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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0001178913-06-001656.txt : 20060907
<SEC-HEADER>0001178913-06-001656.hdr.sgml : 20060907
<ACCEPTANCE-DATETIME>20060907101431
ACCESSION NUMBER:		0001178913-06-001656
CONFORMED SUBMISSION TYPE:	F-3
PUBLIC DOCUMENT COUNT:		10
FILED AS OF DATE:		20060907
DATE AS OF CHANGE:		20060907

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
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-137153
		FILM NUMBER:		061078268

	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
<SEQUENCE>1
<FILENAME>zk62889.htm
<TEXT>
<HTML>
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     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        \\backup\office\EDGAR Filing\BOS better online solutions Ltd\62889\a62889.eep -->
     <!-- Control Number: 62889                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    BOS better online solutions Ltd                                  -->
     <!-- Project Name:   F-3                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>F-3</TITLE>
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As
filed with the Securities and Exchange Commission on September 7, 2006  </FONT></TD>
</TR>
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Registration
No. 333-__________  </FONT></TD>
</TR>
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<BR>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>UNITED STATES</B> </FONT> <BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE="4"><B>SECURITIES AND
EXCHANGE COMMISSION</B> </FONT> <BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2">Washington, D.C. 20549 </FONT> </P>

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<TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="4"><B>FORM
F-3</B> </FONT> <BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE=2>
REGISTRATION
STATEMENT  <BR>
UNDER
THE SECURITIES ACT OF 1933  </FONT></TD>
</TR>
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<BR>

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<TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="5"><B>
B.O.S
BETTER ONLINE SOLUTIONS LTD.</B> </FONT> </TD>
</TR>
</TABLE>


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<I>(Exact
name of Registrant as specified in its charter) </I> </FONT></TD>
</TR>
</TABLE>
<BR>


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<TR VALIGN=Bottom>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH="50%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Israel</B> </FONT></TD>
     <TD WIDTH="50%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Not Applicable</B> </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>(State or other jurisdiction of </I></FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>(I.R.S. Employer</I></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>incorporation or organization)</I></FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Identification No.)</I></FONT></TD></TR>
</TABLE>
<BR>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Beit Rabin, Teradyon
Industrial Park, <BR>
Misgav, 20179, Israel <BR>
(+972) 4-990-7555 <BR>
<I>(Address and
Telephone Number of Registrant&#146;s principal executive offices) </I></FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Corporation Service
Company <BR>
1133 Avenue of the
Americas, Suite 3100 <BR>
New York, NY 10036 <BR>
Tel: (212) 299-9100 <BR>
<I>(Name, address and
telephone number of agent for service) </I></FONT></P>

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Copies
To:  </FONT></TD>
</TR>
</TABLE>
<BR>


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<TR VALIGN=Bottom>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B></B> </FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B></B> </FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B></B> </FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B></B> </FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B></B> </FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B></B> </FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B></B> </FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B></B> </FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B></B> </FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B></B> </FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH="50%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Brian Brodrick, Esq</B> </FONT></TD>
     <TD WIDTH="50%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Shlomo Landress, Adv.</B> </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Phillips Nizer LLP</B> </FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Amit, Pollak, Matalon &amp; Co.</B> </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>666 Fifth Avenue</B> </FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>NYP Tower, 17 Yitzhak Sadeh Street</B> </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>New York, New York 10103</B> </FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Tel Aviv 67775, Israel</B> </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>(212) 841-0700</B> </FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>972-3-561-5268</B> </FONT></TD></TR>
</TABLE>
<BR>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Approximate
date of commencement of proposed sale to the public</B>: From time to time after this
registration statement becomes effective. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the only securities being registered on this Form are being offered pursuant to dividend
or interest reinvestment plans, please check the following box. <FONT size="3" face="Wingdings">o</font> </FONT></P>

<p align=center>
<font size=2></font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. <FONT size="3" face="Wingdings">x</font> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. <FONT size="3" face="Wingdings">o
</font> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. <FONT size="3" face="Wingdings">o
</font> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
this Form is a registration statement pursuant to General Instruction I.C. or a
post-effective amendment thereto that shall become effective upon filing with the
Commission pursuant to Rule 462(e) under the Securities Act, check the following
box. <FONT size="3" face="Wingdings">o
</font> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
this Form is a post-effective amendment to a registration statement filed pursuant to
General Instruction I.C. filed to register additional securities or additional classes of
securities pursuant to Rule 413(b) under the Securities Act, check the following box. <FONT size="3" face="Wingdings">o
</font> </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CALCULATION OF
REGISTRATION FEE </FONT></H1>



<TABLE CELLPADDING=3 CELLSPACING=0 BORDER=1 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Title of Each Class<BR>
of Securities to be Registered</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Amount to be<BR>
Registered</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Proposed Maximum<BR>
Offering Price<BR>
Per Share</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Proposed Maximum<BR>
Aggregate Offering<BR>
Price</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Amount of<BR>
Registration<BR>
Fee</FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=44% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Ordinary Shares, nominal value NIS 4.00<BR>per share</FONT></TD>
     <TD WIDTH="19%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>645,720(1)(2)</FONT></TD>
     <TD WIDTH="11%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$&nbsp;5.30(3)</FONT></TD>
     <TD WIDTH="16%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$3,422,316(3)</FONT></TD>
     <TD WIDTH="10%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$367</FONT></TD></TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Represents
ordinary shares registered for resale by the selling shareholder.
                    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. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Represents
(i) an aggregate of 572,668 shares issuable upon conversion of $1.5
                    million in principal amount of the Registrant&#146;s Secured
Convertible Term                     Note due August 16, 2009 (the &#147;Note&#148;), and
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 for the first $500,000 of principal                     amount payable
under the Note (and any related interest shares) and $4.08 for                     any
additional amount payable thereunder, and (ii) 73,052 shares issuable upon
                    exercise of warrants that were issued to the purchaser of the Note,
at an                     exercise price of $4.04 for the first 24,350 shares acquirable
under the                     warrants and $5.30 per share for any additional shares
acquirable under the                     warrants. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(3)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Calculated
pursuant to Rule 457(g) of the Securities Act. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. </FONT></P>

<p align=center>
<font size=2></font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>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.</B> </FONT></P>

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<TD><HR SIZE="1" noshade color="#000000" style="margin-top: -2px">
<HR SIZE="4" noshade color="#000000" style="margin-top: -10px"> </TD>
</TR>
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<TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
SUBJECT
TO COMPLETION, DATED September 7, 2006  </FONT></TD>
</TR>
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<BR>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PROSPECTUS </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>B.O.S BETTER ONLINE
SOLUTIONS LTD. </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Up to 645,720 Ordinary
Shares </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The selling shareholder identified in
this prospectus, may offer to sell up to 645,720 of ordinary shares issuable upon the
conversion of a convertible note due August 16, 2009 and upon the exercise of a warrant,
both of which were issued by B.O.S Better Online Solutions Ltd. (&#147;BOS&#148;) to the
selling shareholder, Laurus Master Fund, in a private placement transaction on August 16,
2006 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. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOS is filing the registration
statement of which this prospectus is a part at this time to fulfill a contractual
obligation to do so, which the company undertook at the time of the sale of the note and
the warrants. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our ordinary shares are traded on the
Nasdaq Global Market under the symbol &#147;BOSC&#148; and on the Tel-Aviv Stock Exchange
under the symbol &#147;BOSC&#148;. On September 5, 2006, the last reported sale price of
our ordinary shares on the Nasdaq Global Market was $2.40 per share. You are urged to
obtain current market quotations for the ordinary shares. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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 the selling shareholder unless the warrants
are exercised in a &#147;cashless&#148; exercise, in which case we will receive no
proceeds upon such exercise. 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. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>You should read both this prospectus
and any prospectus supplement, together with the additional information described under
the heading &#147;Incorporation of Certain Documents by Reference&#148; before you decide
to invest in our ordinary shares. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>INVESTING
IN OUR ORDINARY SHARES INVOLVES A HIGH DEGREE OF RISK. SEE &#147;RISK FACTORS&#148;
BEGINNING ON PAGE <U>4</U> OF THIS PROSPECTUS TO READ ABOUT FACTORS YOU SHOULD CONSIDER
BEFORE PURCHASING OUR ORDINARY SHARES.</B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Neither
the Securities and Exchange Commission nor any state securities commission or the Israeli
Securities Authority 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</B>. </FONT></P>

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<TR VALIGN=TOP>
<TD><HR SIZE="1" NOSHADE WIDTH="15%" ALIGN="CENTER"> </TD>
</TR>
</TABLE>


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<TR VALIGN=TOP>
<TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
date of this prospectus is ________, 2006  </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2></font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>TABLE OF CONTENTS </FONT></H1>









<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Page</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=90% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk101">Prospectus Summary</a></FONT></TD>
     <TD WIDTH="10%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk102">The Offering</a></FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk103">Risk Factors</a></FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk104">Forward-Looking Statements</a></FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>15</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk105">Use of Proceeds</a></FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>15</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk106">Selling Shareholder</a></FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>16</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk107">Description of Ordinary Shares</a></FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>18</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk108">Plan of Distribution</a></FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>19</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk109">Validity of Securities</a></FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>21</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk110">Experts</a></FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>21</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk111">Where You Can Find More Information</a></FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>21</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk112">Incorporation of Certain Documents by Reference</a></FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>22</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk113">Enforceability of Civil Liabilities</a></FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23</FONT></TD></TR>
</TABLE>
<BR>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

