representations and
                    warranties made in Section 3,4 and 5 were true and correct
                    in all material respects when made and are true and correct
                    in all material respects on and as of the Closing Date, as
                    though made on the Closing Date.

               g.   Signed opinion of Kantor & Co. counsel to the Company and
                    Sellers in the form attached hereto as EXHIBITS 2.2.1(G) ,
                    dated as of the date of the Closing and addressed to the
                    Purchaser.

               h.   Resignation letters signed by Ms. Sara Neuhof, resigning
                    from the Board of Directors of the Company, effective as of
                    the Closing.


                                     - 2 -
<PAGE>

               i.   A duly executed employment agreement between Jacob Neuhof
                    and the Company in the form attached as EXHIBIT 2.2.1(I)
                    hereto.

               j.   A true and correct copy of resolutions of the Company's
                    shareholders, properly and duly adopted resolving to amend
                    the Company's current articles of association (the
                    "ARTICLES"), in the form attached hereto as EXHIBIT 2.2.1(J)
                    (the "AMENDMENt"). The Amendment shall include the increase
                    of the size of the Board of Directors to at least 5
                    directors and revisions to Article 32 and 32A of the
                    Articles, as more fully provided in EXHIBIT 2.2.1(J).

               k.   A a copy of a duly completed notice of the abovementioned
                    amendment to the Articles to be filed with the Israeli
                    Registrar of Companies immediately following the Closing, in
                    the form attached as EXHIBIT 2.2.1(K).

               l.   A waiver executed by Mr. Avidan Zelichovski ("Zelichovski"),
                    waiving any and all rights to receive options in the
                    Company. Purchaser shall issue to Zelichovski 73,000
                    ordinary shares of the Purchaser and grant Zelichovski
                    options to receive 73,000 ordinary shares of the Purchaser
                    (the "BOS OPTIONS"). The BOS options shall be issued under
                    the Purchaser's Stock Option Plan and pursuant to
                    Purchaser's standard Stock Option Agreement.

               m.   Duly Executed Stock Option Agreement by Zelichovski with
                    respect to the BOS Options, in the form attached hereto as
                    EXHIBIT 2.2.1(M) (the "AVIDAN OPTION AGREEMENT").

               n.   Waivers executed by Telsys Ltd. ("TELSYS"), waiving any and
                    all rights they may have with respect to the transfer of the
                    Sold Shares at the Closing, in the form attached hereto as
                    EXHIBIT 2.2.1(N);

               o.   A waiver executed by Seller, waiving any and all rights it
                    may have with respect to the sale and transfer of the
                    Company Shares at the Closing from Telsys to Purchaser, in
                    the form attached as EXHIBIT 2.2.1(O).

               p.   Copies of correspondence with Bank Leumi (the "BANK") with
                    respect to the continuance, post Closing, of the existing
                    credit facility extended by the Bank to the Company,
                    attached as EXHIBIT 2.2.1(P).

               q.   A copy of an agreement, effective as of the Closing,
                    terminating each of the agreement and memorandum entered
                    into between the Sellers and Telsys on September 27, 2000,
                    in the form attached as EXHIBIT 2.2.1(Q).

          2.2.2 The Purchaser shall deliver to the Sellers the following
               documents:

               A.   True and correct copies of resolutions of the Purchaser's
                    Board of Directors approving the transaction contemplated
                    hereby, the issuance of the Consideration Shares and the
                    transfer of the Cash Payment to the Sellers in accordance
                    with Exhibit A hereto, against the transfer to the Purchaser
                    of the Sold Shares, free and clear from any Security
                    Interest;

               B.   Validly executed share certificates covering the
                    Consideration Shares, issued in the names of the applicable
                    Sellers;

               C.   A certified copy of the Purchaser's Shareholders Register,
                    updated to reflect the issuance of all of the Consideration
                    Shares to the applicable Sellers. Promptly after the
                    Closing, the Purchaser shall make all filings and
                    registrations as may be necessary to reflect such issuance
                    and shall deliver copies thereof to the Sellers.


                                     - 3 -
<PAGE>

               D.   A certificate duly executed by an executive officer of the
                    Purchaser, dated as of the date of the Closing, confirming
                    that the representations and warranties made by the
                    Purchaser in Section 6 were true and correct when made and
                    are true and correct in all material respects on and as of
                    the Closing Date, as though made on the Closing Date.

               E.   Avidan Option Agreement duly executed by Purchaser in the
                    form attached hereto as EXHIBIT 2.2.1(M);

               F.   A copy of all of the approvals and consents of any
                    governmental authority or agency, including, without
                    limittion, the OCS, the Investment Center (as such terms are
                    defined in Section 5.4 below) and the Laurus Master Fund
                    Ltd., needed in order to enter into and/or consummate the
                    transactions contemplated hereby.

          2.2.3 The Purchaser shall commence the transfer of the Cash Payment to
               the Sellers by wire transfer in immediately available funds to
               the account of the Sellers, the details of which appear in
               EXHIBIT 2.2.3 hereto. Such payment shall be made in U.S. dollars
               .

          2.2.4 The Purchaser shall deliver to the Company a written notice of
               the appointment of three directors to the Company's Board of
               Directors.

3.   REPRESENTATIONS AND WARRANTIES OF EACH SELLER.

     Each Seller, severally and not jointly, represents and warrants to the
     Purchaser as follows:

     3.1  It is the holder and legal owner of all rights, titles and interests
          in and to the Sold Shares set forth opposite its name in SCHEDULE A,
          free from all Security Interests, other than as set forth in the
          Company's Articles, as shall be amended by the Amendment, together
          with all rights, preferences and privileges attaching to, or conferred
          by, such Sold Shares;

     3.2  Other than as set forth in SCHEDULE 3.2, such Seller is not entitled
          to purchase, receive or otherwise acquire from the Company any
          additional securities of the Company, including without limitation
          securities exercisable or convertible into securities of the Company.

     3.3  The execution and delivery of this Agreement (and the other documents
          contemplated hereby) by such Seller does not, and the consummation of
          the transactions contemplated hereby and thereby will not:

          (a)  constitute a breach of any applicable law, rule or regulation of
               any government applicable to such Seller;

          (b)  require the consent or agreement of any court, governmental body
               or entity that has not been, or will not have been, obtained by
               such Seller prior to the Closing;

          (c)  violate any material contract, agreement, indenture, mortgage,
               instrument, lease, license, arrangement, or undertaking of such
               Seller;

          (d)  result in the creation or enforcement of any Security Interest
               upon the Sold Shares held by such Seller;


                                     - 4 -
<PAGE>

          (e)  to the best of knowledge, violate or conflict with any judgment,
               order, injunction, decree, or ruling of any court or governmental
               authority to which the Seller is subject

     3.4  It has, and will have at the Closing, the right to sell and transfer,
          or procure the sale and transfer of, the full legal and beneficial
          interest in its respective Sold Shares to the Purchaser on the terms
          set out in this Agreement, free from all Security Interests, subject
          to such consents and approvals contemplated hereby and which shall
          have been obtained by the Closing.

4.   REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY. The Company and each
     Seller, severally and jointly, hereby represent and warrant to the
     Purchaser as follows:

     4.1  ORGANIZATION. Each of the Company and its subsidiary, Ruby-Tech, Inc.
          ("RUBY-TECH") is a private company, duly incorporated and validly
          existing under the laws of its state of incorporation, and has full
          corporate power and authority to own, lease and operate its properties
          and assets and to conduct its business as currently being conducted
          and as currently proposed to be conducted. The Company has all
          requisite power and authority to execute and deliver this Agreement
          and to consummate the transactions contemplated hereby. A copy of the
          Company's Certificate of Incorporation and Articles as in effect
          immediately prior to the Closing are attached hereto as SCHEDULE 4.1.
          Each of the Company and Ruby-Tech has all permits, licenses, and any
          similar authority necessary for the conduct of its business as
          currently being conducted by it, and the Company believes that it can
          obtain, without undue burden or expense, all permits, licenses, and
          any similar authority necessary for the conduct of its and Ruby-Tech's
          business as planned to be conducted. Each of the Company and Ruby-Tech
          is not in material default under any of its current franchises,
          permits, licenses, or other similar authorities. Each of the Company
          and Ruby-Tech has not taken any action or failed to take any action,
          which such action or failure would preclude or prevent the Company or
          Ruby-Tech, as the case may be, from conducting its business after the
          Closing in the manner heretofore conducted, or as currently proposed
          to be conducted.

     4.2  SHARE CAPITAL.

          4.2.1 The Company's authorized share capital as of the date hereof is
               NIS 3,000,000. On the date hereof and immediately after the
               Closing, such authorized share capital is and will be divided
               into 30,000,000 Ordinary Shares, of which 268 Ordinary Shares are
               issued and outstanding.

          4.2.2 All issued and outstanding share capital of the Company has been
               duly authorized and validly issued, is fully paid and
               non-assessable, free and clear of any Security Interest.

          A capitalization table showing the division of the issued and
          outstanding share capital of the Company immediately prior to the
          Closing (on a Fully Diluted Basis, as defined below) is attached as
          SCHEDULE 4.2.2. Unless specifically specified otherwise in such
          Schedule, the shareholders identified in such Schedule are, to the
          best of knowledge, the shareholders of the Company immediately prior
          to the Closing, and are the lawful record owners of all of the issued
          and outstanding share capital of the Company. As used in this
          Agreement, the expression "on a Fully Diluted Basis" means (i) all
          issued and outstanding shares of the Company, including all Ordinary
          Shares of the Company, and (ii) all options, warrants, convertible
          debentures and other rights to acquire or purchase Ordinary Shares or
          exchangeable for Ordinary Shares or other shares deemed exercised, and
          (iii) all options under any incentive plan and shares reserved for
          issuance to the Company's existing and future employees, consultants
          and directors, deemed granted and exercised.

                                     - 5 -
<PAGE>

          4.2.3 Except as set forth in SCHEDULE 4.2.2 or in the Company's
               Articles, there are no outstanding warrants, options or other
               rights to subscribe for, purchase or acquire from the Company or
               from Ruby-Tech any shares or other securities of the Company, and
               there are no agreements or undertakings providing for the
               issuance of, or the granting of the rights to acquire from the
               Company or from Ruby - Tech any shares or other securities of the
               Company or Ruby-Tech or under which the Company or Ruby-Tech is
               or may become obligated to issue any of its shares or securities.

          4.2.4 The Sold Shares, when issued to the Sellers were duly
               authorized, validly issued, fully paid, non-assessable, and free
               of any preemptive rights, and when transferred in accordance with
               this Agreement will have the rights, preferences, privileges and
               restrictions set forth in the Company's Articles, as amended by
               the Amendment.

          4.2.5 Except as set forth in SCHEDULE 4.2.5, and to the best of
               knowledge, there are no shareholders agreements, voting
               agreements, registration rights agreements or any other
               agreements or undertakings relating to the share capital of the
               Company.

          4.2.6 Except as set forth in SCHEDULE 4.2.6, since its incorporation,
               there has been no declaration or payment by the Company of
               dividends, or any distribution by the Company of any assets of
               any kind to any of its shareholders in redemption of, or as the
               purchase price for, any of the Company's securities.

          4.2.7 The Company is not under any obligation to register for trading
               on any securities exchange any of its currently outstanding
               securities or any of its securities, which may hereafter be
               issued.

     4.3  SUBSIDIARIES. SCHEDULE 4.3 lists all of the subsidiaries of the
          Company, including their respective places of incorporation. The
          Company's share ownership in each Subsidiary is described in SCHEDULE
          4.3, and such shares are held by the Company free and clear of all
          Security Interests. For the purpose of this Section, the term
          "Subsidiary" means any corporation or other business entity of which
          the Company owns all of its outstanding capital stock. Except as
          listed in SCHEDULE 4.3, the Company does not own shares, equity or
          other rights in any other company or corporation (in any
          jurisdiction), is not a partner in any partnership (general or
          limited, incorporated or unincorporated), and is not a party to any
          joint venture activity.

     4.4  BOARD OF DIRECTORS AND OFFICERS. A list of the directors and officers
          of the Company and of Ruby-Tech is included in SCHEDULE 4.4. Except as
          set forth in SCHEDULE 4.4, neither the Company nor the Sellers, or to
          the best of knowledge, Telsys, are parties to any agreement,
          obligation or commitment with respect to: (i) the election of any
          individual or individuals to the Board, (ii) any voting agreement or
          other arrangement among the Company's shareholders, or (iii) any
          compensation to be provided to any of the Company's directors or
          officers.

     4.5  RECORDS. The minute books of the Company and of Ruby-Tech, which have
          been provided to the Purchaser, contain accurate and complete copies
          of the minutes of every meeting of the Company's and Ruby-Tech's
          respective shareholders and Board of Directors (and any committee
          thereof, if any). No resolutions have been passed, enacted, consented
          to or adopted by the Board of Directors (or any committee thereof) or
          by the shareholders of the Company of or Ruby-Tech, except for those
          contained in such minute books. The corporate records of the Company
          and of Ruby-Tech are complete and accurate in all material respects.
          All registers required to be kept by the Company under the provisions
          of the Companies Law - 1999 are complete, true and accurate. All
          returns, particulars, resolutions and other documents required to be
          filed with or delivered to the Registrar of Companies in respect of
          the Company have been properly filed or delivered.

                                     - 6 -
<PAGE>

     4.6  FINANCIAL STATEMENTS.

          4.6.1 SCHEDULE 4.6.1 sets forth a true, correct and complete copy of
               the audited financial statement for the fiscal year ended
               December 31, 2003 and of reviewed financial statements as of June
               30, 2004 (collectively, the "COMPANY FINANCIAL STATEMENTS"). The
               Company Financial Statements have been prepared in conformity
               with the generally accepted accounting principles ("GAAP"),
               applied on a consistent basis throughout the periods indicated
               and with each other. The Company Financial Statements are
               consistent in all material respects with the books and records of
               the Company and fairly present the position of the Company as of
               the dates thereof and the results of operations and cash flows of
               the Company for the periods shown therein, subject, in the case
               of the unaudited financial statements only, to normal and
               recurring year end adjustments. Nothing has come to the attention
               of the Company or the Seller since such respective dates that
               would indicate that such financial statements are not true and
               correct in all material respects as of the dates thereof. The
               Company shall use its best efforts to promptly provide Purchaser
               with its financial statements for the fiscal years 2002 and 2003,
               reconciled to U.S. GAAP.

          4.6.2 Except as set forth in SCHEDULE 4.6.2, during the period
               commencing on December 31, 2003 and ending on the date hereof,
               there has not been any of the following :

               4.6.2.1 any material adverse change in the financial condition,
                    results of operations, assets, liabilities or business of
                    the Company or of Ruby-Tech;

               4.6.2.2 any liability or obligation of any nature whatsoever
                    incurred by the Company, other than (i) the Company
                    Liabilities (as defined in Section 4.11.2), and (ii)
                    obligations under contracts and commitments incurred in the
                    ordinary course of business and are not required under GAAP
                    to be reflected in the Company Financial Statements, which,
                    individually or in the aggregate, the Company represents,
                    are not material to the financial condition or operating
                    results of the Company;

               4.6.2.3 any material asset or property of the Company or
                    Ruby-Tech made subject to a Security Interest of any kind;

               4.6.2.4 any waiver of any material right of the Company or
                    Ruby-Tech, or any cancellation of any material debt or claim
                    held by the Company or Ruby-Tech;

               4.6.2.5 any payment of dividends on, or other distributions with
                    respect to, any shares of the capital stock of the Company,
                    or any agreement or commitment therefor;

               4.6.2.6 any issuance of any shares of any class by the Company;

               4.6.2.7 any sale, assignment, transfer or lease of any tangible
                    or intangible assets (including intellectual property
                    rights) of the Company, except for sales, assignments,
                    transfers or leases of assets which are not material
                    (individually or in the aggregate) to the Company's
                    business, in the ordinary course of business;

               4.6.2.8 any loan by the Company or Ruby-Tech to any officer,
                    director, employee, consultant or shareholder of the Company
                    or Ruby-Tech or any agreement or commitment therefor other
                    than routine travel or loans made to employees who are not
                    directors or shareholders of the Company, in the ordinary
                    course of business;


                                     - 7 -
<PAGE>

               4.6.2.9 any material damage, destruction or loss (individually or
                    in the aggregate) (whether or not covered by insurance)
                    affecting the assets, property or business of the Company or
                    of Ruby-Tech;

               4.6.2.10 any substantial change in the accounting methods,
                    practices or policies followed by the Company;

               4.6.2.11 any material change or amendment to a material contract
                    or arrangement by which the Company or Ruby-Tech or any of
                    their respective assets or properties is bound or to which
                    the Company, Ruby-Tech or any of their respective assets is
                    subject;

               4.6.2.12 any satisfaction or discharge of any claim or Security
                    Interest except in the ordinary course of business.

               4.6.2.13 any material change in any compensation arrangement or
                    agreement with any director, officer, employee, consultant,
                    advisor or contractor of the Company or Ruby-Tech.

     4.7  AUTHORIZATION; APPROVALS.

          4.7.1 All corporate action on the part of the Company necessary for
               the authorization, execution, delivery and performance of all its
               obligations under this Agreement and for the transfer of the Sold
               Shares under this Agreement has been (or will be) taken prior to
               the Closing.

          4.7.2 This Agreement, when executed, and delivered by the Company and
               by each of the Sellers, shall constitute the valid and legally
               binding obligation of the Company and of each of the Sellers,
               enforceable against the Company or each Seller, as the case may
               be, in accordance with its terms. No consent, approval, order,
               license, permit, action by, or authorization of or from any
               person or entity or filing with any governmental authority on the
               part of the Company or any Seller is required that has not been,
               or will not have been, obtained by the Company or such Seller
               prior to the Closing in connection with the valid execution,
               delivery and performance of this Agreement or the transfer of the
               Sold Shares to the Purchaser.

     4.8  COMPLIANCE WITH LAW AND OTHER INSTRUMENTS.

          4.8.1 To the best of knowledge, each of the Company and Ruby-Tech has
               conducted its business in accordance with all material applicable
               laws and regulations to which it is subject.

          4.8.2 Each of the Company and Ruby-Tech is not (a) in a default under
               its Articles or other formative documents, or (b) to the best of
               knowledge, in material default under any material note,
               indenture, mortgage, lease, agreement, contract, license,
               research and development commitment, purchase order or other
               instrument, document or agreement to which it is a party or by
               which it or any of its property is bound or affected or (c) To
               the best of knowledge, in material default with respect to any
               existing applicable law, statute, ordinance, regulation, order,
               writ, injunction, decree or judgment of any court or any
               governmental department, commission, board, bureau, agency or
               instrumentality, in countries in which it conducts its business,
               which default would have a material adverse effect.

                                     - 8 -
<PAGE>

          4.8.3 To the Company's and Seller's best knowledge, no third party is
               in default under any material agreement, contract or other
               instrument, document or agreement to which the Company or
               Ruby-Tech is a party. Each of the Company and Ruby-Tech is not a
               party to, or named in, any order, judgment, decree or award of
               any governmental authority, agency, court, tribunal or
               arbitrator.

     4.9  NO BREACH.

          4.9.1 Neither the execution and delivery of this Agreement nor
               compliance by the Company with the terms and provisions hereof
               and thereof, will conflict with or result in a breach or
               violation of, any of the terms, conditions and provisions of: (i)
               the Articles, or other governing instruments of the Company or
               Ruby-Tech, (ii) to the best of knowledge, any judgment, order,
               injunction, decree, or ruling of any court or governmental
               authority, in countries in which each of the Company or Ruby-Tech
               conducts its business, or to which the Company or Ruby-Tech is
               subject, (iii) any material agreement, contract, lease, license
               or commitment to which the Company or Ruby-Tech is a party and
               which would impair the ability of the Company to execute, deliver
               or perform this Agreement, or (iv) to the best of knowledge,
               material applicable law in countries in which the Company or
               Ruby-Tech conducts its business.

          4.9.2 To the knowledge of the Company and the Seller, such execution,
               delivery and compliance by the Company and/or the Sellers will
               not (a) give to others any rights, including rights of
               termination, cancellation or acceleration, in or with respect to
               any agreement, contract or commitment referred to in Section
               4.9.1, or (b) otherwise require the consent or approval of any
               person, which consent or approval has not heretofore been
               obtained or shall be obtained by the Closing.

     4.10 OWNERSHIP OF ASSETS. Except as set forth in SCHEDULE 4.10, each of the
          Company and Ruby-Tech has good and marketable title to, or a valid
          leasehold or license interest in its premises and in the properties
          and assets used by it, located on its premises, or shown on the
          Company Financial Statements, free and clear of all Security
          Interests, . No asset is shared by the Company with any other person
          or entity.

     4.11 BANK ACCOUNTS; DEBT AND LOAN FACILITIES.

          4.11.1 Details regarding the Company's and Ruby-Tech's bank accounts
               and the Company's and Ruby-Tech's bank credit facilities (the
               "BANK CREDIT") are as set forth in SCHEDULE 4.11.1. Except for
               the bank accounts identified in SCHEDULE 4.11.1, the Company and
               Ruby-Tech does not have any other bank accounts severally or
               jointly with others.

          4.11.2 Except for liabilities disclosed in the Company Financial
               Statements, the liabilities of the Company in excess of $10,000
               are set forth in SCHEDULE 4.11.2 (the "COMPANY LIABILITIES"). The
               aggregate amount of the liabilities which are not reflected in
               the Company Financial Statements is set forth in SCHEDULE 4.11.2.
               Except as set forth in Schedule 4.11.2, there are no debts owing
               by or to the Company other than the debts, which have arisen in
               the ordinary course of business, nor has the Company lent any
               money which has not yet been repaid.

                                     - 9 -
<PAGE>

          4.11.3 No overdraft or other financial facilities have been made
               available to the Company or Ruby-Tech by any bank or financing
               institution, other than in the ordinary course of business.

          4.11.4 To the best of knowledge, the Company or Ruby-Tech is not in
               material default under any loan agreement or any other instrument
               constituting any indebtedness or under any guarantee of any
               indebtedness, and there is no reason why any such indebtedness or
               guarantee should be called or the liabilities thereunder
               accelerated before their due date (if any) or any loan facilities
               terminated.

     4.12 INTELLECTUAL PROPERTY AND OTHER INTANGIBLE ASSETS.

          4.12.1 GENERAL. The Company owns or has the right to use, pursuant to
               a license, sublicense, agreement, or permission (all such
               licenses, sublicenses, agreements and permissions, except to the
               extent that they are off-the-shelf, are listed in SCHEDULE
               4.12.1), all Intellectual Property (as such term is defined
               below) necessary for the operation of the businesses of the
               Company as currently conducted. The Company has delivered to the
               Purchaser correct and complete copies of all such licenses,
               sublicenses, agreements, and permissions (as amended to date).
               Each item of Intellectual Property owned or used by the Company
               immediately prior to the Closing hereunder will be owned or
               available for use by the Company on identical terms and
               conditions immediately subsequent to the Closing hereunder.
               Except for readily and commercially available off-the-shelf
               products, to the knowledge of the Company and the Seller, no
               other Intellectual Property of any kind, owned by a third party,
               that is required by the Company to conduct its business, as
               currently conducted, requires, or would require, the payment of
               any substantial fee or royalty.


               In this Agreement, "INTELLECTUAL PROPERTY" includes inventions
               and discoveries (whether or not patentable), patents, patent
               applications, trademarks, service marks, trade dress, designs,
               trade names, copyrightable works, copyrights, mask works, trade
               secrets, techniques, proprietary processes and formulas, business
               strategies, and all other proprietary rights, industrial rights
               and any other similar rights, if registrable, then in such
               jurisdiction registered, and all copies and tangible embodiments
               thereof, or any part thereof, in whatever form or medium.

          4.12.2 NO INFRINGEMENT. The Company has not misappropriated any
               Intellectual Property rights of any third party. To the best of
               the Company's and the Seller's knowledge, the Company has not
               infringed upon, or otherwise violated, any Intellectual Property
               rights of any third party. The Company has not received any
               charge, complaint, claim, demand, or notice alleging any
               misappropriation, infringement, or violation (including any claim
               that the Company must license or refrain from using any
               Intellectual Property rights of any third party) by the Company
               or its personnel of any Intellectual Property rights of any third
               party. To the Company's and the Seller's best knowledge, no third
               party has infringed upon, misappropriated, or otherwise violated,
               any Intellectual Property rights of the Company.


                                    - 10 -
<PAGE>


          4.12.3 OWNERSHIP OF INTELLECTUAL PROPERTY. All of the Intellectual
               Property which has been conceived, discovered, researched,
               created and developed or is currently being researched, created
               and developed by the Company's employees, consultants or agents
               related to (i) the Company's technology, (ii) any invention or
               work product created by or for the Company or (iii) any part of,
               or any derivative work of, any of the foregoing, is owned solely
               and exclusively by the Company or is available for the Company's
               use pursuant to a license, agreement or other permission listed
               in SCHEDULE 4.12.1, subject to the terms thereof. SCHEDULE 4.12.3
               identifies each: (a) patent, trade mark and/or applications for
               registration thereof, which the Company has made with respect to
               any of its Intellectual Property until the date hereof; (b) each
               trade name or unregistered trademark used by the Company; and (c)
               any license, agreement, or other permission which the Company has
               granted to any third party with respect to any of its
               Intellectual Property. The Company has made available to the
               Purchaser correct and complete copies of all such patents,
               copyrights, trade marks, registrations, applications, licenses,
               agreements, and permissions (as amended to date) and all other
               written documentation evidencing ownership and prosecution (if
               applicable) of each such item. With respect to each item of
               Intellectual Property required to be identified as set forth in
               this Section: (i) the Company possesses all right, title, and
               interest in and to the item, free and clear of any Security
               Interest, license, royalty, commission or similar arrangements or
               other restriction; (ii) to the best of knowledge, the item is not
               subject to any outstanding injunction, judgment, order, decree,
               ruling, or charge; (iii) to the best of knowledge, no action,
               suit, hearing, charge, complaint, claim, or demand is pending,
               or, to the knowledge of the Company, is threatened which
               challenges the legality, validity, enforceability, use, or
               ownership of the item; (iv) except as set forth in the agreements
               and other documents listed in SCHEDULE 4.12.3 , the Company has
               never agreed to indemnify any person or entity for or against any
               infringement, misappropriation, or other violation with respect
               to the item; and (v) except as set forth in SCHEDULE 4.12.3, the
               Company has not granted, and there are not outstanding, options,
               licenses or agreements of any kind relating to any Intellectual
               Property rights of the Company, nor is the Company a party to any
               option, license or agreement of any kind with respect to any of
               its Intellectual Property.