<p align=center>
<font size=2>2</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<a name=zk101></a>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PROSPECTUS SUMMARY </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ABOUT THIS PROSPECTUS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
prospectus is part of a registration statement that we filed with the United States
Securities and Exchange Commission, or the SEC, utilizing a &#147;shelf&#148; registration
process. Under this shelf process, the selling shareholder may offer up to a total of
645,720 ordinary shares, from time to time, in one or more offerings in any manner
described under the section in this prospectus entitled &#147;Plan of Distribution.&#148; </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 a copy of the actual document filed as
an exhibit to the registration statement or otherwise filed with the SEC. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have not authorized anyone to provide you with information different from that contained
or incorporated by reference in this prospectus. The selling shareholder is 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. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless
the context otherwise requires, all references in this prospectus to &#147;BOS,&#148;
&#147;we,&#148; &#147;our,&#148; &#147;our company,&#148; &#147;us&#148; and the
&#147;Company&#148; refer to BOS Better Online Solutions Ltd. and its consolidated
subsidiaries. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
references in this prospectus to &#147;ordinary shares&#148; refer to our ordinary shares,
nominal value NIS 4.00 per share. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
references in this prospectus to &#147;dollars&#148; or &#147;$&#148; are to United States
dollars. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
references in this prospectus to &#147;shekels&#148; or &#147;NIS&#148; are to New Israeli
Shekels. </FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>THE COMPANY </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We were incorporated in Israel in
1990 and are subject to the Israeli Companies Law 1999 &#150; 5759. We design, integrate
and test our products in our facilities in two locations in Israel. Our headquarters and
manufacturing facilities are located at Teradyon Industrial Zone, Misgav 20179 Israel. The
facilities of our subsidiary, Odem Electronic Technologies 1992 Ltd., are located in the
center of Israel. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our telephone number is
972-4-990-7555 and our website address is www.boscorporate.com. The information contained
on, or linked from, our website is not a part of this prospectus. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We currently manage our operation
through our two wholly-owned subsidiaries: </FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOScom
Ltd. that is engaged in the connectivity solutions segment of our business; and</FONT></TD>
</TR>
</TABLE>
<BR>


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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Odem
Electronic Technologies 1992 Ltd. that is engaged in the supply of electronic components
and          solutions segment of our business.</FONT></TD>
</TR>
</TABLE>
<BR>


<p align=center>
<font size=2>3</font></p>
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<page>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Our</B> <B>Connectivity solutions
segment, </B>focuses on providing emulation solutions for the popular IBM iSeries,
enabling customers to extend its capabilities and life cycle. Our server and associated
modules empower the iSeries, providing a scaleable solution for transparent expansion and
growth. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Our Electronic Components segment,
</B>provides solutions in RFID (radio frequency identification devices), semiconductors,
electronic components, CCD (charge &#150; coupled device), imaging, networking, telecom
and automation. Odem is a major solution provider and distributor of electronic components
and advance technologies in the Israeli market. </FONT></P>

<a name=zk102></a>


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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>THE OFFERING </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
prospectus relates to up to 645,720 ordinary shares that may be offered for sale by the
selling shareholder. The ordinary shares are issuable upon the conversion of a
convertible note due August 16, 2009 and upon the exercise of warrants, both of which
were issued by BOS to Laurus Master Fund in a private placement transaction on August 16,
2006, 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 &#147;Selling Shareholder&#148;.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;BOS
is filing the registration statement of which this prospectus is a part at this time 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 shareholder. </FONT></P>

<a name=zk103></a>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>RISK FACTORS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>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.</I> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Risks relating to our business: </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>We have had a history of
losses and our future levels of sales and ability to achieve profitability are  unpredictable.</I></B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have incurred net losses of $3.6 million in 2005, $2.1 million in 2004 and $21,000 in
2003. As of December 31, 2005, we had an accumulated deficit of $42.7 million. Only in the
fourth quarter of 2005 did we manage to breakeven, and there can be no assurance that this
trend will continue. According to our unaudited financial reports for the six months ended
June 30, 2006, we had an operating loss of $500,000 and a net profit of $174,000, which
was mainly due to other income in the amount of $958,000, resulting form the receipt of
Qualmax Inc. shares. Our ability to maintain and improve future levels of sales and
profitability depends on many factors. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>These factors include: </FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
continued demand for our existing products;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
ability to develop and sell new products to meet customer needs;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>management's
ability to control costs and successfully implement our business strategy; and</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
ability to manufacture and deliver products in a timely manner.</FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>4</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
can be no assurance that we will experience any growth in sales or achieve profitability
in the future or that the levels of historic sales or profitability experienced during
previous years will continue in the future or that our net losses will not increase in the
future. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>Fluctuations in our
operating results could result in lowered prices, and we may be unable to maintain our gross
profit margins.</I></B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
sales and profitability may vary in any given year, and from quarter to quarter. In order
to increase sales and enter into new markets with new products we may find it necessary to
decrease prices in order to be competitive. Additionally, the gross profit margin of our
subsidiary, Odem, whose sales accounted for 75% of our total sales in 2005, tends to
fluctuate. We may not be able to maintain current gross profit margins in the future,
which would have a material adverse effect on our business. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>We have limited capital
resources and we may encounter difficulties raising capital. </I></B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Continued
expansion requires additional resources and especially working capital. If our efforts to
raise capital do not succeed, our efforts to increase our business and to compete in the
marketplace may be seriously jeopardized, which would have a materially adverse effect on
our business. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>A significant part of&nbsp;the
revenues of our wholly-owned subsidiary, Odem Electronic Technologies 1992 Ltd.
(&#147;Odem&#148;), is from one major customer. Our business relationship with such
customer involves the following risks:</I></B> </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>An
interruption in our business relationship with such customer&nbsp;would&nbsp;materially
adversely impact  our financial results.</I></B></FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales
to this customer accounted for 14% of our revenues in year 2005 and for 20% in the first
six months of 2006. An interruption in our business relationship with such
customer&nbsp;would result in a significant reduction in our revenues and in a write-off
of inventory, and would have an adverse effect on our business and results of
operations.&nbsp; </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>Significant
appreciation in the cost price of electronic components under a long term sales agreement
with a fixed sales price with this customer, may materially adversely impact our
 financial results.</I></B></FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
September 2004, Odem entered into a long term sales agreement with the aforementioned
customer for the supply of electronic components. The agreement provides for a fixed sales
price of the components during the term of the agreement through December 2008. Absent the
flexibility to increase our prices as a result of increased costs of the components,
significant increased costs may adversely impact our financial results. </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>The
relationship with this customer requires us to hold large inventory, in order to meet its
short </I></B><I></I><B><I>lead time and delivery requirements. If we are unable to sell
this inventory on a timely basis, we </I></B><I></I><B><I>could incur charges for excess
and obsolete inventory, which would materially adversely affect our </I></B><I></I><B><I>results
of operations.</I></B></FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
the agreement with Odem&#146;s aforementioned major customer, we are obligated to hold
inventory of products necessary for three months of the customer&#146;s production. This
requires us to incur the costs of purchasing inventory without having an outstanding
purchase order for the products. If we are unable to sell products that are purchased to
hold in inventory, we may incur write-offs and writedowns as a result of slow moving
items, technological obsolescence, excess inventories, discontinued products and products
with market prices lower than cost. Such write-offs and write-downs could adversely affect
our operating results and financial condition. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>We may be unable to maintain
and continue developing marketing and distribution arrangements and expand our reach into
oversea markets. Additionally, we have limited experience in selling in the Far East,
which could have a materially adverse impact on our results of operation.</I></B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
2005, nearly half of our revenues were generated from sales outside Israel. If we are not
able to maintain our existing distribution channels and expand to new international
markets, our operating results may be materially adversely affected. Additionally, in 2005
and in the first six months of 2006, our sales to the Far East accounted for 22% and 13%
of our total sales, respectively. We have limited sales and marketing experience in the
Far East. Furthermore, in October 2005 the major supplier of products sold by Odem in the
Far East territory, opened a headquarters in China, and began selling in competition with
Odem in this territory. If we are unable to continue to achieve the same Far East sale
levels as were achieved in 2005, our business condition and results of operation may be
materially adversely affected. </FONT></P>

<p align=center>
<font size=2>5</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>We recently sold our
Communication segment to IP Gear Ltd., a subsidiary of Qualmax Inc., in exchange for shares
of Qualmax Inc. Common Stock. If Qualmax is not successful in its business, we may
lose the value of our investment.</I></B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
December 31, 2005 we closed a transaction for the sale of our Communications segment to IP
Gear Ltd., a wholly owned subsidiary of Qualmax Inc. The consideration was comprised
mostly of common stock of Qualmax Inc. Qualmax Inc. has a limited operating history on
which to judge whether or not this company will be successful. If Qualmax is not
successful in its business or if Qualmax&#146;s share price is subject to a prolonged
decline, we may lose the value of our investment, and be required to record an impairment
of the investment, which could materially affect our results of operation. Additionally,
we are entitled to certain earn out shares in 2006 based upon revenues that IP Gear will
generate from the sold segment. In June 2006, we received 250,000 ordinary shares, however
there is no assurance that the revenues shall be such that will grant us any additional
earn out shares. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>We have limited order backlog.
If revenue levels for any quarter fall below our expectations, our result of operation
will be adversely affected.</I></B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have a limited order backlog, which makes revenues in any quarter substantially dependent
on orders received and delivered in that quarter. We base our decisions regarding our
operating expenses on anticipated revenue trends, and our expenses level are relatively
fixed, or require some time for adjustment. Hence, revenue levels below our expectations
will adversely affect our results of operation. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>In 2004 we completed the
acquisition of a controlling stake in Odem. In September 2005, we acquired another 23.9%
of Odem&#146;s shares and in November 2005, we increased our holdings in Odem to 100%. The
integration of this acquisition may interrupt the activities of the combined companies and
could have an adverse effect on our business, results of operations, financial condition
or prospects.</I></B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
acquisition of Odem involved the integration of a company that had previously operated
independently. The difficulties of combining Odem&#146;s operations with our other
operations included, and continue to be, but are not limited to: the necessity of
coordinating geographically separate organizations and integrating personnel with diverse
business backgrounds, potential difficulties in retaining employees and the associated
adverse effects on relationships with existing partners. The integration may interrupt the
activities of the combined companies&#146; businesses and may result in the loss of key
personnel. This could have an adverse effect on our business, results of operations,
financial condition or prospects. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>The sales of our Connectivity
products in the US depend on one master distributor. In the event that we cease 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.</I></B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
market Connectivity products in the USA through one master distributor. In 2005 and in the
first six months of 2006, our sales of Connectivity products in the US market accounted
for 9% and 8% of our total sales, respectively and for approximately 23% and 21% of our
gross profit, respectively. In the event that we cease 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. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>Our Connectivity division
is 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.</I></B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
offer our Connectivity solutions to the IBM midrange computer communications market. 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 competitors, which may adversely affect our
ability to successfully market our products and services. </FONT></P>