          4.12.4 PROTECTION OF IP RIGHTS AND TRADE SECRETS. The Company has
               taken all actions which are in its reasonable discretion
               necessary and desirable to maintain and protect each item of
               Intellectual Property that it owns or uses, which actions are
               customary in the industry in which the Company operates. All the
               confidential information of the Company is being (and has been)
               continuously maintained in confidence by taking reasonable
               precautions to protect and prevent its disclosure to unauthorized
               parties.

          4.12.5 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. Each
               employee and consultant of the Company has executed an agreement
               with the Company pertaining to confidentiality and assignment of
               invention sufficient to vest in the Company good title to the
               work product or result of endeavors of every employee, officer or
               contractor, free of any retained rights or royalty or similar
               obligations except as set forth in SCHEDULE 4.12.5. To the
               Company's and Seller's best knowledge, none of the said
               employees, officers or consultants is in violation thereof.

     4.13 TAXES.

          4.13.1 Each of the Company and Ruby-Tech has accurately prepared and
               timely filed with the appropriate tax authorities all income and
               payroll tax returns, V.A.T. filings and any filings that it is
               required to file (the "TAX REPORTS") and has paid or made
               adequate reserves for the payment of, all amounts due pursuant to
               such Tax Reports. The Tax Reports are true and complete in all
               material respects and accurately reflect all liability for taxes
               for the periods covered thereby.

          4.13.2 Except as listed in SCHEDULE 4.13.2, none of the Tax Reports
               have been audited by any taxing authority and the Company or
               Ruby-Tech has not been advised that any of such Tax Reports will
               be so audited, and there are no waivers in effect of the
               applicable statute of limitations for any period. No deficiency
               assessment or proposed adjustment of income or payroll taxes of
               the Company or Ruby-Tech is pending and except as listed in
               SCHEDULE 4.13.2, the Company, Ruby-Tech and the Seller has no
               knowledge of any proposed liability for any tax to be imposed.

                                    - 11 -
<PAGE>

          4.13.3 Each of the Company and Ruby-Tech has complied with all
               applicable laws, rules and regulations relating to the payment
               and withholding of taxes and has duly and timely withheld from
               employee salaries, wages and other compensation and has paid over
               to the appropriate taxing authorities all amounts required to be
               so withheld and paid over for all periods under all applicable
               laws, except where such non-compliance, which is listed in
               SCHEDULE 4.13.3, would not have a material adverse effect on the
               Company or on Ruby-Tech.

     4.14 CONTRACTS.

          4.14.1 SCHEDULE 4.14.1 lists each of the Material Agreements (as
               hereinafter defined) to which the Company or Ruby-Tech is a party
               (collectively, the "COMPANY MATERIAL AGREEMENTS"). A "MATERIAL
               AGREEMENT" means any arrangement under which the consequences of
               a default or termination could have a material adverse effect on
               the Company's business, operating results, properties, or
               financial condition, or which was not entered into in the
               ordinary course of business, or which has a value in excess of
               $30,000. There is no oral Material Agreement to which the Company
               or Ruby-Tech is party, other than those reflected in SCHEDULE
               4.14.1, or the Company Liabilities. True and correct copies of
               all such Company Material Agreements, as amended to date, have
               been delivered to the Purchaser.

          4.14.2 With respect to each Company Material Agreement, and except as
               set forth in SCHEDULE 4.14.1, at Closing and immediately after
               Closing hereunder: (i) to the Company's and the Seller's best
               knowledge, such Company Material Agreement is legal, valid,
               binding, enforceable and in full force and effect, subject to and
               in accordance with its terms, subject as to enforceability to
               bankruptcy, insolvency, reorganization and other laws of general
               applicability relating to or affecting creditors' rights and to
               general principles of equity; (ii) to the Company's and the
               Seller's best knowledge, neither the Company, nor Ruby-Tech or
               any other party in breach or default (including with respect to
               any express or implied warranty or achievement of milestones or
               completion dates required under license agreements), and no event
               has occurred which with notice or lapse of time or both would
               constitute a breach or default or permit termination,
               modification or acceleration thereunder, except for any breaches,
               defaults, terminations, modifications or accelerations which have
               been cured or waived; and (iii) to the Company's and Seller's
               best knowledge, no party has repudiated any provision of any such
               Company Material Agreement.

          4.14.3 The Company's representations and warranties included in the
               Company's Agreement with Yail Noa Sokhnuyot Ltd., dated May 10,
               2004 are true and correct in all material respects as of the
               abovementioned date.

     4.15 LITIGATION. Except as listed on SCHEDULE 4.15, neither the Company nor
          Ruby-Tech has received notice in which it is: (i) named or otherwise
          identified in any outstanding injunction, judgment, order, decree,
          writ, stipulation, ruling, or charge of any court or any governmental
          agency or any arbitrator; or (ii) a party or, to its best knowledge,
          threatened to be made a party to, any action, suit, proceeding,
          hearing, complaint, charge or investigation of, in, or before any
          court or quasi-judicial or administrative agency of any state,
          municipal, or foreign jurisdiction or before any arbitrator or other
          method of settling disputes or disagreements. To the best knowledge of
          the Company and the Sellers, no action, suit, proceeding, hearing,
          complaint, charge or investigation is to be brought or threatened
          against the Company or Ruby-Tech, and the Company or Ruby-Tech does
          not intend to initiate any such action, suit, proceeding, hearing,
          complaint, charge or investigation. Without derogating from any of the
          foregoing, except as listed on SCHEDULE 4.15, to the best of
          knowledge, there is no action, suit, proceeding, or investigation
          pending or currently threatened involving the prior employment of any
          of the Company's or Ruby-Tech's employees, their use in connection
          with the Company's business of any information or techniques allegedly
          proprietary to any of their former employers, or their obligations
          under any agreement with prior employers.

                                    - 12 -
<PAGE>

     4.16 INTERESTED PARTY TRANSACTIONS.

          4.16.1 Except as set forth in SCHEDULE 4.16.1, no officer, director or
               holder of more than 5% of the issued and outstanding share
               capital of the Company ("INTERESTED PARTY"), or any affiliate of
               such Interested Party or the Company, has or has had, either
               directly or indirectly, (a) an interest in any person or entity
               which (i) furnishes or sells services or products which are
               furnished or sold or are proposed to be furnished or sold by the
               Company or Ruby-Tech, or (ii) purchases from or sells or
               furnishes to the Company or to Ruby-Tech any goods or services,
               or (b) a beneficial interest in any contract or agreement to
               which the Company or Ruby-Tech is a party to .

          4.16.2 Except as set forth in SCHEDULES 4.2.5 and 4.16.1, there exist
               no arrangements or proposed transactions, either directly or
               indirectly, between the Company or Ruby-Tech and any Interested
               Party, or to the best knowledge of the Company and the Seller,
               any affiliate or associate of any such Interested Party. Except
               as set forth in SCHEDULE 4.16.2, no employee, shareholder,
               officer or director of the Company or of Ruby-Tech is indebted to
               the Company or to Ruby-Tech, as the case may be, nor is the
               Company or Ruby-Tech indebted (or committed to make loans or
               extend or guarantee credit) to any of them, except in the
               ordinary course of business.

     4.17 EMPLOYEES.

          4.17.1 A full list of all of the Company's and Ruby-Tech's officers
               and employees and their agreements with the Company or Ruby-Tech,
               copies of which were delivered to the Purchaser, is shown in
               SCHEDULE 4.17.1, which agreements show all Benefits (as defined
               below) payable or which the Company or Ruby-Tech is bound to
               provide (whether now or at a future time set forth therein) to
               each officer and employee. Such agreements include customary
               non-compete and confidentiality provisions.

          4.17.2 Except as listed on SCHEDULE 4.17.2, no key employee of the
               Company or of Ruby-Tech has been dismissed in the last six months
               or has given notice of termination of his/her employment.

          4.17.3 Except as provided by law and/or under legally binding
               collective agreements, there are no agreements or arrangements
               (whether legally enforceable or not) for the payment of any
               pensions, allowances, lump sums or other like benefits on
               retirement or on death or during periods of sickness or
               disablement for the benefit of any director or former director or
               employee or former employee of the Company or of Ruby-Tech for
               the benefit of the dependents of any such person in operation at
               the date hereof, other than customary managers' insurance
               policies.

          4.17.4 Except as listed on SCHEDULE 4.17.4, each of the Company and
               Ruby-Tech does not operate any share incentive scheme, share
               option scheme or profit sharing scheme for the benefit of any of
               its respective officers, directors, employees or consultants.

          4.17.5 Except as listed on SCHEDULE 4.17.5, the Company has paid in
               full or has made sufficient reserves in the Company Financial
               Statements for all of the payments and obligations due or payable
               with respect to its and Ruby-Tech's employees, including, but not
               limited to, social security payments, income tax withholdings,
               severance payments, pension and vacation pay.


                                    - 13 -
<PAGE>

          4.17.6 For the purposes of this Section the term "BENEFITS" means
               benefits of every description including, without limitation,
               salaries, directors' fees, social benefits, bonuses, commissions,
               profit shares under any incentive scheme and benefits in kind.

     4.18 INSURANCE.

          4.18.1 SCHEDULE 4.18.1 lists all of the insurance policies currently
               maintained by the Company and Ruby-Tech (the "INSURANCE
               POLICIES"). All such policies are in full force and effect, all
               premiums due and payable thereunder have been paid, and no notice
               of cancellation or termination has been received with respect to
               any such policy. Such policies are valid, outstanding and
               enforceable in accordance with their terms and will remain in
               full force and effect without the payment of any additional
               premiums through the Closing.

          4.18.2 The Company believes that the coverage provided by the
               Insurance Policies adequately insures the Company's business,
               material assets and properties, as such material assets and
               properties are now being used and held by the Company and
               Ruby-Tech.

          4.18.3 There are currently no claims pending under any Insurance
               Policies. To the best knowledge of the Company and the Seller,
               there is no threatened termination of any such Insurance
               Policies. To the best knowledge of the Company and the Seller,
               the Company has not been refused any insurance with respect to
               its assets or operations, nor has its coverage been limited by
               any insurance carrier to which it has applied for any such
               insurance or with which it carried insurance since its
               incorporation.

     4.19 BROKERS OR FINDERS. Neither the Company nor any of the Sellers or any
          of their respective employees or shareholders has employed or made any
          agreement with any broker, finder or similar agent or any person or
          firm, which will result, directly or indirectly, in the obligation of
          the Seller, the Company or the Purchaser to pay any finder's fee,
          brokerage fees or commission or similar payment in connection with the
          transactions contemplated hereby. It is acknowledge that the Purchaser
          has used Cukierman & Co. Investment House Ltd. as financial advisor to
          this transaction. It is hereby clarified, that neither the Company nor
          the Sellers shall be liable to pay Cukierman & Co. Investment House
          Ltd. any broker's or finder's fee or any other commission or similar
          fee, directly or indirectly, on account of any action taken by the
          Purchaser in connection with any of the transactions contemplated
          under this Agreement.

     4.20 OPTION PLAN. As of the date hereof, none of the Company's unissued
          Ordinary Shares are reserved for future issuance to employees,
          officers and directors of the Company. Except for options covering
          Thirteen (13) Ordinary Shares of the Company's unissued Ordinary
          Shares, which have been promised to Zelichovski (and which shall be
          waived upon Closing), no options have been granted and/or promised to
          any employees or consultants of the Company.

     4.21 COMPLIANCE WITH SECURITIES LAWS. The Company's securities have been
          offered and sold in compliance with all material applicable securities
          laws.

                                    - 14 -
<PAGE>

     4.22 FULL DISCLOSURE. The representations and warranties of the Company and
          the Sellers in this Agreement, are each accurate, correct and complete
          in all material respects, and do not contain any untrue statement of a
          material fact or omit to state a material fact necessary in order to
          make the statements and information contained herein or therein not
          misleading. To the best knowledge of the Company and the Sellers
          neither the Company nor the Seller is aware of any material
          information which would likely adversely and materially affect the
          business, operating results, properties, or financial condition of the
          Company, which has not been expressly disclosed to the Purchaser.
          Subject to the Closing, the Purchaser has the right to rely fully upon
          the representations, warranties, covenants and agreements of the
          Company and the Seller contained in this Agreement or any Exhibit or
          Schedule hereto or any ancillary agreements or documents executed or
          delivered in connection with or pursuant to any of the foregoing.


5.   REPRESENTATIONS AND UNDERTAKINGS REGARDING THE CONSIDERATION SHARES.

     Each Seller, severally and jointly, hereby represents, warrants and
     covenants to the Purchaser as follows:

     5.1. INFORMATION AND ADVISE. Each Seller confirms that it has received or
          has had full access to all the information it considers necessary or
          appropriate to make an informed decision with respect to this
          Agreement and the Consideration Shares received by it hereunder. The
          Seller further confirms that it has had an opportunity to ask
          questions and receive answers from the Purchaser regarding the
          Purchaser's business, management and financial affairs and to obtain
          additional information (to the extent the Company possessed such
          information or could acquire it without unreasonable effort or
          expense) necessary to verify any information furnished to the Seller
          or to which the Seller had access.

     5.2. AVAILABILITY OF EXEMPTIONS. Each Seller understands that the
          Consideration Shares are being offered pursuant to an exemption or
          exemptions from registration requirements of Israeli and US Federal
          and state securities laws and that the Purchaser is relying upon the
          truth and accuracy of such Seller's representations, warranties,
          agreements, acknowledgments and understandings set forth in section 5
          herein in order to determine the applicability of such exemptions and
          the suitability of such Seller to receive the Shares.