<p align=center>
<font size=2>6</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
market for our connectivity 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. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Some
of our current and potential competitors for connectivity products 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. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>In late 2002 we decided
to wind up the business of our subsidiary, Pacific Information Systems, Inc. (&#147;PacInfo&#148;),
due to its severe financial situation.</I></B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
wind up process was accompanied by settlements with a majority but not all of
PacInfo&#146;s creditors. An action by any of such remaining creditors would result in
additional costs to the Company. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Furthermore,
certain actions involving PacInfo, if occurred before the end of 2003, may have triggered
a tax event for PacInfo former owners (the &#147;Sellers&#148;). In such event, we may be
obligated, under the purchase agreement, to grant the Sellers a loan on a full recourse
basis for certain tax payments the Sellers may be liable for, currently estimated at
approximately $2 million. The purchase agreement provides that the Company is to receive a
security interest in shares of the Company that the Sellers hold 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 the Sellers, we may also be required to reimburse the Sellers for
certain interest on taxes that they may owe. It is possible that the windup of PacInfo
during 2002 and 2003 may have triggered such a tax event for the Sellers, which would
result in our obligation to loan the Sellers such amount and to reimburse them 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. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>If actual market
conditions prove less favorable than those projected by management, additional inventory write-downs
may be required.</I></B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories
may be written down for estimated obsolescence based upon assumptions about future demand
and market conditions and such write-downs could adversely affect our business condition
and results of operations. As of December 31, 2005, inventory is presented net of $100,000
general provision for technological obsolescence and slow moving items. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>Our acquisitions, to
date, have not always proved successful.</I></B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Over
the past years we have pursued the acquisition of businesses, products and technologies
that are complementary to ours. However, our acquisitions have not always proven, in the
aftermath, to be successful. In June 1998, we acquired PacInfo, which was based in
Portland, Oregon, and in 2001 PacInfo acquired Dean Technologies LLC (&#147;Dean
Tech&#148;), 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., which we sold, as part of the sale of the Communication
Solutions segment in 2005, as the segment did not fare well. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 future acquisitions we
may undertake. There can be no assurance that we will ultimately be effective in executing
additional acquisitions. Any failure to effectively execute and integrate future
acquisitions could have an adverse effect on our business, operating results or financial
condition. </FONT></P>

<p align=center>
<font size=2>7</font></p>
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<page>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>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.</I></B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
IBM midrange related products contributed 30% of our gross profit in year 2005 and 29% of
our gross profit in the first six months of the year 2006. 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)). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although
we are developing and introducing new remote date access communication 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. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>If we are unsuccessful in
developing and introducing new products, we may be unable to expand our business. </I></B></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>We depend on key
personnel and need to be able to retain them and our other employees. </I></B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
ability to retain the employees who have assisted in the development of our products;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
ability to attract and retain additional qualified personnel to provide technological
depth and           support to enhance existing products and develop new products; and</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
ability to attract and retain highly skilled computer operating, marketing and financial
          personnel.</FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

<p align=center>
<font size=2>8</font></p>
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<page>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>We may be unable to
successfully defend ourselves against claims brought against us.</I></B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are defendants in a number of lawsuits filed against us, and from time to time may receive
written demands for payments from prospective plaintiffs, in the normal course of our
business. Legal proceedings can be expensive, lengthy and disruptive to normal business
operations, and can require extensive management attention and resources regardless of
their merit. Moreover, we cannot predict the result of all proceedings and there can be no
assurance that we will be successful in defending ourselves against them. An unfavorable
resolution of a lawsuit or proceeding could materially adversely affect our business,
results of operations and financial condition. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>We depend on third
parties licenses for the development of our products. </I></B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Third
party developers or owners of technologies may not be willing to enter into, or renew,
license agreements with us regarding technologies that we may wish to incorporate in our
products, either on acceptable terms or at all. If we cannot obtain licenses to these
technologies, we may be at a disadvantage compared with our competitors who are able to
license these technologies. In addition, when we do obtain licenses to third party
technologies that we did not develop, we may have little or no ability to determine in
advance whether the technology infringes the intellectual property rights of others. Our
suppliers and licensors may not be required or may not be able to indemnify us in the
event that a claim of infringement is asserted against us, or they may be required to
indemnify us only up to a maximum amount, above which we would be responsible for any
further costs or damages. Additionally, from time to time there may arise disputes with
respect to royalties owed to third parties from which we obtained licenses. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>Indemnification of
Directors and Officers</I></B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company has agreements with its directors and senior officers which provide, subject to
Israeli law, for the Company 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 the Company, (b) reasonable
litigation expenses, including attorney&#146;s fees, incurred by them pursuant to an
investigation or a proceeding commenced against them by a competent authority and that was
terminated without an indictment and without having a monetary charge imposed on them in
exchange for a criminal procedure (as such terms are defined in the Israeli Companies
Law), or that was terminated without an indictment but with a monetary charge imposed on
them in exchange for a criminal procedure in a crime that does not require proof of
criminal intent, as a result of an act or omission of such person in his capacity as a
director or officer of the Company, and (c) reasonable litigation expenses, including
attorney&#146;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 the Company 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 the Company. Such
indemnification may materially adversely affect our financial condition. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>We may be unable to
effectively manage our growth and expansion, and as a result, our business results may be
adversely affected.</I></B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
inability to manage growth effectively could have a material adverse effect on our
business, financial condition and results of operations. </FONT></P>

<p align=center>
<font size=2>9</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>The measures we take in
order to protect our intellectual property may not be effective or sufficient. </I></B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. Additionally, there are risks that arise from the use of intranet networks and
the Internet. Although we utilize firewalls and protection software, we cannot be sure
that our proprietary information is secured against penetration. Such penetration, if
occurs, could have an adverse effect on our business. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>We rely on certain key
suppliers for the supply of components in our products. </I></B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 becomes 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. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;One
of Odem&#146;s major suppliers accounted for 25% of our purchases in the year 2005 and for
15% of our purchases in the first six months of the year 2006. An interruption in our
business relationship with such supplier&nbsp;would have an adverse effect on our business
and results of operations.&nbsp; </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>New industry standards,
the modification of our products to meet additional existing standards or the addition of
features to our products may delay the introduction of our products or increase our costs. </I></B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
industry standards that apply to our Connectivity segment products are continually
evolving. In addition, since our products are integrated into networks consisting of
elements manufactured by various companies, they must comply with a number of industry
standards and practices established by various international bodies and industry forums.
Should new standards gain broad acceptance, we will be required to adopt those standards
in our products. We may also decide to modify our products to meet additional existing
standards or add features to our products. It may take us a significant amount of time to
develop and design products incorporating these new standards. A prolonged disruption in
supply may force us to redesign and retest our products. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>There can be no assurance
that we will not be classified as a passive foreign investment company (a
&#147;PFIC&#148;).</I></B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based
upon our current and projected income, assets and activities, we do not believe that at
this time BOS is a passive foreign investment company (a &#147;PFIC&#148;) for US federal
income tax purposes, but there can be no assurance that we won&#146;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 &#147;qualified
electing fund&#148; election for the first taxable year in which the Company is 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. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>We may be required to pay
stamp taxes on documents executed by us on or after June&nbsp;2003. </I></B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Israeli Stamp Tax on Documents Law, 1961, or the &#147;Stamp Tax Law&#148;, provides that
certain documents signed by Israeli companies are subject to a stamp tax, generally at a
rate of between 0.4% and 1% of the value of the subject matter of the applicable document.
As a result of an amendment to the Stamp Tax Law that came into effect in June&nbsp;2003,
the Israeli tax authorities have commenced enforcement of the provisions of the Stamp Tax
Law. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consequently,
we may be liable to pay stamp taxes on some or all of the documents we have signed since
June&nbsp;2003, which could have a material adverse effect on our results of operations. </FONT></P>

<p align=center>
<font size=2>10</font></p>
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<page>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Recently
promulgated regulations provide for the cancellation of the stamp tax with respect to
documents signed from January 1, 2006 onwards. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>We have significant sales
worldwide and could encounter problems if conditions change in the places where we market
our products.</I></B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have sold and intend to continue to sell our products in markets through distributors in
North America, Europe and Asia. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
number of risks are inherent in engaging in international transactions, including &#150; </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>international
sales and operations being limited or disrupted by longer sales and payment cycles,</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>possible
problems in collecting receivables,</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>imposition
of governmental controls, or export license requirements,</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>political
and economic instability in foreign countries,</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>trade
restrictions or changes in tariffs being imposed, and</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>laws
and legal issues concerning foreign countries.</FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
we should encounter such difficulties in conducting our international operations, it may
adversely affect our business condition and results of operations. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>The slow down in
technology markets and technology-focused corporations in prior years has had an adverse impact
on us and on the value of our shares.</I></B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
Company, like other technology companies, has been significantly impacted by the market
slowdown in the technology industry in prior years. 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. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>Inflation and foreign
currency fluctuations significantly impact on our business results. </I></B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
vast majority of our sales are made in US Dollars and most of our expenses are in US
Dollars and New Israel Shekels (&#147;NIS&#148;). 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. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>If we are forced to repay
our secured convertible notes in cash, we may not have enough cash to fund our operations
and may not be able to obtain additional financing.</I></B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
secured convertible term notes issued in September 2005 and in August 2006, contain
certain provisions and restrictions, which if violated, could result in the full principal
amounts together with interest and other amounts becoming immediately due and payable in
cash. If such an event occurred and if the holder of such notes demanded repayment, we
might not have the cash resources to repay such indebtedness when due. Each of the notes
is repayable in monthly installments commencing January 1, 2006 for the September 2005
note and December 1, 2006 for the August 2006 note, with principal payments which start at
$15,000 and increase to $55,200. Subject to certain conditions, the monthly principal and
interest payment on the notes may be paid in cash or ordinary shares. If we are required
to pay the note in cash rather than in ordinary shares, it would reduce the amount of cash
available to fund operations. Also, in connection with the issuance of the notes, we
agreed to certain restrictions upon incurring additional indebtedness such as in case of
certain mergers and acquisitions. The existence of debt service obligations and the terms
and anti-dilution provisions of the notes may limit our ability to obtain additional
financing on favorable terms, or at all. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the investor in our convertible notes financing converts or exercises its warrants, or if
we elect to pay principal and/or interest on the notes with our ordinary shares, our
existing shareholders will be diluted. In addition, sales of substantial amounts of our
ordinary shares could cause the market price to go down. </FONT></P>