     5.3. LEGENDS. Each Seller acknowledges and agrees that certificates
          representing the Consideration Shares will contain one or more legends
          to the effect that transfer of such securities is prohibited except
          pursuant to registration under the Securities Act or pursuant to an
          available exemption from registration, similar to the following:

               "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
               REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
               APPLICABLE STATE SECURITIES LAWS. THESE SHARES HAVE BEEN ACQUIRED
               FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
               OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
               IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH
               RESPECT TO THE SHARES EVIDENCED BY THIS CERTIFICATE, FILED AND
               MADE EFFECTIVE UNDER THE SECURITIES ACT AND APPLICABLE STATE LAWS
               OR AN OPINION OF COUNSEL TO B.O.S. BETTER ON-LINE SOLUTIONS LTD.
               THAT SUCH REGISTRATION IS NOT REQUIRED. IN ADDITION, THESE SHARES
               ARE SUBJECT TO A NO SALE COMMITMENT AND MAY NOT BE SOLD,
               TRANSFERRED, ASSIGNED, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR
               OTHERWISE DISPOSED OF WITHOUT THE PRIOR WRITTEN CONSENT OF B.O.S.
               BETTER ON-LINE SOLUTIONS LTD. ANY PURPORTED SALE OR DISPOSITION
               IN CONTRIVANCE OF THE ABOVE SHALL BE DEEMED VOID AND HAVE NO
               EFFECT "


                                    - 15 -
<PAGE>

     5.4. CONTROL OVER THE SELLER. Each Seller who is not an individual has made
          available to the Purchaser a complete and detailed list of individuals
          who have or share voting and/or investment control over such Seller.
          Each Seller acknowledges that such information shall be provided by
          the Purchaser to the Office of Chief Scientist (the "OCS") and the
          Investment Center of the Ministry of Industry, Trade and Labor (the
          "INVESTMENT CENTER"), whose approvals of the transaction contemplated
          hereby are a condition to the Purchaser's obligations hereunder. Each
          Seller shall update such list as reasonably requested by the
          Purchaser, to comply with any request for such information from any
          regulatory body, including, without limitation the OCS and the
          Investment Center. This Section 5.4 shall survive the Closing of the
          transaction contemplated hereby.

     5.5. RESTRICTIONS ON TRANSFERABILITY AND HEDGING.

          5.5.1. Each Seller understands that (i) the Consideration Shares have
               not been registered under the Securities Act of 1933, or under
               the laws of any other jurisdiction; (ii) such Consideration
               Shares are deemed to be "restricted securities" as defined in
               Rule 144 promulgated under the Securities Act, and cannot be
               sold, transferred or otherwise disposed of unless they are
               registered under the Securities Act and, where required, under
               the laws of other jurisdictions or unless an exemption from
               registration is then available; (iii) there is now no
               registration statement on file with the Securities and Exchange
               Commission with respect to the Consideration Shares to be
               received by such Seller.

          5.5.2. Each Seller acknowledges that the Purchaser will not register
               any transfer of Consideration Shares not made pursuant to
               registration under the Securities Act, or pursuant to an
               available exemption from registration or made in contravention of
               the lock-up provisions of Section 5.8 below.

          5.5.3. Each Seller acknowledges, agrees and covenants not to engage in
               hedging transactions with regard to the Consideration Shares
               offered pursuant to this Agreement.

     5.6. OFFSHORE TRANSACTION. Such Seller is not a "U.S. Person", as such term
          is defined in Regulation S under the Securities Act of 1933, its
          principal address is outside the United States and it has no present
          intention of becoming a resident of (or moving its principal place of
          business to) the United States. Such Seller was located outside the
          United States at the time any offer to sell and any other action in
          connection with such offer and sale was made to such Seller and at the
          time that the buy order was originated by the Seller. The
          Consideration Shares are being acquired solely for such Seller's own
          account, and in no event and without derogating from the foregoing,
          for the account or the benefit of a U.S. person.

     5.7. INVESTMENT PURPOSES. The Consideration Shares are being acquired for
          investment purposes. The Shares are not being purchased with a view
          to, or for sale in connection with, any distribution or other
          disposition thereof. The Seller has no present plans to enter into any
          contract, undertaking, agreement or arrangement for any such resale,
          distribution or other disposition and it will not divide its interest
          in the Consideration Shares with others, resell or otherwise
          distribute the Consideration Shares in violation of federal or state
          US Securities laws or the Israeli Securities Laws.


                                    - 16 -
<PAGE>

     5.8. LOCK UP. For a period of four years from the date of issuance of the
          Consideration Shares, no Seller shall sell, assign, transfer, pledge,
          hypothecate, mortgage or otherwise dispose of, by gift or otherwise
          any of the Consideration Shares, provided however, that the
          abovementioned restriction shall expire, for each Seller, with respect
          to fifty percent (50%) of the Consideration Shares issued to such
          Seller, upon the lapse of two years from the date of issuance of the
          Consideration Shares. Upon expiration of the applicable lock-up
          period, the Company shall cooperate with the Sellers in connection
          with re-sales pursuant to Rule 144 under the Securities Act.

     5.9. NO SOLICITATION. At no time was such Seller presented with or
          solicited by any leaflet, public promotional meeting, newspaper or
          magazine article, radio or television advertisement or any other form
          of general advertising or general solicitation in connection with the
          Consideration Shares and the transaction contemplated hereby.

     5.10. BROKER-DEALER. The Seller is not a broker-dealer, nor is it an
          affiliate of any broker-dealer.

6.   REPRESENTATIONS AND WARRANTIES REGARDING THE PURCHASER. Purchaser hereby
     represents and warrants to each of the Sellers as follows:

     6.1. CORPORATE ORGANIZATION. The Purchaser is a corporation duly
          incorporated and validly existing under the laws of Israel, and has
          the corporate power to own its property and to carry on its business
          as now being conducted. The Purchaser has all requisite power and
          authority to execute and deliver this Agreement and to consummate the
          transactions contemplated hereby. The Purchaser's shares are traded on
          the Nasdaq Market and on the Tel-Aviv Stock Exchange and as such it is
          subject to both US and Israeli Securities Laws.

     6.2. DUE AUTHORIZATION AND VALID ISSUANCE. The Agreement has been, or will
          have been, at the time of its execution and delivery, duly executed
          and delivered by a duly authorized officer of the Purchaser. Prior to
          the Closing of this Agreement, the Purchaser shall have acted to
          complete all corporate action necessary on its part for the issuance,
          sale and delivery of the Consideration Shares. The Consideration
          Shares will, upon issuance, be duly authorized, validly issued,
          fully-paid and nonassessable.

     6.3. BINDING AGREEMENT. The Agreement constitutes valid and legally binding
          obligations of the Purchaser enforceable against the Purchaser in
          accordance with its terms, except as (i) such enforceability may be
          limited by bankruptcy, insolvency, reorganization, arrangement,
          moratorium or similar laws relating to or affecting the rights of
          creditors and contracting parties generally, (ii) the remedy of
          specific performance and injunctive and other forms of equitable
          relief may be subject to equitable defenses and to the discretion of
          the court before which any proceeding therefore may be brought.

     6.4. NON-CONTRAVENTION. Neither the execution and delivery of the
          Agreement, nor the consummation of the transactions or the performance
          of the obligations contemplated hereby will result in any violation or
          breach of any of the terms, conditions and provisions of: (i) the
          Purchaser's articles of association, (ii) to the Purchaser's best
          knowledge, any judgment, order, injunction, decree, or ruling of any
          court or governmental authority, in countries in which the Purchaser
          conducts its business, to which the Purchaser is subject, (iii) any
          material agreement, contract, lease, license or commitment to which
          the Purchaser is a party to and which would impair the ability of the
          Purchaser to execute, deliver or perform this Agreement, or (iv)
          material applicable law in countries in which the Company conducts its
          business. To the knowledge of the Purchaser, such execution, delivery
          and compliance by the Purchaser will not (a) give to others any
          rights, including rights of termination, cancellation or acceleration,
          in or with respect to any agreement, contract or commitment referred
          to in this Section 6.4, except as would not have a material adverse
          effect or (b) otherwise require the consent or approval of any person,
          which consent or approval has not heretofore been obtained or shall be
          obtained by the Closing.


                                    - 17 -
<PAGE>

     6.5. NO CONSENT. To the Purchaser's best knowledge, and in reliance on the
          representations of the Sellers given in section 5 hereof, except for
          reporting obligations and approvals required under applicable
          securities laws and market regulations in Israel and the United States
          and for approvals by the OCS, the Investment Center and of Laurus
          Master Fund, Ltd., no consent of any governmental body or third party
          is required to be made or obtained by the Purchaser in connection with
          the execution and delivery of the Agreement by the Purchaser or the
          consummation by the Purchaser of the transactions or the performance
          of the obligations contemplated hereby by the Purchaser.

     6.6. CAPITALIZATION. The authorized share capital of the Purchaser consists
          as of the date hereof: 8,750,000 Ordinary Shares, par value NIS 4.00
          per share, of which, as of September 30, 2004, 4,447,171 Ordinary
          Shares are outstanding and issued, and 833,085 Ordinary shares are
          reserved for issuance upon conversion of a Note and exercise of a
          Warrant issued to Laurus Master Fund, Ltd. Any change in the above
          capitalization between the date hereof and the date of the Closing
          shall not constitute a default under this Agreement, provided,
          however, that such change is the result of the conversion or exercise
          of convertible securities, options or warrants of the Purchaser.

     6.7. FINANCIAL STATEMENTS.

          6.7.1 The audited consolidated financial statements of the Purchaser
               as of December 31, 2003 and the related notes thereto, as filed
               by the Purchaser with the Securities and Exchange Commission
               under Form 20-F for the year ending December 31, 2003 are true,
               correct and complete in all material respects and fairly present
               the financial position of the Purchaser as of their respective
               dates, and have been prepared in accordance with the books and
               records of the Purchaser as at the applicable dates and for the
               applicable periods. Such financial statements have been prepared
               in accordance with generally accepted accounting principles
               applied on a consistent basis throughout the periods therein
               specified, except as may be disclosed in the notes to such
               financial statements, or as may be permitted by the Securities
               and Exchange Commission and except as disclosed in the filings
               the Purchaser made in connection with such statements, if any.

          6.7.2 Other than as reported in the Purchaser's public filings, since
               December 31, 2003, there has not been any event or material
               adverse change in the financial conditions of the Purchaser as
               reflected in the financial statements which, individually or
               collectively with other events or changes, could have a material
               adverse effect on the Purchaser.

     6.8  LEGAL PROCEEDINGS. Except as disclosed in the Purchaser's public
          filings, there is no material legal or governmental proceeding pending
          or, to the knowledge of the Purchaser, threatened to which the
          Purchaser is or may be a party.

     6.9  COMPLIANCE WITH LAW. To the knowledge of the Purchaser, the business
          of the Purchaser is conducted in accordance with applicable laws,
          except to extent that, individually or in the aggregate, would not
          cause a material adverse effect on the Purchaser.

     6.10 DISCLOSURE. The representations and warranties of the Purchaser
          contained in this Section 6 as of the date hereof and as of the
          Closing, read together with the Company's public filings, do not
          contain any untrue statement of a material fact or omit to state a
          material fact necessary to make the statements herein, in light of the
          circumstances under which they are made, not misleading.


                                    - 18 -
<PAGE>

     6.11 INFORMATION AND ADVICE. The Purchaser acknowledges that it has been
          furnished by the Company and/or the Sellers with the documents and
          information regarding the Company which it has requested, and has been
          afforded the opportunity to ask questions of and receive answers from
          duly authorized officers or other representatives of the Company
          and/or Sellers concerning the Company's business, assets and financial
          position and the Sold Shares. The Purchaser has relied solely upon the
          advice of its own tax and legal advisors with respect to the tax
          aspects of this transaction.

7.   COVENANTS

     7.1  From and after the signing of this Agreement and until the Closing,
          the Company and each of the Sellers, severally and jointly, covenant
          and agree with the Purchaser that the Company and Ruby-Tech shall not
          engage in any practice, take any action, or enter into any transaction
          outside the ordinary course of business. Without limiting the
          generality of the foregoing, the Company will not, without the prior
          consent of the Purchaser: (a) authorize or effect any change in its
          corporate documents; (b) declare or pay any dividends or make any
          other distributions with respect to its share capital; (c) issue any
          shares or grant any option, warrant, convertible debenture or any
          other form of security exercisable into or convertible into shares of
          the Company; (d) enter into or renew any agreement with an Interested
          Party (including an employment agreement with any employee or
          director), or increase the remuneration of any employee or director;
          and (e) sell its assets (other than the Company's inventory sold in
          the ordinary course of business).

     7.2  The Sellers further covenant with the Purchaser that none of the
          Sellers shall dispose of any interest in the Company Shares or any of
          them or grant any option over or create or allow to exist any Security
          Interest over the Company Shares or any of them.

     7.3  No announcement or other disclosure concerning the sale and purchase
          of the Sold Shares or any ancillary matter shall be made before or
          after the Closing by the parties or any person acting on their behalf,
          except subject to Purchaser's prior written approval of the form and
          content of such announcement or disclosure or otherwise as required by
          law or by the applicable rules of any stock exchange or automated
          quotation system.