<p align=center>
<font size=2>11</font></p>
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<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
the extent that the notes are converted and/or the warrants that were issued with the
notes 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 notes 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. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>If we are forced to
immediately pay our short term bank loans, we may not have sufficient resources to fund our
operations and may not be able to obtain additional financing.</I></B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our bank loans contain certain
provisions and restrictions, which if violated, could result in the full principal amounts
together with interest becoming immediately due and payable, in cash. If such an event
occurred, we might not have sufficient cash resources to repay such indebtedness and to
continue funding our operations. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Risks related to our location in
Israel: </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>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.</I></B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. . In July 2006, Israel became involved in a
major military conflict with the Hizbullah organization in Lebanon, which subjected the
north of Israel to missile attacks. Certain of our facilities are located in the north of
Israel near the City of Haifa. Israel&#146;s military operations required the drafting of
a substantial number of reserve soldiers. In addition, the future of the &#147;peace
process&#148; with the Palestinians is uncertain and has deteriorated due to Palestinian
violence, with the threat of a large-scale attack by Palestinians on Israeli civilians and
key infrastructure remaining a constant concern. The past few years of renewed terrorist
attacks by the Palestinians has severely affected the Israeli economy in many ways. In
January 2006, Hamas, an Islamic movement responsible for many attacks against Israelis,
won the majority of the seats in the Parliament of the Palestinian Authority. The election
of a majority of Hamas-supported candidates is expected to be a major obstacle to
relations between Israel and the Palestinian Authority, as well as to the stability in the
Middle East as a whole. 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 &#147;peace process&#148; or by restrictive laws or policies directed
towards Israel or Israeli businesses. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Generally,
all nonexempt male adult citizens and permanent residents of Israel, including some of the
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. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Furthermore,
Israel is a party to certain trade agreements with other countries, and material changes
to these agreements could have an adverse effect on our business. </FONT></P>

<p align=center>
<font size=2>12</font></p>
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<page>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>If the Israeli Government
programs that we benefit from are reduced or terminated, our costs and taxes may  increase. </I></B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
the Israeli Law for Encouragement of Capital Investments, 1959, facilities that meet
certain conditions can apply for &#147;Approved Enterprise&#148; status (or be a
&#147;Benefited Enterprise&#148;, if qualified, without prior application and approval).
This status confers certain benefits including tax benefits. The existing facilities of
our wholly owned subsidiary, BOScom, have been designated as Approved Enterprises. If we
attain taxable income in Israel, these tax benefits will help reduce BOScom&#146;s tax
burden. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
order to maintain our eligibility for the grants and tax benefits BOScom receives, BOScom
must continue to satisfy certain conditions, including making certain investments in fixed
assets and operations and achieving certain levels of exports. If BOScom fails to satisfy
such conditions in the future, BOScom could be required to refund tax benefits which may
have been received, with interest and linkage differences to the Israeli Consumer Price
Index. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 BOScom as a result of the Approved Enterprise
status of the BOScom&#146;s facilities and programs) would have a material adverse effect
on the Company&#146;s business, operating results and financial condition. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>The anti-takeover effects
of Israeli laws may delay or deter a change of control of the Company. </I></B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. Shareholder approval
isn&#146;t required if the company that will not survive is controlled by the surviving
company. Additionally, the law provides some exceptions to the shareholder approval
requirement in the surviving company. Shares held by a party to the merger and certain of
its affiliates are not counted towards 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, provided that 30 days have elapsed since shareholder approval was received and
50 days have passed from the time that a proposal for approval of the merger was filed
with the Registrar. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 the Company. 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 45% of the voting
power. An acquisition from a 25% or 45% holder, which turns the purchaser into a 25% or
45% holder respectively, does not require a tender offer. An exception to the tender offer
requirement may also apply when the additional voting power is obtained by means of a
private placement approved by the general meeting of shareholders. These rules also do not
apply if the acquisition is made by way of a merger. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Israeli Companies Law also provides specific rules and procedures for the acquisition of
shares held by minority shareholders, if the majority shareholder shall hold more than 90%
of the outstanding shares. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These
laws may have the effect of delaying or deterring a change in control of the Company,
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 the
Company&#146;s securities. </FONT></P>

<p align=center>
<font size=2>13</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>All of our directors and
officers are non-U.S. residents and enforceability of civil liabilities against them is
uncertain.</I></B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Risks related to our ordinary shares: </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>Our share price has been
and may continue to be volatile, which could result in substantial losses for individual
shareholders.</I></B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
market price of our ordinary shares has been and may continue to be highly volatile and
subject to wide fluctuations. Since January 2005 through August 2006, the daily closing
price of our ordinary shares has ranged from $2.15 to $3.74 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: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>actual
or anticipated variations in our quarterly operating results;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>announcements
of technological innovations or new products or services or new pricing practices by
         us or our competitors;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>increased
market share penetration by our competitors;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>announcements
by us or our competitors of significant acquisitions, strategic partnerships, joint
         ventures or capital commitments;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>additions
or departures of key personnel; and</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>sales
of additional ordinary shares.</FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>The Company&#146;s shares
may be delisted from the Nasdaq Global Market if it does not meet Nasdaq&#146;s continued listing
requirements.</I></B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
late 2002 and early 2003 the Company received notice from the Nasdaq Stock Market that its
ordinary shares were subject to delisting from the Nasdaq National Market (recently
renamed the Nasdaq Global Market) for failure to meet Nasdaq&#146;s minimum bid price and
shareholders&#146; equity requirements ($10 million) for continued listing on the National
Market. As a result of the hearing requested by the Company and supplemental information
presented by the Company to the Nasdaq Listing Qualifications Panel by the Company, the
Panel determined to continue the listing of the Company&#146;s securities on the Nasdaq
National Market pursuant to a detailed exception to the Nasdaq National Market Rules, and
the Company successfully met all the conditions set forth in the exception. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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&#146;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. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
January 25, 2005, we received notice from the Nasdaq Stock Market that we were not in
compliance with the minimum $10 million shareholders&#146; equity requirement for
continued listing on the National Market. Following that notice, on January 28, 2005, we
received an additional notice indicating that based on further review of our financial
statements as they appeared in our filing on Form 6-K dated January 10, 2005, it was
determined that the shareholders&#146; equity was $10,601,000 on a pro forma basis as of
September 30, 2004. Therefore we were in compliance with the stockholders&#146; equity
requirement for continued listing on the National Market and the matter had been closed. </FONT></P>

<p align=center>
<font size=2>14</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
June 2, 2005, the Company again received notice from the Nasdaq Stock Market indicating
that based on the results for the period ended March 31, 2005, the shareholders&#146;
equity was $9,425,000, and accordingly not in compliance with the minimum $10,000,000
shareholders&#146; equity requirement for continued listing on the National Market. The
Company was requested to provide by June 17, 2005, its specific plan to achieve and
sustain compliance with the listing requirements. The Company subsequently submitted a
proposed plan of compliance to Nasdaq based upon completing a previously announced private
placement offering of its ordinary shares. On July 11, 2005, the Company was advised by
the Nasdaq Staff that contingent upon completion of the private placement by August 11,
2005, the Staff believed that the Company had provided a definitive plan evidencing its
ability to achieve and sustain compliance with the listing requirements. The private
placement took place in June 2005, and consequently the Company regained compliance with
Nasdaq&#146;s minimum $10,000,000 shareholders&#146; equity requirement for continued
listing on the National Market. However, the Company has been advised by Nasdaq Staff that
the Staff will continue to monitor its ongoing compliance with the stockholder&#146;s
equity requirement and, if at the time of the Company&#146;s next periodic report, the
Company does not evidence compliance, it may be subject to delisting. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
can be no assurance that we will be able to meet and continue to meet these or other
Nasdaq requirements to maintain our Nasdaq Global Market listing, in which case we will
have the right to apply for a transfer of our ordinary shares to the Nasdaq Capital
Market. </FONT></P>

<a name=zk104></a>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>FORWARD-LOOKING
STATEMENTS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 above and elsewhere in this prospectus. You should
therefore not rely on these forward-looking statements, which are applicable only as of
the date hereof. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
urge you to consider that statements which use the terms &#147;believe&#148;, &#147;do not
believe&#148;, &#147;expect&#148;, &#147;plan&#148;, &#147;intend&#148;,
&#147;estimate&#148;, &#147;anticipate&#148;, &#147;projections&#148;,
&#147;forecast&#148; 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. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

<a name=zk105></a>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>USE OF PROCEEDS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
of the proceeds from the sale of the ordinary shares offered under this prospectus are for
the account of the selling shareholder. 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 the selling shareholder, unless the warrants are exercised in a
&#147;cashless&#148; exercise, in which case we will receive no proceeds upon such
exercise. </FONT></P>

<p align=center>
<font size=2>15</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>


<a name=zk106></a>



<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SELLING SHAREHOLDER </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>This prospectus relates to up to
645,720 ordinary shares that may be offered for sale by the selling shareholder. The
ordinary shares are issuable upon the conversion of a convertible note due August 16, 2009
and upon the exercise of warrants to purchase up to 73,052 ordinary shares, both of which
were issued by BOS to Laurus Master Fund in a private placement transaction on August 16,
2006, 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. </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
convertible note has an aggregate principal amount of $1.5 million and a conversion price
of $3.08 per share for the first $500,000 of principal amount payable thereunder (and any
related interest shares) and of $4.08 for any additional amount payable thereunder. The
principal amount of the note is repayable in monthly installments commencing as of
December 1, 2006, in the initial amount of $15,000 eventually increasing to $55,200. 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. </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
note conversion price is subject to proportional adjustment in the event of stock splits,
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. </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
convertible note bears interest at a fluctuating interest rate equal at all times to the
prime rate plus 1.5%, 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. </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
our registration rights agreement with Laurus, a delay in the effectiveness of the
registration of our ordinary shares beyond a certain date subjects us to payment to Laurus
of liquidated damages equal to 1.0% of the outstanding principal amount of the note for
each thirty day period of delay (prorated for partial periods). </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
note is secured by a first priority floating charge on all of our company&#146;s assets
and by a first priority fixed charge on all of our company&#146;s right, title and
interest in our wholly-owned subsidiaries, BOScom Ltd. and Quasar Telecom (2004) Ltd. </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
warrants are exercisable at an exercise price of $4.04 for the first 24,350 shares
acquirable thereunder and at $5.30 per share for any additional shares acquirable under
the warrants 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 &#147;cashless&#148; 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. </FONT>
</TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>16</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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&#146;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, together with the number of ordinary shares issuable
under the note and/or warrants which were purchased by the Selling Shareholder on
September 29, 2005, shall not exceed an aggregate of 1,270,720 ordinary shares. </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
exercise price of the warrant is 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. Exercise of the warrant is limited as follows: at no time shall
the warrant be exercised into that number of ordinary shares which, when added to the
number of ordinary shares otherwise beneficially owned by the 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 exercise notice.
These limitations expire, however, with 75 days prior notice by the holder, provided that
in no time shall the holder&#146;s beneficial ownership of ordinary shares exceed 19.9% of
our ordinary shares. </FONT>
</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
table below sets forth certain information concerning the number of ordinary shares and
warrants owned by the selling shareholder as of August 31, 2006, and the number of
ordinary shares and warrants that may be offered from time to time by the selling
shareholder under this prospectus. Because the selling shareholder may offer all or some
portion of the ordinary shares, BOS has assumed for the purposes of the table below that
the selling shareholder will sell all of the ordinary shares it has acquired from us. </FONT></P>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=6><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Shares Owned or Underlying<BR>
Convertible Securities<BR>
Prior to Offering</FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Shares Being<BR>
Offered</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=6><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Shares Beneficially Owned<BR>
After the Offering</FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Number(1)</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Percent (1)</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Number</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Percent</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=27% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Laurus Master Fund,</B> </FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH=10% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
        <TD WIDTH=7% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH=5% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
        <TD WIDTH=5% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH=10% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
        <TD WIDTH=3% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH=10% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
        <TD WIDTH=3% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH=10% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Ltd. (2)</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>825 Third Avenue,</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14th Floor</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>New York, NY 10022</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,400,720</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(3)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>20.89</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>645,720</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>%</FONT></TD></TR>
</TABLE>
<BR>



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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Calculated
based upon 6,702,534 ordinary shares outstanding as of June 30, 2006. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(3)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Number
of shares represents the maximum number of shares receivable by Laurus           Master
Fund, Ltd. upon th full conversion of notes and exercise of warrants it           holds
into ordinary shares. However, the terms of the notes and the warrants
          expressly limit the number of shares into which Laurus can convert or exercise,
          ane beneficially own at any one time pursuant to such conversion or exercises
          (as defined in Rule 13d-3 of thd Securities Exchange Act of 1934, as amended)
to           4.99% of the total outstanding ordinary shares. These limitations expire,
          however, with 75 days prior notice by Laurus, provided that in no time shall
          Lauruse beneficial ownership of ordinary shares exceed 19.9% of our ordinary
          shares. &#145;</FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>17</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>DESCRIPTION OF
ORDINARY SHARES </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following is a summary
description of our Ordinary Shares under our Articles of Association. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Dividend and Liquidation Rights.
</I> All holders of paid-up Ordinary Shares of the Company have an equal right to
participate in a distribution of (i) dividends, whether by cash or by bonus shares; (ii)
Company assets; and (iii) the Company&#146;s surplus assets upon winding up, all pro rata
to the nominal value of the shares held by them. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors may issue shares and other securities, which are convertible or
exercisable into shares, up to the limit of the Company&#146;s authorized share capital. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company&#146;s Board of Directors is the organ authorized to decide upon the distribution
of dividends or bonus shares. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Voting, Shareholders&#146;
Meetings, Notices and Resolutions. </I> Holders of paid-up Ordinary Shares have one vote
for each share held on all matters submitted to a vote of shareholders. Such voting rights
may be affected in the future by the grant of any special voting rights to the holders of
a class of shares with preferential rights. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
quorum required for a general meeting of shareholders (whether annual or special) consists
of at least two shareholders present in person or by proxy/voting instrument and holding,
or representing, at least 33?% of the voting rights of the issued share capital. A meeting
adjourned for lack of quorum shall be postponed by one week, to the same day, time and
place, or to a later time if stated in the invitation to the meeting or in the notice of
the meeting. The quorum for the commencement of the adjourned meeting shall be any number
of participants. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless
otherwise determined by the Israeli Companies Law 1999 or the Company&#146;s Articles of
Association, a resolution requires approval by the holders of a majority of the shares
represented at the meeting, in person or by proxy, and voting thereon. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Companies Law 1999 requires that certain transactions, actions and arrangements be
approved by shareholders, including (i) arrangements with a director as to the terms of
his office and compensation and arrangements for insurance, exemption and indemnity of
directors; (ii) certain Extraordinary Transactions (as defined in the Companies Law) of
the Company with its controlling shareholders or any Extraordinary Transaction in which a
controlling shareholder has a personal interest; (iii) certain private placements; and
(iv) any action or Extraordinary Transaction in which the majority of the members of the
Board of Directors have a personal interest. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
shareholder of record is entitled to receive at least a 21 day prior notice of
shareholders&#146; meetings. The accidental omission to give notice of a meeting to any
member, or the non receipt of notice sent to such member, shall not invalidate the
proceedings at such meeting. For purposes of determining the shareholders entitled to
notice and to vote, the Board of Directors may fix a record date subject to the provisions
of the law. Currently, Israeli law provides that the record date not be any earlier than
40 days prior to the meeting. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Transfer of Shares. </I> Fully
paid Ordinary Shares may be transferred freely. The transfer of Ordinary Shares not fully
paid up requires the approval of the Board of Directors. </FONT></P>

<p align=center>
<font size=2>18</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Modification of Class Rights. </I>
Subject to the provisions of any law, the rights attached to any class (unless otherwise
provided by the terms of issue of such class), such as voting, rights to dividends and the
like, may be altered after a resolution is passed by the Company, with the approval of a
resolution passed by a majority of the voting power present by person or proxy and voting
hereon at a general meeting of the holders of the shares of such class, or the written
agreement of all the class holders. The rights vested in the holders of shares of a
particular class that were issued with special rights shall not be deemed to have been
altered by the creation or issue of further shares ranking equally with them, unless
otherwise provided in such shares&#146; issue terms. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Election of Directors</I>. The
Company&#146;s directors are elected by the shareholders at a shareholders&#146; meeting.
The Ordinary Shares do not have cumulative voting rights in the election of directors. The
holders of Ordinary Shares conferring more than 50% of the voting power present by person
or by proxy at the shareholders&#146; meeting, have the power to elect the directors. The
directors elected shall hold office until the next annual meeting, or sooner if they cease
to hold office pursuant to the provisions of the Company&#146;s Articles. In addition, the
Board of Directors may appoint a director (to fill a vacancy or otherwise) between
shareholder meetings, and such appointment shall be valid until the next annual meeting or
until such appointee ceases to hold office pursuant to the provisions of the
Company&#146;s Articles. In compliance with the Companies Law, the Company has two
external directors. The external directors are also appointed by the shareholders and
their term of office is three years. </FONT></P>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PLAN OF DISTRIBUTION </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
selling shareholder and any of its 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
shareholder may sell the securities by one or more of the following methods, without
limitation: </FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>purchases
by a broker or dealer as principal and resale by the broker or dealer for its own account
         pursuant to this prospectus;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>an
exchange distribution in accordance with the rules of any stock exchange on which the
securities          are listed;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>privately
negotiated transactions;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>"at
the market" or through market makers or into an existing market for the shares;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>through
the writing or settlement of options or other hedging transactions on the securities,
         whether through an options exchange or otherwise;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>through
the distribution of the securities by the selling shareholder to its partners, members or
         shareholders;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>one
or more underwritten offerings on a firm commitment or best efforts basis;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>any
combination of any of these methods of sale; and</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>any
other method permitted pursuant to applicable law.</FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>19</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
selling shareholder may also transfer the securities by gift. We do not know of any
arrangements by the selling shareholder for the sale of any of the securities. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
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. The 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. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From
time to time, the selling shareholder 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&#146;s
securities offered under this prospectus will decrease as and when it takes such actions.
The plan of distribution for a selling shareholder&#146;s securities will otherwise remain
unchanged. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
the extent required under the Securities Act, the aggregate amount of the selling
shareholder&#146;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&#146; securities, for whom they may act (which compensation as to a
particular broker-dealer might be in excess of customary commissions). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
selling shareholder and any underwriters, brokers, dealers or agents that participate in
the distribution of the securities may be deemed to be &#147;underwriters&#148; 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. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
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 the selling shareholder, including, without limitation, in
connection with distributions of the securities by those broker-dealers. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
anti-manipulation provisions of Regulation M under the Exchange Act will apply to
purchases and sales of ordinary shares by the selling shareholder. Under Regulation M, the
selling shareholder or its agents may not bid for, purchase, or attempt to induce any
person to bid for or purchase our ordinary shares while the selling shareholder is
distributing ordinary shares covered by this prospectus. The selling shareholder is 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. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
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. The 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. </FONT></P>