8.   CALL AND PUT OPTIONS

     8.1  CALL OPTION TERMS.

          (a) CALL OPTION. At any time starting from the third anniversary of
          the Closing and until (but not including) the fourth anniversary of
          the Closing (the "OPTION TERM"), and subject to Section 8.6 below, the
          Purchaser may serve notice in writing on the Sellers requiring them to
          sell or procure the sale of (the "CALL OPTION") any and all Company
          Shares held by the Sellers at such time (the "OPTION SHARES"). The
          Call Option may be exercised by the Purchaser on one or more occasions
          during the Option Term, in full or in part.

          (b) Starting from the date hereof and until the expiration of the
          Option Term, the Sellers shall be permitted to transfer the Option
          Shares to a third party only in the event that such sale is subject to
          the Call Option rights set forth herein and the transferee agrees to
          be bound by the terms of this Section 8.1.


                                    - 19 -
<PAGE>


     8.2  CALL OPTION CONSIDERATION.

          (a)  The consideration to be paid by the Purchaser for the Call Option
               Shares shall equal the relevant Company Valuation (as set forth
               below), divided by the number of Company Shares issued and
               outstanding immediately prior to the Call Option closing,
               multiplied by the number of Call Option Shares. For purposes of
               this Section 8.2, the "COMPANY VALUATION" shall be as follows:

               (i)  in the event that the Company achieves between NIS
                    207,000,000 and NIS 253,000,000 as Projected Results (as
                    defined below), the Company Valuation shall be Five Million
                    US Dollars ($ 5,000,000);

               (ii) in the event that the Company achieves between NIS
                    172,500,000 and NIS 206,999,999 as Projected Results (as
                    defined below), the Company Valuation shall be Four Million
                    US Dollars ($ 4,000,000); and

               (iii) in the event that the Company achieves above NIS
                    253,000,000 as Projected Results (as defined below), the
                    Company Valuation shall be Six Million US Dollars ($
                    6,000,000);

                    "PROJECTED RESULTS" equals the aggregate amount of revenues
                    in the years 2004, 2005 and 2006.

          (b)  The consideration for the Option Shares shall be comprised of
               fifty percent (50%) cash and fifty percent (50%) new
               Consideration Shares, with the value of each new Consideration
               Share being the higher of: (i) the average closing price of the
               Purchaser's shares on the Nasdaq Market during the twenty (20)
               days immediately preceding the date of issuance of such
               Consideration Shares or (ii) $3.08.

     8.3  NEUHOF PUT OPTION.

          8.3.1 At any time during the Option Term, the Sellers (jointly and not
               severally), may serve notice in writing to the Purchaser,
               requiring the Purchaser to purchase (the "PUT OPTION") the Option
               Shares. The Put Option (or the accelerated Put Option) may be
               exercised by the Sellers on one occasion during the Option Term,
               in full and not in part. The consideration for the Option Shares
               subject to the Put Option shall be calculated and paid in
               accordance with the provisions of Section 8.2 hereof governing
               the Call Option.

          8.3.2 The closing of the Put Option (or the Accelerated Put Option (as
               defined below), if applicable) shall be subject to Seller's
               provision as of such closing, of the representations and
               warranties of Sections 3 and 5 hereof, with respect to the Option
               Shares and Consideration Shares. In addition, Seller undertakes
               to make the same representations and warranties as are specified
               in Sections 3 and 5 hereof with respect to the Option Shares and
               Consideration Shares, in the event Purchaser exercises a Call
               Option, as of the closing of such Call Option, subject to such
               written exceptions and/or reservations as shall be specified by
               the Sellers at the closing of such Call Option.

     8.4  Any and all Consideration Shares issued in connection with the Call
          Option or the Put Option, as the case may be, shall be subject to a
          lock-up period from the date of issuance of such Consideration Shares,
          in accordance with the lock-up provisions of Section 5.8 hereof.

                                    - 20 -
<PAGE>

     8.5  ACCELERATED OPTION.


          8.5.1 It is expressly agreed, that in the event that the Company
               issues any ordinary shares or preferred shares or any other kind
               of shares of the Company, whether now or hereafter authorized
               (including as a result of the exercise or conversion, as the case
               may be, of rights, options, or warrants to purchase ordinary
               shares or preferred shares, or securities convertible into
               ordinary shares or preferred shares of the Company) to any third
               party, except for issuances as a result of: (i) conversion of any
               warrants or notes outstanding as of the date hereof, or (ii) the
               exercise of any options by former or existing employees or
               consultants of the Company (the "TRIGGERING EVENT"), then, at
               Sellers' sole discretion, Sellers may notify the Purchaser that
               the Option Term (with respect to the Put Option only) shall be
               deemed to commence upon such Triggering Event, and extend for a
               period of 12 months thereafter (the "ACCELERATED PUT OPTION").
               Sellers shall notify the Purchaser of the election to accelerate
               the Put Option promptly upon their being aware of the appropriate
               circumstances, and in any event no later than 7 business days
               before the Triggering Event. Unless so notified by Sellers, the
               provisions of this Section 8.5 shall NOT apply.

          8.5.2 The consideration to be paid by the Purchaser for the
               Accelerated Put Option shall equal the relevant Company Valuation
               (as set forth in Section 8.5.3 below) divided by the number of
               Company Shares issued and outstanding immediately prior to the
               Triggering Event, multiplied by the number of Accelerated Put
               Option Shares.

          8.5.3 In the event the Triggering Event occurs after to the end of
               2006, the Company Valuation shall be calculated in accordance
               with Section 8.2(a) above. If, however, the Triggering Event
               occurs prior to the end of 2006, than the Company Valuation shall
               be the higher of (i) $4,500,000 or (ii) Company Valuation to be
               calculated in accordance with Section 8.2(a) above but on the
               basis of the Deemed Projected Results (defined below) and not of
               Projected Results.

               The term "DEEMED PROJECTED RESULTS" shall mean three (3) times
               the aggregate revenues received during the twelve (12) month
               period immediately prior to the Triggering Event

     8.6  Notwithstanding anything else herein, in the event the Company total
          pre-tax profits for the years 2004, 2005 and 2006 are, in the
          aggregate, below 5% of the Minimum Projected Results (defined below),
          then the Put Option shall immediately expire with no further force and
          effect. The term "MINIMUM PROJECTED RESULTS" shall mean Projected
          Results in an amount of Two Hundred and Thirty Million NIS (NIS
          230,000,000), or in the event of Accelerated Put Option, shall mean
          Deemed Projected Results in an amount of Two Hundred and Thirty
          Million NIS (NIS 230,000,000).

9.   BOARD OF DIRECTORS

     9.1  The Articles, as amended by the Amendment, shall include, INTER ALIA,
          the following:

          Prior to the Company's IPO, the following shall apply:

               (a) Sellers (jointly) shall have the right to appoint one (1)
          member of the Company's Board of Directors, for as long as Sellers
          (jointly) holds at least sixty four (64) shares of the Company.


                                    - 21 -
<PAGE>

               (b) Telsys shall have the right to appoint one (1) member of the
          Company's Board of Directors, for as long as Telsys holds at least
          thirty three (33) shares of the Company.

               (c) Purchaser shall have the right to appoint all remaining
          members of the Company's Board of Directors and no less than three
          (3).

     9.2  The parties hereby undertake to vote their shares of the Company in
          order to give effect to the provisions of this Section 9.

10   CONDITIONS OF CLOSING OF THE PURCHASER. The obligation of the Purchaser to
     purchase the Sold Shares and issue the Consideration Shares at the Closing
     are subject to the fulfillment at or before the Closing of the following
     conditions precedent, any one or more of which may be waived in whole or in
     part by and at the sole discretion of the Purchaser:

     10.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
          made by the Company and each of the Sellers in this Agreement shall
          have been true and correct in all material respects when made, and
          shall be true and correct in all material respects as of the Closing
          as if made on the date of the Closing.

     10.2 COVENANTS. All covenants, agreements, and conditions contained in this
          Agreement to be performed or complied with by the Sellers and/or the
          Company prior to the Closing shall have been performed or complied
          with by the Sellers and the Company, as the case may be, prior to or
          at the Closing.

     10.3 NO INJUNCTION. No statute, rule, regulation, executive order, decree,
          ruling or injunction shall have been enacted, entered, promulgated or
          endorsed by any court or governmental authority of competent
          jurisdiction, which prohibits the consummation of any of the
          transactions contemplated by this Agreement.

     10.4 CONSENTS, ETC. The Company and the Sellers shall have secured all
          permits, consents, approvals and authorizations that shall be
          necessary or required of them lawfully to consummate the transaction
          contemplated by this Agreement and to transfer the Sold Shares to be
          purchased by the Purchaser at the Closing, excluding the consents
          required under the Company's various distribution agreements and
          provided, however, that the Company shall use its best efforts to
          provide Purchaser with such consents promptly after the public
          announcement of this transaction.

     10.5 DELIVERY OF DOCUMENTS. All of the documents to be delivered to the
          Purchaser pursuant to Section 2 shall have been fully-executed (if
          applicable) by all parties whose names appear as intended signatories
          thereto (other than the Purchaser), and delivered to the Purchaser.

     10.6 APPROVALS. The Purchaser shall have received all necessary approvals
          by the OCS, the Investment Center and of Laurus Master Fund with
          respect to the transactions contemplated hereby.

     10.7 NOTICES TO NASDAQ THE TASE AND THE ISA. The Purchaser shall have made
          all required filings of notices with NASDAQ, the Tel Aviv Stock
          Exchange and the Israel Securities Authority and has received no
          notice adversely affecting the performance of the transactions
          contemplated hereunder. The Purchaser shall use its commercially
          reasonable efforts to complete such filings.


                                    - 22 -
<PAGE>


     10.8 RIGHTS OF FIRST REFUSAL. No Company Shareholder or any other person
          has any rights of first refusal, tag along or similar rights in
          connection with the issuance of any of the Sold Shares pursuant to
          this Agreement, except those rights which have been duly waived.

     10.9 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings of the
          Company and the Sellers in connection with the transactions
          contemplated by this Agreement and all documents and instruments
          incident to such transactions shall be satisfactory in substance and
          form to the Purchaser and its counsel, and the Purchaser and its
          counsel shall have received all such counterpart originals or
          certified or other copies of such documents as the Purchaser or its
          counsel may reasonably request.

     10.10 ABSENCE OF ADVERSE CHANGES. From the date hereof until the Closing,
          there will have been no material adverse change in the financial or
          business condition of the Company, in the sole judgment of the
          Purchaser.

     10.11 TELSYS CLOSING. The closing of the purchase by Purchaser from Telsys
          of Sixty Seven (67) Company Shares, reflecting approximately 12.5% of
          the issued and outstanding Company Shares.

     10.12 BANK CREDIT FACILITY. The Company's Bank credit facility for working
          capital shall continue post Closing, as evidenced by the
          correspondence attached as EXHIBIT 2.2.1(P) hereto.

     10.13 DUE DILIGENCE. The completion of the due diligence review of the
          Company by the Purchaser to the sole and complete satisfaction of the
          Purchaser.

11.  CONDITIONS OF CLOSING OF THE SELLERS. Each Seller's obligations to sell the
     Sold Shares at the Closing are subject to the fulfillment, at the
     discretion of such Sellers, at or before the Closing of the following
     conditions precedent, any one or more of which may be waived in whole or in
     part by the Seller:

     11.1. REPRESENTATIONS AND WARRANTIES. The representations and warranties
          made by the Purchaser in this Agreement shall have been true and
          correct in all material respects when made, and shall be true and
          correct in all material respects as of the Closing as if made on the
          date of the Closing.

     11.2. COVENANTS. All covenants, agreements, and conditions contained in
          this Agreement to be performed or complied with by the Purchaser prior
          to the Closing shall have been performed or complied with by the
          Purchaser prior to or at the Closing.

     11.3. NO INJUNCTION. No statute, rule, regulation, executive order, decree,
          ruling or injunction shall have been enacted, entered, promulgated or
          endorsed by any court or governmental authority of competent
          jurisdiction, which prohibits the consummation of any of the
          transactions contemplated by this Agreement.

     11.4. CONSENTS, ETC. The Purchaser shall have secured all permits, consents
          and authorizations that shall be necessary or required of it lawfully
          to consummate the transactions contemplated by this Agreement and to
          issue the Consideration Shares to be issued at the Closing.

     11.5. DELIVERY OF DOCUMENTS. All of the documents to be delivered to the
          Sellers pursuant to Section 2 shall have been fully-executed (if
          applicable) by all parties whose names appear as intended signatories
          thereto (other than the Sellers), and delivered to the Sellers or the
          Company.


                                    - 23 -
<PAGE>

     11.6. APPROVALS. The Purchaser shall have received all necessary approvals
          by the OCS, the Investment Center and of Laurus Master Fund with
          respect to the transactions contemplated hereby.

     11.7. PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings of the
          Purchaser in connection with the transactions contemplated by this
          Agreement and all documents and instruments incident to such
          transactions shall be satisfactory in substance and form to the
          Company and Sellers and their respective counsels, and the Company and
          Sellers and their counsel shall have received all such counterpart
          originals or certified or other copies of such documents as the
          Company and Sellers and their counsel may reasonably request.

     11.8. BANK APPROVAL. The Bank shall have removed any obligation imposed on
          Company Shares held by Jacob Neuhof in favor of such Bank.

     11.9. ABSENCE OF ADVERSE CHANGES. From the date hereof until the Closing,
          there will have been no material adverse change in the financial or
          business condition of the Purchaser.