<p align=center>
<font size=2>20</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have agreed to indemnify in certain circumstances the selling shareholder of the
securities covered by the registration statement, against certain liabilities, including
liabilities under the Securities Act. The selling shareholder has agreed to indemnify us
in certain circumstances against certain liabilities, including liabilities under the
Securities Act. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
securities offered hereby were originally issued to the selling shareholder pursuant to an
exemption from the registration requirements of the Securities Act. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
cannot assure you that the selling shareholder will sell all or any of the securities
offered for sale under this prospectus. </FONT></P>

<a name=zk109></a>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>VALIDITY OF SECURITIES </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
validity of the ordinary shares, including the ordinary shares issuable upon conversion of
the note and the exercise of the warrants, will be passed upon for us by Amit, Pollak,
Matalon &amp; Co., our Israeli counsel. </FONT></P>

<a name=zk110></a>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>EXPERTS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
consolidated financial statements, included in our Annual Report on Form 20-F for the year
ended December 31, 2005, as amended, have been audited by Kost Forer Gabbay &amp;
Kasierer, independent registered public accounting firm and a member of Ernst &amp; 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. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
consolidated financial statements of our consolidated subsidiary Odem Electronic
Technologies 1992 Ltd., for the year ended December 31, 2004, as amended have been audited
by Kesselman &amp; Kesselman, independent registered public accounting firm and a member
of PricewaterhouseCoopers, as set forth in their report thereon included in our Annual
Report on Form 20-F for the year ended December 31, 2005, as amended and incorporated
herein by reference. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
value attributed to our holdings in Surf Communication Systems Ltd., was supported by an
external valuation prepared by Variance Economic Consulting Ltd. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
value attributed to our holdings in Qualmax Inc. was supported by an external valuation
prepared by Melnik Oded Business Advisory Ltd. </FONT></P>

<a name=zk111></a>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>WHERE YOU CAN FIND
MORE INFORMATION </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

<p align=center>
<font size=2>21</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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&#146;s Public
Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Copies of this material are
also available by mail from the Public Reference Section of the SEC, at 100 F. Street,
N.E., 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). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 &#147;short-swing profits&#148; reporting
and liability provisions contained in Section 16 of the Exchange Act and related Exchange
Act rules. </FONT></P>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
SEC allows us to &#147;incorporate by reference&#148; 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: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our
annual report on Form 20-F for the fiscal year ended December 31, 2005,           filed
with the SEC on June 28, 2006 and the amendment to such annual report,           filed
with the SEC on September 7, 2006. (SEC File No. 001-14184); </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
description of our ordinary shares contained in our registration statement           on
Form 8-A filed with the SEC on April 1, 1996, as amended by the description           of
our ordinary shares contained in a Form 6-K filed on August 22, 2006.; and </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our
current reports on Form 6-K filed with the SEC on August 22, 2006. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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: </FONT></P>


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<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>B.O.S.
Better Online Solutions Ltd. <BR>
Beit Rabin, BOS Road <BR>
Teradyon Industrial Park, <BR>
Misgav 20179, Israel </FONT></TD>
</TR>
</TABLE>


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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         Tel.: </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(+972)
4-990-7555</FONT></TD>
</TR>
</TABLE>


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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         Fax: </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(+972)
4-999-0334</FONT></TD>
</TR>
</TABLE>


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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         Attn.: </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Nehemia
Kaufman, CFO</FONT></TD>
</TR>
</TABLE>
<BR>


<p align=center>
<font size=2>22</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<a name=zk113></a>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ENFORCEABILITY OF
CIVIL LIABILITIES </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have been informed by our legal counsel in Israel, Amit, Pollak, Matalon &amp; 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: </FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT>  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
judgment is enforceable in the state in which it was given;</FONT></TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT>  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>adequate
service of process has been effected and the defendant has had a reasonable opportunity
to                 present his arguments and evidence;</FONT></TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT>  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
judgment and the enforcement of the judgment are not contrary to the law, public policy,
security                 or sovereignty of the State of Israel;</FONT></TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT>  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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</FONT></TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT>  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have appointed Corporation Service Company<B> </B>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. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

<p align=center>
<font size=2>23</font></p>
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<page>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOS BETTER ONLINE
SOLUTIONS LTD. </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Up to 645,720 Ordinary
Shares </FONT></H1>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PROSPECTUS </FONT></H1>

<p align=center>
<font size=2>24</font></p>
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<page>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PART II <BR>
INFORMATION NOT
REQUIRED IN PROSPECTUS </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ITEM 8.
INDEMNIFICATION OF DIRECTORS AND OFFICERS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consistent
with the provisions of the Israeli Companies Law, 1999 (the &#147;Companies Law&#148;),
the amended Articles of the Registrant include provisions permitting the Registrant to
procure insurance coverage for its &#147;office holders&#148;, exempt them from certain
liabilities and indemnify them, to the maximum extent permitted by law. An &#147;office
holder&#148; 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&#146;s
title. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;INSURANCE </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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&#146;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. <BR><BR>The Registrant has obtained
directors&#146; and officers&#146; liability insurance covering its officers and directors
and those of its subsidiaries. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;INDEMNIFICATION </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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; (ii) reasonable litigation expenses,
including attorneys&#146; 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; (c) a criminal charge in which
he was convicted for a criminal offence that does not require proof of criminal intent;
and (d) an investigation or a proceeding instituted against him by an authority competent
to administrate such an investigation or proceeding that ended without the filing of an
indictment against the office holder and, either without any financial obligation imposed
on the office holder in lieu of criminal proceedings; or with financial obligation imposed
on him in lieu of criminal proceedings, in a crime which 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 with respect to
events specified above, provided that, with respect to indemnification under sub-section
(i) above, the undertaking: (a) is limited to events which the board of directors
determines can be anticipated, based on the activity of the Company at the time the
undertaking is given; (b) is limited in amount or criteria determined by the board of
directors to be reasonable for the circumstances; and (c) specifies the abovementioned
events, amounts or criteria. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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&#146; and officers&#146; liability
insurance. Such indemnification agreement appears in exhibit 4.1 of our Annual Report on
Form 20-F filed with the Securities and Exchange Commission on June 28, 2006. </FONT></P>

<p align=center>
<font size=2>25</font></p>
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<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;EXEMPTION </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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, provided
that in no event shall the office holder be exempt from any liability for damages caused
as a result of a breach of his duty of care to the company in the event of a
&#147;distribution&#148; (as defined in the Companies Law). The Articles authorize
Registrant to exempt any office holder from liability to the Registrant to the extent
permitted by law. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 loyalty (however, the Registrant may insure and indemnify against such
breach if the office holder acted in good faith and had a reasonable basis to assume that
the act would not harm the Registrant); (b) a breach by the office holder of his duty of
care if the breach was done intentionally or recklessly, unless made in negligence only;
(c) any act done with the intent to derive an illegal personal benefit; or (d) any fine or
monetary penalty levied against the office holder. </FONT></P>

<p align=center>
<font size=2>26</font></p>
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<page>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ITEM 9. EXHIBITS </FONT></H1>




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<TR VALIGN=TOP>
<TD WIDTH="12%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Exhibit No.</B> </FONT> <HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TD>
<TD WIDTH="88%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Description</B> </FONT> <HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.1*  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Articles
of Association </FONT></TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.1**  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Secured
Convertible Term Note </FONT></TD>
</TR>
</TABLE>


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<TR VALIGN=TOP>
<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.2**  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Ordinary
Shares Purchase Warrant </FONT></TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.3***  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Form
of share certificate. </FONT></TD>
</TR>
</TABLE>


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<TR VALIGN=TOP>
<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.4**  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Registration
Rights Agreement by and between the Company and Laurus Master Fund dated August
                        16, 2006 </FONT></TD>
</TR>
</TABLE>


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<TR VALIGN=TOP>
<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5.1**  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Opinion
of Amit,  Pollak,  Matalon &amp; Co.  Israeli  counsel for B.O.S Better  Online  Solutions
                        Ltd., as to the validity of the ordinary shares. </FONT></TD>
</TR>
</TABLE>


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<TR VALIGN=TOP>
<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23.1**  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consent
of Amit, Pollak, Matalon &amp; Co. (included in Exhibit 5.1). </FONT></TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23.2**  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consent
of Kost Forer Gabbay &amp; Kasierer, a Member Firm of Ernst &amp; Young Global. </FONT></TD>
</TR>
</TABLE>


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<TR VALIGN=TOP>
<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23.3**  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consent
of Kesselman &amp; Kesselman, a member of PricewaterhouseCoopers International Limited. </FONT></TD>
</TR>
</TABLE>


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<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23.4**  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consent
of Variance Economic Consulting Ltd. </FONT></TD>
</TR>
</TABLE>


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<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23.5**  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consent
of Melnik Oded Business Advisory Ltd. </FONT></TD>
</TR>
</TABLE>


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<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>24.1**  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Power
of Attorney (included on signature page). </FONT></TD>
</TR>
</TABLE>



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<HR SIZE=1 NOSHADE WIDTH=15% ALIGN=LEFT>

<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>*  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Incorporated
by reference to Exhibit 1.2 of the Company's Annual Report on Form 20-F filed with
       the SEC on June 28, 2006</FONT></TD>
</TR>
</TABLE>