     11.10. DUE DILIGENCE. The completion of the due diligence review of the
          Purchaser by the Seller to the complete satisfaction of the Seller.

12.  INDEMNIFICATION AND REMEDIES

     12.1. The Sellers and the Company agree, jointly and severally, to
          indemnify, and hold the Purchaser harmless against and in respect of
          any and all loss, liability, deficiency or damage, or actions in
          respect thereof (including reasonable legal fees and expenses) and any
          reduction in the value of the Sold Shares purchase by the Purchaser
          hereunder ("DAMAGES"), as and when incurred, occasioned by any breach
          of any of the representations and warranties of the Sellers contained
          herein (each such representation and warranty is deemed to be made on
          the date of this Agreement and at the Closing) or any certificate or
          other instrument furnished or to be furnished by the Sellers hereunder
          , all subject to the terms set forth in this Section 12.

     12.2. The Purchaser agrees to indemnify and hold each of the Sellers
          harmless against and in respect of any Damages, as and when incurred,
          occasioned by any breach of any of the representations and warranties
          of the Purchaser contained in Section 6 above (each such
          representation and warranty is deemed to be made on the date of this
          Agreement and at the Closing) or any certificate or other instrument
          furnished or to be furnished by the Purchaser hereunder.

     12.3. Promptly after (i) receipt by the party making the claim pursuant to
          this Section (or any of its directors, employees and advisors) of
          notice of the commencement of any action, proceeding, or
          investigation; or (ii) the party making the claim pursuant to this
          Section (or any of its directors, employees and advisors) becoming
          aware of any breach of this Agreement or falsity of representation, in
          each case, in respect of which indemnity may be sought as provided
          above, such person (the "INDEMNIFIED PARTY") shall notify the party or
          parties from whom indemnification is claimed (the "INDEMNIFYING
          PARTY") of the claim and, when known, the facts constituting the basis
          of such claim. In the event of any such claim for indemnification
          hereunder resulting from or in connection with any claim or legal
          proceeding by a third party, the notice to the Indemnifying Party
          shall specify, if known, the amount of damages asserted by such third
          party.

                                    - 24 -
<PAGE>

     12.4. Upon receipt of any such notice from the Indemnified Party, the
          Indemnifying Party shall be entitled to participate in the defense of
          such claim and may assume the defense of such claim at its own expense
          and by its own counsel. If the Indemnifying Party elects to assume the
          defense of such claim, the Indemnified Party shall reasonably
          cooperate with the Indemnifying Party in defending such claim, at the
          expense of the Indemnifying Party. The parties acknowledge and agree
          that in the event the Indemnifying Party has properly assumed the
          defense of such claims provided herein, the Indemnified Party shall be
          entitled to retain its own counsel to participate in the defense of
          such claim at its own cost and expense.

     12.5. No claim shall be settled or compromised by the Indemnifying Party
          without the written consent of the Indemnified Party (which shall not
          be unreasonably withheld) if such settlement or compromise requires
          the Indemnified Party to make any payment or to take or refrain from
          taking any action or enjoins the Indemnified Party or subjects it to
          other equitable relief or subjects it to any potential criminal law,
          claim or liability.

     12.6. Each party shall not bring any claim or series of claims for monetary
          compensation under this Section 12 unless the Damages claimed in
          accordance therewith are at least Thirty Thousand U.S. Dollars (US$
          30,000).

     12.7. Notwithstanding section 12.1 above the sole and exclusive recourse
          with respect to each Seller under this Agreement or any theory of
          liability, shall be limited to the Company shares and the
          Consideration Shares held by such Seller (valued in accordance with
          the their then fair market value) unless such Seller, upon its
          discretion, elects to pay the Damages in cash in lieu of transferring
          the appropriate amount of shares. Notwithstanding section 12.1 above,
          the sole and exclusive recourse with respect to the Purchaser under
          this Agreement or any theory of liability, shall be limited to Six
          Hunderd and Seventy Thousand Dollars ($670,000).

     12.8. The limitation of liabilities and remedies set forth in Sections 12.6
          and 12.7. above, and the limitation on the survival period of the
          representations and warranties as set forth in Section 12.10 below,
          shall not apply with respect to fraud; or intentional or willful
          breaches by the Company or the Sellers, each of its respective
          representations, warranties or covenants.

     12.9. Subject to Section 12.8 above, the remedies specified in this Section
          12 shall be the sole and exclusive remedy to which either party is
          entitled with regard to any losses or damages caused to it due to any
          breach of representations, warranties or covenants made to them by the
          othe party.

     12.10. SURVIVAL OF REPRESENTATIONS. The representations and warranties made
          in this Agreement shall survive the execution and the delivery of this
          Agreement and the Closing and remain in full force and effect for a
          period of twenty four (24) months after the Closing, except for
          Sellers' representations and warranties under Section 4 hereof, which
          shall remain in full force and effect for a period of twelve (12)
          months after the Closing, and Sellers' representations and warranties
          under Section 8.3.2 hereof, which shall remain in full force and
          effect for a period of twenty four (24) months after the exercise of
          the Put Option or Call Option, as the case may be.


                                    - 25 -
<PAGE>


13.  MISCELLANEOUS

     13.1. FURTHER ASSURANCES. Each of the parties hereto shall perform such
          further acts and execute such further documents as may reasonably be
          necessary to carry out and give full effect to the provisions of this
          Agreement and the intention of the parties as reflected hereby.

     13.2. GOVERNING LAW; JURISDICTION. This Agreement shall be governed by and
          construed according to the laws of the State of Israel, without regard
          to the conflict of laws provisions thereof. Any dispute arising under
          or in relation to this Agreement shall be resolved in the competent
          court of Tel Aviv-Jaffa district only, and each of the parties hereby
          submits irrevocably to the exclusive jurisdiction of such court.

     13.3. EXPENSES. Each of the parties hereto shall be responsible for its own
          costs and expenses (including legal fees) in connection with this
          Agreement and any other documents or actions relating to the
          transactions contemplated by this Agreement. All stamp duty and filing
          fees payable in respect of this Agreement or the transfer of shares as
          contemplated hereby shall be borne equally by the Sellers, on the one
          hand, and the Purchaser, on the other.

     13.4. SUCCESSORS AND ASSIGNS; ASSIGNMENT. Except as otherwise expressly
          limited herein, the provisions hereof shall inure to the benefit of,
          and be binding upon, the successors, assigns, heirs, executors, and
          administrators of the parties hereto. None of the rights, privileges,
          or obligations set forth in, arising under, or created by this
          Agreement may be assigned or transferred without the prior consent in
          writing of each party to this Agreement.

     13.5. ENTIRE AGREEMENT. This Agreement and the Schedules and Exhibits
          attached hereto constitute the full and entire understanding and
          agreement between the parties with regard to the subject matters
          hereof and thereof.

     13.6. NOTICES, ETC. All notices and other communications required or
          permitted hereunder to be given to a party to this Agreement shall be
          in writing and shall be faxed or mailed by registered or certified
          mail, postage prepaid, or otherwise delivered by hand or by messenger,
          addressed to such party's address as set forth below or in SCHEDULE A,
          as the case may be, or at such other address as the party shall have
          furnished to each other party in writing in accordance with this
          provision:

          if to the Purchaser:

                                   B.O.S. Better On-Line Solutions Ltd.
                                   Beit Rabin, Teradyon Industrial Park,
                                   Misgav 20179, Israel

                                   Attention: Chief Financial Officer
                                   Facsimile:      (972) 4 999-0334

                                   WITH A COPY TO:

                                   Amit, Pollak, Matalon & Ben-Naftali,
                                   Erez & Co.NYP Tower, 17 Yitzhak Sadeh Street,
                                   19th Floor
                                   Tel Aviv 67775
                                   Attention: Shlomo Landress, Adv.

                                   Facsimile: (972) 3 561-3620


                                    - 26 -
<PAGE>


          if to the Company:       Odem Electronic Technologies 1992 Ltd.
                                   20 Frieman Jacob Street,
                                   Rishon Le-Zion, 75358, Israel

                                   Attention: Jacob Neuhof
                                   Telephone: (972) 3 9540000
                                   Facsimile:  (972) 3 9660345

                                   With a copy to:

                                   Kantor & Co.
                                   Oz  House, 14 Abba Hillel Silver Rd.,
                                   Ramat Gan, 52506 Israel
                                   T:  +972-3-6133371
                                   F:  +972-3-6133372
                                   Attention of:  Giora Gutman, Adv.

          if to a Seller: to its address, as set forth on SCHEDULE A;


          Any notice sent in accordance with this Section 13.6 shall be
          effective (i) if mailed, three (3) business days after mailing, (ii)
          if sent by messenger, upon delivery, and (iii) if sent via facsimile,
          upon transmission and electronic confirmation of receipt or (if
          transmitted and received on a non-business day) on the first business
          day following transmission and electronic confirmation of receipt
          (provided, however, that any notice of change of address shall only be
          valid upon receipt).

     13.7. DELAYS OR OMISSIONS. No delay or omission to exercise any right,
          power, or remedy accruing to any party upon any breach or default
          under this Agreement, shall be deemed a waiver of any other breach or
          default theretofore or thereafter occurring. Any waiver, permit,
          consent, or approval of any kind or character on the part of any party
          of any breach or default under this Agreement, or any waiver on the
          part of any party of any provisions or conditions of this Agreement,
          must be in writing and shall be effective only to the extent
          specifically set forth in such writing. All remedies, either under
          this Agreement or by law or otherwise afforded to any of the parties,
          shall be cumulative and not alternative.

     13.8. SEVERABILITY. If any provision of this Agreement is held by a court
          of competent jurisdiction to be unenforceable under applicable law,
          then such provision shall be excluded from this Agreement and the
          remainder of this Agreement shall be interpreted as if such provision
          were so excluded and shall be enforceable in accordance with its
          terms; provided, however, that in such event this Agreement shall be
          interpreted so as to give effect, to the greatest extent consistent
          with and permitted by applicable law, to the meaning and intention of
          the excluded provision as determined by such court of competent
          jurisdiction.

     13.9. COUNTERPARTS. This Agreement may be executed in any number of
          counterparts, each of which shall be deemed an original and
          enforceable against the parties actually executing such counterpart,
          and all of which together shall constitute one and the same
          instrument.

                  [Remainder of page intentionally left blank.]


                                    - 27 -
<PAGE>

     IN WITNESS WHEREOF the parties have signed this Share Exchange Agreement as
of the date first hereinabove set forth.

      PURCHASER:                                COMPANY:

_____________________________                   _____________________________
      B.O.S. BETTER ONLINE                      ODEM ELECTRONIC
      SOLUTIONS LTD.                            TECHNOLOGIES LTD.

Name: _______________________                   Name: _______________________
Title:_______________________                   Title:_______________________



      SELLERS:

_______________________________
          JACOB NEUHOF


_______________________________
          SARA NEUHOF




                                    - 28 -
<PAGE>


                                   SCHEDULE A

<TABLE>
<CAPTION>

       NAME AND ADDRESS OF           NO. OF SOLD   % OF SHARE CAPITAL       CONSIDERATION
            SELLER                     SHARES        (FULLY DILUTED)   BOS SHARES        CASH
            ------                     ------        ---------------   ----------        ----
<S>                                      <C>             <C>            <C>          <C>
            Jacob Neuhof

  13 Hankin Street, Rishon
  Lezion                                  69             25.74%         109,560      $  705,109.50

            Sara Neuhof

  13 Hankin Street, Rishon
  Lezion                                  68             25.37%         107,972      $  694,890.50
                                       =====             =====          =======      =============

            TOTAL                        137             51.11%         217,532      $1,400,000.00
</TABLE>



                                    - 29 -

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>5
<FILENAME>exhibit_10-7.txt
<TEXT>

                                                                    EXHIBIT 10.7

                            SHARE PURCHASE AGREEMENT

     This Agreement (the "AGREEMENT") is made as of November 2, 2004, by and
among Telsys Ltd., an Israeli Company No. 520038100, having its address at
Kiryat Atidim 3, Tel-Aviv ( the "SELLER") and B.O.S Better Online Solutions
Ltd., an Israeli company No. 520042565, having its address at Beit Rabin,
Teradyon Industrial Park, Misgav 20179, Israel, or an affiliate thereof (the
"PURCHASER"); and Odem Electronic Technologies 1992 Ltd., an Israeli company No.
51-1687402, having its address at 20 Frieman Jacob Street, Rishon Le-Zion,
75358, Israel (the "COMPANY").

                              W I T N E S S E T H :

     WHEREAS, the Seller is the owners of 67 issued and outstanding ordinary
shares of the Company, nominal value NIS 0.1 each (the "COMPANY SHARES")
reflecting 25% of the issued and outstanding shares in the Company; and

     WHEREAS, the Seller wish to sell to the Purchaser, 34 Company Shares,
reflecting 12.68% of the issued and outstanding shares in the Company (the "SOLD
SHARES"); and

     WHEREAS, The Purchaser wishes to acquire such Sold Shares in accordance
with the terms of this Agreement; and

     WHEREAS, the Board of Directors of the Company agrees to the transfer of
the Sold Shares, as set forth below;

     NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the parties hereby agree as follows:

1.   SALE AND PURCHASE OF SHARES.

     1.1  GENERAL. The Seller shall sell to Purchaser and the Purchaser shall
          purchase, all rights, title and interest in the Sold Shares on the
          terms of this Agreement, free from all claims, liens, charges,
          pledges, security interests, encumbrances and third party rights of
          any kind (the "SECURITY INTERESTS"), other than under the Articles, as
          amended, together with all rights, preferences and privileges
          attaching to, or conferred by, them.

     1.2  CONSIDERATION. Subject to Closing, the Purchaser shall, in
          consideration for the purchase from the Seller of the Sold Shares pay
          to the seller cash in the amount of Five Hundred Seventy Thousand
          Eight Hundred and Ninety Five US Dollars ($570,895).

2.   CLOSING OF SHARE EXCHANGE.

     2.1  CLOSING. The closing of the sale and purchase of the Sold Shares shall
          take place at a closing (the "Closing"), which will be held at the
          offices of Amit, Pollak, Matalon & Ben-Naftali, Erez & Co., Advocates
          and Notary, NYP Tower, 19th Floor, 17 Yitzhak Sadeh St., Tel-Aviv
          67775 fourteen (14) days from the date hereof or on such other date,
          time and place as the Purchaser and the Seller shall mutually agree,
          subject to the fulfillment to the Purchaser's satisfaction, or waiver
          of the conditions detailed in Section 8 below, and subject further to
          the fulfillment to the Seller's satisfaction, or waiver, of the
          conditions detailed in Section 9 below.

<PAGE>


     2.2  TRANSACTIONS AT CLOSING. At the Closing, the following transactions
          shall occur, which transactions shall be deemed to take place
          simultaneously and no transaction shall be deemed to have been
          completed or any document delivered until all such transactions have
          been completed and all required documents delivered:

          2.2.1 The Seller and the Company shall deliver, or procure the
               delivery, to the Purchaser of the following documents:

               a.   A duly executed share transfer deed with respect to the
                    transfer of all the Sold Shares to the Purchaser;

               b.   A true and correct copy of resolutions of the Board of
                    Directors of the Company, approving this Agreement and the
                    transactions contemplated hereby;

               c.   If issued by the Company, a validly executed share
                    certificate covering the Sold Shares, issued in the name of
                    the Purchaser;

               d.   A true and correct copy of resolutions of the Board of
                    Directors of the Seller, approving this Agreement and the
                    transactions contemplated hereby;

               e.   A signed opinion of counsel to Seller, in the form attached
                    hereto as EXHIBIT 2.2.1(E), dated as of the date of the
                    Closing and addressed to the Purchaser.

               f.   A true and correct copy of resolutions of the Company's
                    shareholders, properly and duly adopted resolving to amend
                    the Company's current articles of association (the
                    "ARTICLES"), in the form attached hereto as EXHIBIT 2.2.1(F)
                    (the "AMENDMENT"). The Amendment shall include the increase
                    of the size of the Board of Directors to at least 5
                    directors, and revisions to Article 32 and 32A of the
                    Articles, as more fully provided in EXHIBIT 2.2.1(F).

               g.   A waiver executed by Jacob and Sara Neuhof ("NEUHOF")
                    waiving any and all rights they may have with respect to the
                    transfer of the Sold Shares at the Closing, in the form
                    attached hereto as EXHIBIT 2.2.1(G).

               h.   A waiver executed by Seller, waiving any and all rights it
                    may have with respect to the sale and transfer of Company
                    Shares at the Closing from Neuhof to Purchaser, in the form
                    attached hereto as EXHIBIT 2.2.1(H).

               i.   A copy of an agreement terminating each of the agreement and
                    the memorandum entered into between the Seller and Neuhof on
                    September 27, 2000, effective as of the date of Closing, in
                    the form attached as EXHIBIT 2.2.1(I).

          2.2.2 The Purchaser shall deliver to the Seller true and correct
               copies of resolutions of the Purchaser's Board of Directors
               approving the transaction contemplated hereby.

          2.2.3 The Purchaser shall pay $570,895 to the Seller by wire transfer
               in immediately available funds to the account(s) of the Seller in
               Israel, the details of which appear in EXHIBIT 2.2.3 hereto. Such
               payment shall be made in NIS, according to the the NIS-U.S.
               Dollar representative rate known on the Closing Date


                                     - 2 -
<PAGE>


3.   REPRESENTATIONS AND WARRANTIES OF THE SELLER.

     The Seller, represents and warrants to the Purchaser as follows:

     3.1  It is the holder and legal owner of all rights, titles and interests
          in and to the Sold Shares, free from all Security Interests, other
          than as set forth in the Company's Articles, as amended, together with
          all rights, preferences and privileges attaching to, or conferred by,
          such Sold Shares;

     3.2  Other than as set forth in SCHEDULE 3.2, such Seller is not entitled
          to purchase, receive or otherwise acquire from the Company any
          additional securities of the Company, including without limitation
          securities exercisable or convertible into securities of the Company.

     3.3  The execution and delivery of this Agreement (and the other documents
          contemplated hereby) by such Seller does not, and the consummation of
          the transactions contemplated hereby and thereby will not:

          (a)  constitute a breach of any law, rule or regulation of any
               government applicable to the Seller;

          (b)  violate any judgment, order, injunction, decree, or ruling of any
               court or governmental authority, domestic or foreign, to which
               the Seller is subject;

          (c)  require the consent or agreement of any court, governmental body
               or entity;

          (d)  violate any material contract, agreement, indenture, mortgage,
               instrument, lease, license, arrangement, or undertaking of the
               Seller;

          (e)  result in the creation or enforcement of any Security Interest
               upon the Sold Shares held by the Seller;

     3.4  It has, and will have at the Closing, the right to sell and transfer,
          or procure the sale and transfer of, the full legal and beneficial
          interest in the Sold Shares to the Purchaser on the terms set out in
          this Agreement, free from all Security Interests.

     3.5  (a)  it is duly organized and validly existing under the laws of the
               State of Israel, with power and authority to carry on its
               business as now being conducted;

          (b)  it has the capacity and authority to execute and deliver this
               Agreement, to perform hereunder and to consummate the
               transactions contemplated hereby. All corporate action on the
               part of Seller, its directors, and its shareholders necessary for
               the authorization and execution of this Agreement, the
               authorization, sale and delivery of the Sold Shares and the
               performance of all of Seller's obligations hereunder have been
               taken. This Agreement constitutes and, when signed by its duly
               authorized representatives, all other documents contemplated
               hereby will constitute, valid and legally binding obligations of
               Seller, enforceable in accordance with their terms; and

          (c)  the execution, delivery and performance of this Agreement (and
               the other documents contemplated hereby) by Seller does not, and
               the consummation of the transactions contemplated hereby and
               thereby will not violate the provisions of Seller's
               organizational documents.


                                     - 3 -
<PAGE>


     3.6  Except as set forth in SCHEDULE 3.6, Seller is not party to any
          shareholders agreements, voting agreements, registration rights
          agreements or any other agreements or undertakings relating to the
          share capital of the Company.

     3.7  Except as set forth in SCHEDULE 3.7, no consent, approval, order,
          license, permit, action by, or authorization of or from any person or
          entity or filing with any governmental authority on the part of the
          Seller is required that has not been, or will not have been, obtained
          by the Seller prior to the Closing in connection with the valid
          execution, delivery and performance of this Agreement or the transfer
          of the Sold Shares to the Purchaser.

4.   REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. Purchaser hereby
     represents and warrants to the Seller as follows:

     4.1. CORPORATE ORGANIZATION. The Purchaser is a corporation duly
          incorporated and validly existing under the laws of Israel.

     4.2. DUE AUTHORIZATION AND VALID ISSUANCE. The Purchaser has the corporate
          power to enter into this Agreement. The Agreement has been, or will
          have been, at the time of its execution and delivery, duly executed
          and delivered by a duly authorized officer of the Purchaser.

     4.3. BINDING AGREEMENT. The Agreement constitutes valid and legally binding
          obligations of the Purchaser enforceable against the Purchaser in
          accordance with its terms, except as (i) such enforceability may be
          limited by bankruptcy, insolvency, reorganization, arrangement,
          moratorium or similar laws relating to or affecting the rights of
          creditors and contracting parties generally, (ii) the remedy of
          specific performance and injunctive and other forms of equitable
          relief may be subject to equitable defenses and to the discretion of
          the court before which any proceeding therefore may be brought.

     4.4. NON-CONTRAVENTION. Neither the execution and delivery of the
          Agreement, nor the consummation of the transactions or the performance
          of the obligations contemplated hereby will result in any violation or
          breach of Purchaser's articles of association.

5.   COVENANTS

     5.1  From and after the signing of this Agreement and until the Closing the
          Seller shall not dispose of any interest in its Company Shares or any
          of them or grant any option over or create or allow to exist any
          Security Interest over its Company Shares or any of them.

     5.2  No announcement or other disclosure concerning the sale and purchase
          of the Sold Shares or any ancillary matter shall be made before or
          after the Closing by the parties or any person acting on their behalf,
          except subject to Purchaser's prior written approval of the form and
          content of such announcement or disclosure or otherwise as required by
          law or by the applicable rules of any stock exchange or automated
          quotation system.

6.   PUT OPTION

     6.1  At any time starting from 180 days after the date hereof and ending 12
          months thereafter (the "TELSYS OPTION TERM"), Seller may serve notice
          in writing on the Purchaser requiring the Purchaser to purchase (the
          "TELSYS PUT OPTION") all of the Company Shares then held by Seller
          (the "TELSYS OPTION SHARES") in consideration for payment in cash of
          Five Hundred Fifty Four Thousand One Hundred and Five US Dollars
          ($554,105) The Telsys Put Option may be exercised by the Seller in one
          occasion during the Telsys Option Term, in full and not in part.


                                     - 4 -
<PAGE>


     6.2  The closing of the Telsys Put Option shall be subject to: (i) Seller's
          provision, at such closing, of the representation and warranties of
          Section 3 hereof, with respect to the Telsys Option Shares; and (ii)
          the representation and warranties made by Seller in this Agreement
          shall have been true and correct as of the Closing Date.

7.   BOARD OF DIRECTORS

     7.1  Prior to the Company's IPO, the following shall apply:

          (a)  Neuhof shall have the right to appoint one (1) member of the
               Company's Board of Directors, for as long as Neuhof holds at
               least sixty four (64) shares of the Company.

          (b)  Seller shall have the right to appoint one (1) member of the
               Company's Board of Directors, for as long as Seller holds at
               least thirty three (33) shares of the Company.

          (c)  Purchaser shall have the right to appoint all the remaining
               members of the Company's Board of Directors, and no less than
               three (3) members.

     7.2  The parties hereby undertake to vote their shares of the Company in
          order to give effect to the provisions of this Section 7.

8.   CONDITIONS OF CLOSING OF THE PURCHASER. The obligation of the Purchaser to
     purchase the Sold Shares at the Closing are subject to the fulfillment at
     or before the Closing of the following conditions precedent, any one or
     more of which may be waived in whole or in part by and at the sole
     discretion of the Purchaser:

     8.1. REPRESENTATIONS AND WARRANTIES. The representations and warranties
          made by the Seller in this Agreement shall have been true and correct
          when made, and shall be true and correct as of the Closing as if made
          on the date of the Closing.

     8.2. COVENANTS. All covenants, agreements, and conditions contained in this
          Agreement to be performed or complied with by the Seller prior to the
          Closing shall have been performed or complied with by the Seller,
          prior to or at the Closing.

     8.3. NO INJUNCTION. No statute, rule, regulation, executive order, decree,
          ruling or injunction shall have been enacted, entered, promulgated or
          endorsed by any court or governmental authority of competent
          jurisdiction, which prohibits the consummation of any of the
          transactions contemplated by this Agreement.

     8.4. CONSENTS, ETC. The Seller shall has secured all permits, consents,
          approvals and authorizations that shall be necessary or required of it
          lawfully to consummate the transactions contemplated by this Agreement
          and to transfer the Sold Shares to be purchased by the Purchaser at
          the Closing.

     8.5. DELIVERY OF DOCUMENTS. All of the documents to be delivered to the
          Purchaser pursuant to Section 2 shall have been fully-executed (if
          applicable) by all parties whose names appear as intended signatories
          thereto (other than the Purchaser), and delivered to the Purchaser.


                                     - 5 -
<PAGE>


     8.6. APPROVALS. The Purchaser shall have received all necessary approvals
          by the OCS and the Investment Center and of Laurus Master Fund with
          respect to the transactions contemplated hereby.

     8.7. NOTICES TO NASDAQ THE TASE AND THE ISA. The Purchaser shall have made
          all required filings of notices with NASDAQ, the Tel Aviv Stock
          Exchange and the Israel Securities Authority and has received no
          notice adversely affecting the performance of the transactions
          contemplated hereunder. The Purchaser shall use its commercially
          reasonable efforts to complete such filings.

     8.8. RIGHTS OF FIRST REFUSAL. No Company Shareholder or any other person
          has any rights of first refusal, tag along or similar rights in
          connection with the issuance of any of the Sold Shares pursuant to
          this Agreement, except those rights which have been duly waived.

     8.9. PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings of the
          Company and the Seller in connection with the transactions
          contemplated by this Agreement and all documents and instruments
          incident to such transactions shall be satisfactory in substance and
          form to the Purchaser and its counsel, and the Purchaser and its
          counsel shall have received all such counterpart originals or
          certified or other copies of such documents as the Purchaser or its
          counsel may reasonably request.

     8.10. ABSENCE OF ADVERSE CHANGES. From the date hereof until the Closing,
          there will have been no material adverse change in the financial or
          business condition of the Company, in the sole judgment of the
          Purchaser.