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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>**  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Filed
herewith. </FONT></TD>
</TR>
</TABLE>


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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>***  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Previously
filed with the SEC on November 24, 2003 as Exhibit 4.1 to the Company&#146;s Registration
Statement on Form S-8, SEC File Number 333-110696, and incorporated herein by reference. </FONT></TD>
</TR>
</TABLE>
<BR>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ITEM 10. UNDERTAKINGS </FONT></H1>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
undersigned registrant hereby undertakes: </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To
file, during any period in which offers or sales are being made, a
          post-effective amendment to this registration statement: </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  </FONT></TD>
<TD ALIGN=LEFT WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
To
include any prospectus required by Section 10(a)(3) of the Securities Act of
          1933;  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  </FONT></TD>
<TD ALIGN=LEFT WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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 &#147;Calculation of Registration Fee&#148; table
in the           effective registration statement;  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  </FONT></TD>
<TD ALIGN=LEFT WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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;  </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>27</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<I>provided,
however,</I> that Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not
apply if the registration statement is on Form S-3 or Form F-3 and the information
required to be included in a post-effective amendment by those paragraphs is contained in
reports filed with or furnished to the Commission by the registrant pursuant to section
13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement, or is contained in a form of prospectus filed
pursuant to Rule 424(b) that is part of the registration statement.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=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. </FONT></TD>
</TR>
</TABLE>
<BR>


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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(3) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(4) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(5)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>That,
for the purpose of determining liability under the Securities Act of 1933           to
any purchaser: </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(i) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If
the registrant is relying on Rule 430B (Sec 230.430B of this chapter):  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A. </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Each
prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be           deemed
to be part of the registration statement as of the date the filed           prospectus
was deemed part of and included in the registration statement; and  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>B. </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or           (b)(7)
as part of a registration statement in reliance on Rule 430B relating to           an
offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of
          providing the information required by section 10(a) of the Securities Act of
          1933 shall be deemed to be part of and included in the registration statement
as           of the earlier of the date such form of prospectus is first used after
          effectiveness or the date of the first contract of sale of securities in the
          offering described in the prospectus. As provided in Rule 430B, for liability
          purposes of the issuer and any person that is at that date an underwriter, such
          date shall be deemed to be a new effective date of the registration statement
          relating to the securities in the registration statement to which that
          prospectus relates, and the offering of such securities at that time shall be
          deemed to be the initial bona fide offering thereof. Provided, however, that no
          statement made in a registration statement or prospectus that is part of the
          registration statement or made in a document incorporated or deemed
incorporated           by reference into the registration statement or prospectus that is
part of the           registration statement will, as to a purchaser with a time of
contract of sale           prior to such effective date, supersede or modify any
statement that was made in           the registration statement or prospectus that was
part of the registration           statement or made in any such document immediately
prior to such effective date;           or  </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>28</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(ii) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If
the registrant is subject to Rule 430C, each prospectus filed pursuant to           Rule
424(b) as part of a registration statement relating to an offering, other           than
registration statements relying on Rule 430B or other than prospectuses           filed
in reliance on Rule 430A, shall be deemed to be part of and included in           the
registration statement as of the date it is first used after effectiveness.
          Provided, however, that no statement made in a registration statement or
          prospectus that is part of the registration statement or made in a document
          incorporated or deemed incorporated by reference into the registration
statement           or prospectus that is part of the registration statement will, as to
a purchaser           with a time of contract of sale prior to such first use, supersede
or modify any           statement that was made in the registration statement or
prospectus that was           part of the registration statement or made in any such
document immediately           prior to such date of first use.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(6) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>That,
for the purpose of determining liability of the registrant under the           Securities
Act of 1933 to any purchaser in the initial distribution of the           securities: The
undersigned registrant undertakes that in a primary offering of           securities of
the undersigned registrant pursuant to this registration           statement, regardless
of the underwriting method used to sell the securities to           the purchaser, if the
securities are offered or sold to such purchaser by means           of any of the
following communications, the undersigned registrant will be a           seller to the
purchaser and will be considered to offer or sell such securities           to such
purchaser: </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(i) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Any
preliminary prospectus or prospectus of the undersigned registrant relating           to
the offering required to be filed pursuant to Rule 424;  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(ii) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Any
free writing prospectus relating to the offering prepared by or on behalf           of
the undersigned registrant or used or referred to by the undersigned
          registrant;  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(iii) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
portion of any other free writing prospectus relating to the offering
          containing material information about the undersigned registrant or its
          securities provided by or on behalf of the undersigned registrant; and  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(iv) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Any
other communication that is an offer in the offering made by the           undersigned
registrant to the purchaser.  </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>29</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
undersigned registrant hereby undertakes that, for purposes of determining
               any liability under the Securities Act of 1933, each filing of the
               registrant&#146;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&#146;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. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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 &#147;Item 8.
               Indemnification of Directors and Officers&#148; 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. </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>30</font></p>
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<page>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SIGNATURES </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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
Registration Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Misgav, in the State of Israel, on September 7, 2006. </FONT></P>



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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD ALIGN="Center" COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>B.O.S. Better Online Solutions Ltd.</B><BR>
&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR><BR>&nbsp;</FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By: /s/ Adiv Baruch<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Adiv Baruch<BR>President and Chief<BR>
Executive Officer</FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/ Nehemia Kaufman<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Nehemia Kaufman<BR>Chief Financial<BR>
Officer</FONT></TD>
</TR>
</TABLE>
<BR>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>POWER OF ATTORNEY </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>KNOW ALL PERSONS BY THESE PRESENTS,
that each individual whose signature appears below constitutes and appoints Adiv Baruch
and Nehemia Kaufman, and each of them, his or her true and lawful attorneys-in-fact and
agents with full power of substitution and re-substitution, for him or her and in his or
her name, place and stead, in any and all capacities, to (i) act on, sign and file with
the Securities and Exchange Commission any and all amendments (including post-effective
amendments) to this Registration Statement, together with all schedules and exhibits
thereto, and any subsequent registration statement filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended, together with all schedules and exhibits thereto, (ii)
act on, sign and file such certificates, instruments, agreements and other documents as
may be necessary or appropriate in connection therewith, (iii) act on, sign and file any
supplement to any prospectus filed pursuant to Rule 462(b) under the Securities Act of
1933, as amended, and (iv) take any and all actions which may be necessary or appropriate
to be done, as fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them,
or their or his or her substitutes, may lawfully do or cause to be done by virtue hereof. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Pursuant to the requirements of the
Securities Act of 1933, as amended, this Registration Statement has been signed by the
following persons in the capacities and on the dates indicated: </FONT></P>




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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="33%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><U>Signature</U></B> </FONT> </TD>
<TD WIDTH="34%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><U>Title</U></B> </FONT> </TD>
<TD WIDTH="33%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><U>Date</U></B> </FONT> </TD>
</TR>
</TABLE>
<BR>





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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=33%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/ Edouard Cukierman<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Mr. Edouard Cukierman</FONT></TD>
<TD WIDTH="34%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Chairman of the Board of Directors</FONT></TD>
<TD WIDTH="33%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>September 7, 2006</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=33%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/ Adiv Baruch<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Mr. Adiv Baruch</FONT></TD>
<TD WIDTH="34%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>President, Chief Executive Officer and  <BR>
Director (Principal Executive Officer)
</FONT></TD>
<TD WIDTH="33%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>September 7, 2006</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=33%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/ Nehemia Kaufman<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Mr. Nehemia Kaufman</FONT></TD>
<TD WIDTH="34%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>           Chief Financial Officer          <BR>
(Principal Financial and Accounting Officer)
</FONT></TD>
<TD WIDTH="33%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>September 7, 2006</FONT></TD>
</TR>
</TABLE>
<BR>


<p align=center>
<font size=2></font></p>
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<page>



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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=33%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Mr. Joel Adler</FONT></TD>
<TD WIDTH="34%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director</FONT></TD>
<TD WIDTH="33%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
</TR>
</TABLE>
<BR>



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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=33%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/ Ronen Zavlik<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Mr. Ronen Zavlik</FONT></TD>
<TD WIDTH="34%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director</FONT></TD>
<TD WIDTH="33%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>September 7, 2006</FONT></TD>
</TR>
</TABLE>
<BR>



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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=33%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/ Jean-Marc Bally<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Mr. Jean-Marc Bally</FONT></TD>
<TD WIDTH="34%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director</FONT></TD>
<TD WIDTH="33%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>September 7, 2006</FONT></TD>
</TR>
</TABLE>
<BR>



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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=33%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/ Andrea Mandel-Mantello<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Mr. Andrea Mandel-Mantello</FONT></TD>
<TD WIDTH="34%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director</FONT></TD>
<TD WIDTH="33%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>September 7, 2006</FONT></TD>
</TR>
</TABLE>
<BR>



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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=33%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/ Avishai Gluck<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Mr. Avishai Gluck</FONT></TD>
<TD WIDTH="34%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director</FONT></TD>
<TD WIDTH="33%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>September 7, 2006</FONT></TD>
</TR>
</TABLE>
<BR>




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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=33%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/ Yael Ilan<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Dr. Yael Ilan</FONT></TD>
<TD WIDTH="34%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director</FONT></TD>
<TD WIDTH="33%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>September 7, 2006</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=33%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/ Adi Raveh<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Prof. Adi Raveh</FONT></TD>
<TD WIDTH="34%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director</FONT></TD>
<TD WIDTH="33%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>September 7, 2006</FONT></TD>
</TR>
</TABLE>
<BR>




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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Authorized Representative in the U.S.:</B><BR><BR>
Corporation Service Company<BR><BR>
<BR>By: /s/ John H. Pelletier<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
John H. Pelletier<BR><BR>Assistant Secretary<BR><BR>September 7, 2006</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
</TR>
</TABLE>
<BR>