     8.11. NEUHOF CLOSING. The closing of the purchase by Purchaser from Neuhof
          of 137 Company Shares, reflecting approximately 51% of the issued and
          outstanding Company Shares.

     8.12. DUE DILIGENCE. The completion of the due diligence review of the
          Company by the Purchaser to the sole and complete satisfaction of the
          Purchaser.

9.   CONDITIONS OF CLOSING OF THE SELLER. Seller's obligation to sell the Sold
     Shares at the Closing is subject to the fulfillment, at the discretion of
     the Seller, at or before the Closing of the following conditions precedent,
     any one or more of which may be waived in whole or in part by the Seller:

     9.1. REPRESENTATIONS AND WARRANTIES. The representations and warranties
          made by the Purchaser in this Agreement shall have been true and
          correct when made, and shall be true and correct as of the Closing as
          if made on the date of the Closing.

     9.2. COVENANTS. All covenants, agreements, and conditions contained in this
          Agreement to be performed or complied with by the Purchaser prior to
          the Closing shall have been performed or complied with by the
          Purchaser prior to or at the Closing.

     9.3. CONSENTS, ETC. The Purchaser shall have secured all permits, consents
          and authorizations that shall be necessary or required of it lawfully
          to consummate this Agreement and to issue the Consideration Shares to
          be issued at the Closing.

     9.4. DELIVERY OF DOCUMENTS. All of the documents to be delivered to the
          Seller pursuant to Section 2 shall have been fully-executed (if
          applicable) by all parties whose names appear as intended signatories
          thereto (other than the Seller), and delivered to the Seller or the
          Company. The resolutions to be adopted by the Company's Board of
          Directors and shareholders pursuant to Section 2 hereof, and the
          documents to be delivered to the Purchaser by Neuhof pursuant to
          Section 2 shall have been duly adopted and delivered to the Purchaser.


                                     - 6 -
<PAGE>

10.  [Reserved]

11.  INDEMNIFICATION AND REMEDIES

     11.1. The Seller and the Company agree, jointly and severally, to
          indemnify, and hold the Purchaser harmless against and in respect of
          any and all loss, liability, deficiency or damage, or actions in
          respect thereof (including reasonable legal fees and expenses) and any
          reduction in the value of the Sold Shares purchased by the Purchaser
          hereunder ("DAMAGES"), as and when incurred, occasioned by (i) any
          breach of this Agreement; or (ii) any breach of any of the
          representations and warranties of the Seller contained in Section 3
          hereof (each such representation and warranty is deemed to be made on
          the date of this Agreement and at the Closing) or any certificate or
          other instrument furnished or to be furnished by the Seller hereunder.

     11.2. The Purchaser agrees to indemnify and hold the Seller harmless
          against and in respect of any Damages, as and when incurred,
          occasioned by any breach of any of the representations and warranties
          of the Purchaser contained in Section 4 hereof (each such
          representation and warranty is deemed to be made on the date of this
          Agreement and at the Closing) or any certificate or other instrument
          furnished or to be furnished by the Purchaser hereunder.

     11.3. Promptly after (i) receipt by the party making the claim pursuant to
          this Section (or any of its directors, employees and advisors) of
          notice of the commencement of any action, proceeding, or
          investigation; or (ii) the party making the claim pursuant to this
          Section (or any of its directors, employees and advisors) becoming
          aware of any breach of this Agreement or falsity of representation, in
          each case, in respect of which indemnity may be sought as provided
          above, such person (the "INDEMNIFIED PARTY") shall notify the party or
          parties from whom indemnification is claimed (the "INDEMNIFYING
          PARTY") of the claim and, when known, the facts constituting the basis
          of such claim. In the event of any such claim for indemnification
          hereunder resulting from or in connection with any claim or legal
          proceeding by a third party, the notice to the Indemnifying Party
          shall specify, if known, the amount of damages asserted by such third
          party.

     11.4. Upon receipt of any such notice from the Indemnified Party, the
          Indemnifying Party shall be entitled to participate in the defense of
          such claim and may assume the defense of such claim at its own expense
          and by its own counsel. If the Indemnifying Party elects to assume the
          defense of such claim, the Indemnified Party shall reasonably
          cooperate with the Indemnifying Party in defending such claim, at the
          expense of the Indemnifying Party. The parties acknowledge and agree
          that in the event the Indemnifying Party has properly assumed the
          defense of such claims provided herein, the Indemnified Party shall be
          entitled to retain its own counsel to participate in the defense of
          such claim at its own cost and expense.

     11.5. No claim shall be settled or compromised by the Indemnifying Party
          without the written consent of the Indemnified Party (which shall not
          be unreasonably withheld) if such settlement or compromise requires
          the Indemnified Party to make any payment or to take or refrain from
          taking any action or enjoins the Indemnified Party or subjects it to
          other equitable relief or subjects it to any potential criminal law,
          claim or liability.

     11.6. NO LIMITATION. The provisions of this Section shall not limit or
          impair any right or remedy available to the Purchaser under any
          applicable law or agreement, arising from or in connection with a
          breach of a covenant, or a fraudulent misrepresentation.


                                     - 7 -
<PAGE>

12.  MISCELLANEOUS

     12.1. FURTHER ASSURANCES. Each of the parties hereto shall perform such
          further acts and execute such further documents as may reasonably be
          necessary to carry out and give full effect to the provisions of this
          Agreement and the intention of the parties as reflected hereby.

     12.2. GOVERNING LAW; JURISDICTION. This Agreement shall be governed by and
          construed according to the laws of the State of Israel, without regard
          to the conflict of laws provisions thereof. Any dispute arising under
          or in relation to this Agreement shall be resolved in the competent
          court of Tel Aviv-Jaffa district only, and each of the parties hereby
          submits irrevocably to the exclusive jurisdiction of such court.

     12.3. EXPENSES. Each of the parties hereto shall be responsible for its own
          costs and expenses (including legal fees) in connection with this
          Agreement and any other documents or actions relating to the
          transactions contemplated by this Agreement. All stamp duty and filing
          fees payable in respect of this Agreement or the transfer of shares as
          contemplated hereby shall be borne equally by the Sellers, on the one
          hand, and the Purchaser, on the other

     12.4. SUCCESSORS AND ASSIGNS; ASSIGNMENT. Except as otherwise expressly
          limited herein, the provisions hereof shall inure to the benefit of,
          and be binding upon, the successors, assigns, heirs, executors, and
          administrators of the parties hereto. None of the rights, privileges,
          or obligations set forth in, arising under, or created by this
          Agreement may be assigned or transferred without the prior consent in
          writing of each party to this Agreement.

     12.5. ENTIRE AGREEMENT. This Agreement and the Schedules and Exhibits
          attached hereto constitute the full and entire understanding and
          agreement between the parties with regard to the subject matters
          hereof and thereof.

     12.6. NOTICES, ETC. All notices and other communications required or
          permitted hereunder to be given to a party to this Agreement shall be
          in writing and shall be faxed or mailed by registered or certified
          mail, postage prepaid, or otherwise delivered by hand or by messenger,
          addressed to such party's address as set forth below or in SCHEDULE A,
          as the case may be, or at such other address as the party shall have
          furnished to each other party in writing in accordance with this
          provision:

          if to the Purchaser:

                         B.O.S. Better On-Line Solutions Ltd.
                         Beit Rabin, Teradyon Industrial Park,
                         Misgav 20179, Israel

                         Attention: Chief Financial Officer
                         Facsimile:      (972) 4 999-0334

                         WITH A COPY TO:

                         Amit, Pollak, Matalon & Ben-Naftali,
                         Erez & Co.NYP Tower, 17 Yitzhak
                         Sadeh Street, 19th Floor
                         Tel Aviv 67775
                         Attention: Shlomo Landress, Adv.

                         Facsimile: (972) 3 561-3620

          if to the Company: to the address listed in the preamble to this
          Agreement


                                     - 8 -
<PAGE>


         if to the  Seller:  Telsys Ltd.

                                     Kiryat Atidim 3, Tel-Aviv

                                     Attention: _______________
                                     Telephone: ______________

                         Facsimile: _______________

          Any notice sent in accordance with this Section 12.6 shall be
          effective (i) if mailed, three (3) business days after mailing, (ii)
          if sent by messenger, upon delivery, and (iii) if sent via facsimile,
          upon transmission and electronic confirmation of receipt or (if
          transmitted and received on a non-business day) on the first business
          day following transmission and electronic confirmation of receipt
          (provided, however, that any notice of change of address shall only be
          valid upon receipt).

     12.7. DELAYS OR OMISSIONS. No delay or omission to exercise any right,
          power, or remedy accruing to any party upon any breach or default
          under this Agreement, shall be deemed a waiver of any other breach or
          default theretofore or thereafter occurring. Any waiver, permit,
          consent, or approval of any kind or character on the part of any party
          of any breach or default under this Agreement, or any waiver on the
          part of any party of any provisions or conditions of this Agreement,
          must be in writing and shall be effective only to the extent
          specifically set forth in such writing. All remedies, either under
          this Agreement or by law or otherwise afforded to any of the parties,
          shall be cumulative and not alternative.

     12.8. SEVERABILITY. If any provision of this Agreement is held by a court
          of competent jurisdiction to be unenforceable under applicable law,
          then such provision shall be excluded from this Agreement and the
          remainder of this Agreement shall be interpreted as if such provision
          were so excluded and shall be enforceable in accordance with its
          terms; provided, however, that in such event this Agreement shall be
          interpreted so as to give effect, to the greatest extent consistent
          with and permitted by applicable law, to the meaning and intention of
          the excluded provision as determined by such court of competent
          jurisdiction.

     12.9. COUNTERPARTS. This Agreement may be executed in any number of
          counterparts, each of which shall be deemed an original and
          enforceable against the parties actually executing such counterpart,
          and all of which together shall constitute one and the same
          instrument.

                  [Remainder of page intentionally left blank.]


                                     - 9 -
<PAGE>



     IN WITNESS WHEREOF the parties have signed this Share Exchange Agreement as
of the date first hereinabove set forth.

      PURCHASER:                                COMPANY:

_____________________________                   _____________________________
      B.O.S. BETTER ONLINE                      ODEM ELECTRONIC
      SOLUTIONS LTD.                            TECHNOLOGIES LTD.

Name: _______________________                   Name: _______________________
Title:_______________________                   Title:_______________________





      SELLER:

_____________________________
      TELSYS LTD.

Name: _______________________
Title:_______________________



                                    - 10 -


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>6
<FILENAME>exhibit_23-2.txt
<TEXT>

                                                                    EXHIBIT 23.2

            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the references to our firm under the caption "Experts" in
Amendment No.2 to the Registration Statement on Form F-3 and related prospectus
of B.O.S Better Online Solutions Ltd. ("BOS") for the registration of 1,190,228
of its Ordinary shares and to the incorporation by reference therein of our
report dated March 22, 2004 (except for note 1e, for which the date is January
6, 2005), with respect to the consolidated financial statements of BOS included
in its Annual Report on Form 20-F/A, for the year ended December 31, 2003, filed
with the Securities and Exchange Commission on January 6, 2005.

We also consent to the incorporation by reference to such Registration Statement
and related Prospectus of our report dated April 4, 2004 with respect to the
consolidated financial statements of Surf-Communications Solutions Ltd. included
in the abovementioned Annual Report of BOS.

                                               /s/ Kost Forer Gabbay & Kasierer

Tel Aviv, Israel                               Kost Forer Gabbay & Kasierer
January 6, 2005                                A Member of Ernst & Young Global





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>7
<FILENAME>exhibit_23-4.txt
<TEXT>

                                                                    EXHIBIT 23.4

                                                 CHAIKIN, COHEN, RUBIN & GILBOA.

Atidim Technology Park, Bldg. 4,
P.O.B. 58143 Tel-Aviv 61580, Israel
TEL: 972-3-6489858 FAX: 972-3-6489946
E-MAIL: accounting@ccrcpa.co.il
- --------------------------------------------------------------------------------
                                             CERTIFIED PUBLIC ACCOUNTANTS (ISR.)



                         CONSENT OF INDEPENDENT AUDITORS


We consent to the reference to our firm under the caption "Experts" in this
Registration Statement on Form F-3 and related prospectus of B.O.S Better Online
Solutions Ltd. ("BOS") and to the incorporation by reference therein of our
report dated January 4, 2005, with respect to the financial statements of Quasar
Communication Systems Ltd. included in BOS' current report on Form 6-K, filed
with the Securities and Exchange Commission on January 10, 2005.




                                                     SINCERELY YOURS,

                                             /S/ Chaikin, Cohen, Rubin & Gilboa

                                               CHAIKIN, COHEN, RUBIN & GILBOA
                                             Certified Public Accountants (Isr.)

Tel Aviv, Israel
January 10, 2005

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>8
<FILENAME>exhibit_23-5.txt
<TEXT>

                                                                    EXHIBIT 23.5

CONSENT OF  INDEPENDENT REGISTERED PUBLIC ACOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration
Statement on Form F-3 (No.333-117529) of B.O.S. Better Online Solutions Ltd.
("BOS") of our report dated December 12, 2004 relating to the financial
statements of Odem Electronic Technologies 1992 Ltd. which appears in the
current Report on Form 6-K of BOS dated January 10, 2005. We also consent to the
references to us under the heading "Experts" in such Registration Statement.

                                               /S/ Kesselman & Kesselman

Jerusalem, Israel                                 Kesselman & Kesselman
January 10, 2005                            Certified Public Accountants (Isr.)










</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