<p align=center>
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<TYPE>EX-4.1
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<FILENAME>exhibit_4-1.htm
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     <!-- Control Number: 62889                                                            -->
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     <!-- Client Name:    BOS better online solutions Ltd                                  -->
     <!-- Project Name:   F-3                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>F-3</TITLE>
</HEAD>
<BODY>

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<HR ALIGN=LEFT WIDTH=100% SIZE=1 NOSHADE STYLE="margin-top: -10px">

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<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Exhibit 4.1</B></U> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>THIS NOTE AND THE ORDINARY SHARES
ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THIS NOTE AND THE ORDINARY SHARES ISSUABLE
UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
B.O.S. BETTER ON-LINE SOLUTIONS LTD. THAT SUCH REGISTRATION IS NOT REQUIRED. </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>SECURED CONVERTIBLE
TERM NOTE</U> </FONT> </H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FOR
VALUE RECEIVED, B.O.S. BETTER ON-LINE SOLUTIONS LTD., a corporation incorporated under the
laws of the State of Israel (the &#147;<B>Borrower</B>&#148;), hereby promises to pay to
LAURUS MASTER FUND, LTD. a Cayman Islands company c/o Ironshore Corporate Services Ltd.,
P.O. Box 1234 G.T., Queensgate House, South Church Street, Grand Cayman, Cayman Islands,
Fax: 345-949-9877 (the &#147;<B>Holder</B>&#148;) or its registered assigns or successors
in interest, on order, the sum of One Million and Five Hundred Thousand United States
Dollars ($1,500,000), together with any accrued and unpaid interest hereon, on August 16,
2009 (the &#147;<B>Maturity Date</B>&#148;) if not sooner paid. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capitalized
terms used herein without definition shall have the meanings ascribed to such terms in
that certain Securities Purchase Agreement dated as of the date hereof between the
Borrower and the Holder (the &#147;<B>Purchase Agreement</B>&#148;). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following terms shall apply to
this Note: </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ARTICLE I <BR>
INTEREST &amp;
AMORTIZATION </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1(a)
<U>Interest Rate</U>. Subject to Section 4.11 and 5.6 hereof, interest payable
          on this Note shall accrue at a rate per annum (the &#147;Interest Rate&#148;)
          equal to the &#147;prime rate&#148; published in <U>The Wall Street Journal</U>          from
time to time, plus one and a half percent (1.5%). The Interest Rate shall           be
increased or decreased as the case may be for each increase or decrease in           the
prime rate in an amount equal to such increase or decrease in the prime           rate;
each change to be effective as of the day of the change in such rate and           also
subject to Section 1.1(b) hereof. In no event, however, shall the Interest           Rate
be less than zero percent (0.00%). Interest shall be (i) calculated on the
          basis of a 360 day year, (ii) payable monthly, in arrears, commencing on
          September 1, 2006 and on the first business day of each consecutive calendar
          month thereafter until the Maturity Date (and on the Maturity Date), whether by
          acceleration or otherwise (each, a &#147;<B>Repayment Date</B>&#148;).  </FONT></P>

<p align=center>
<font size=2>1</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1
(b) <U>Interest Rate Adjustment</U>. The Interest Rate shall be calculated on the last
business day of each month hereafter until the Maturity Date (each a
&#147;<B>Determination Date</B>&#148;) and be subject to adjustment. If (i) the Borrower
shall have registered the Borrower&#146;s Ordinary Shares underlying the conversion of the
Note and that certain warrant issued to the Holder (the &#147;Warrant&#148;) on a
registration statement declared effective by the SEC, and (ii) the average closing price
of the Ordinary Shares as reported by Bloomberg, L.P. on the Principal Market (as defined
below) for any five (5) consecutive trading days during the fifteen (15) days immediately
preceding a Determination Date, exceeds the then applicable Fixed Conversion Price, then
the Interest Rate for the succeeding calendar month shall automatically be reduced by 200
basis points (2.0%) for each incremental twenty five percent (25%) increase in the market
price of the Ordinary Shares above the then applicable Fixed Conversion Price. If (i) the
Borrower shall not have registered the Borrower&#146;s Ordinary Shares underlying the
conversion of the Note and the Warrant on a registration statement declared effective by
the SEC, and (ii) the average closing price of the Ordinary Shares as reported by
Bloomberg, L.P. on the Principal Market (as defined below) for any five (5) consecutive
trading days during the fifteen (15) days immediately preceding a Determination Date
exceeds the Fixed Conversion Price, then the Interest Rate for the succeeding calendar
month shall automatically be reduced by 100 basis points (1.0%) for each incremental
twenty five percent (25%) increase in the market price of the Ordinary Shares above the
then applicable Fixed Conversion Price. </FONT></P>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=5%></TD>
<TD WIDTH=95%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;1.2 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Minimum
Monthly Principal Payments</U>. Amortizing payments of the aggregate principal amount
outstanding under this Note at any time (the &#147;<B>Principal Amount</B>&#148;) shall
begin on December 1, 2006 and shall recur on the first calendar day of each succeeding
month thereafter until the Maturity Date (each, an &#147;<B>Amortization Date</B>&#148;)
as set forth in the table below:  </FONT></P></TD>
</TR>
</TABLE>
<BR>




<TABLE CELLPADDING=3 CELLSPACING=0 BORDER=1 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Date</FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Principal Amount</FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Date</FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Principal Amount</FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH="25%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>12/1/06</FONT></TD>
     <TD WIDTH="25%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$15,000</FONT></TD>
     <TD WIDTH="25%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2/1/08</FONT></TD>
     <TD WIDTH="25%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1/1/07</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$15,000</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3/1/08</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2/1/07</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$15,000</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4/1/08</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3/1/07</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$15,000</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5/1/08</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4/1/07</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$15,000</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6/1/08</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5/1/07</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$15,000</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7/1/08</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6/1/07</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$15,000</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8/1/08</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7/1/07</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$15,000</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>9/1/08</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8/1/07</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10/1/08</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>9/1/07</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>11/1/08</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10/1/07</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>12/1/08</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>11/1/07</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1/1/09</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>12/1/07</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2/1/09</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1/1/08</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3/1/09</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4/1/09</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5/1/09</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6/1/09</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7/1/09</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8/1/09</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
</TABLE>
<BR>


<p align=center>
<font size=2>2</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject
to Section 3 below, beginning on the first Amortization Date, the Borrower shall make
monthly payments to the Holder on each Repayment Date, each in the amount set forth above,
together with any accrued and unpaid interest to date on such portion of the Principal
Amount plus any and all other amounts which are then owing under this Note but have not
been paid (collectively, the &#147;<B>Monthly Amount</B>&#148;). All payments hereunder
shall be paid by wire transfer of immediately available funds to the account designated by
the Holder in a written notice delivered to the Borrower at least three business days in
advance of the Repayment Date. </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ARTICLE II <BR>
CONVERSION REPAYMENT </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;2.1 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
<U>Payment of Monthly Amount in Cash or Ordinary Shares</U>. Each month by the fifth (5<SUP>th</SUP>)
business day prior to each Amortization Date (the &#147;<B>Notice Date</B>&#148;), the
Holder shall deliver to Borrower a written Monthly Conversion Notice in the form of <U>Exhibit
B</U> attached hereto converting the Monthly Amount payable on the next Repayment Date in
either cash or Ordinary Shares, or a combination of both (each, a &#147;<B>Repayment
Notice</B>&#148;). If a Repayment Notice is not delivered by the Holder on or before the
applicable Notice Date for such Repayment Date, then, the Borrower shall pay the Monthly
Amount due on such Repayment Date in cash. Any portion of the Monthly Amount paid in cash
on a Repayment Date, shall be paid to the Holder an amount equal to 100% of such
unconverted portion of the Monthly Amount due and owing to Holder on the Repayment Date.
If the Holder converts all or a portion of the Monthly Amount into Ordinary Shares as
provided herein, the number of such shares to be issued by the Borrower to the Holder on
such Repayment Date shall be the number determined by dividing (x) the portion of the
Monthly Amount to be paid in shares of Ordinary Shares, by (y) the then applicable Fixed
Conversion Price. For purposes hereof, the &#147;<B>Fixed Conversion Price</B>&#148; means
$3.08 for the first Five Hundred Thousand Dollars ($500,000) of Principal Amount payable
hereunder, and $4.08 for any additional amount payable hereunder. The then applicable
Fixed Conversion Price shall be adjusted in accordance with the provisions of Section 3.4
below.  </FONT></P>

<p align=center>
<font size=2>3</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Monthly Amount Conversion Guidelines</U>. Subject to Sections 2.1(a), 2.2,
          and 3.2 hereof, the Holder shall convert all or a portion of the Monthly Amount
          due on each Repayment Date into Ordinary Shares if the average closing price of
          the Ordinary Shares as reported by Bloomberg, L.P. on the Principal Market for
          any five (5) consecutive trading days during the fifteen (15) days immediately
          preceding such Repayment Date was greater than or equal to one hundred and ten
          percent (110%) of the Fixed Conversion Price, provided, however, that such
          conversions shall be up to but not exceed twenty five percent (25%) of the
          aggregate dollar trading volume of the Ordinary Shares for the thirty (30) day
          trading period immediately preceding the Repayment Date. Any part of the Monthly
          Amount due on a Repayment Date that the Holder has not converted into Ordinary
          Shares, shall be paid by the Borrower in cash on such Repayment Date. Any part
          of the Monthly Amount due on such Repayment Date which must be paid in cash (as
          a result of the closing price of the Ordinary Shares on one or more of the five
          (5) consecutive trading days during the fifteen (15) days immediately preceding
          the applicable Repayment Date being less than 110% of the Fixed Conversion
          Price) shall be paid in cash at the rate of 100% of the Monthly Amount otherwise
          due on such Repayment Date, within three (3) business days of the applicable
          Repayment Date. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;2.2 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>No
Effective Registration</U>. Notwithstanding anything to the contrary herein, none of the
Borrower&#146;s obligations to the Holder may be converted into Ordinary Shares unless
(i) an effective current Registration Statement (as defined in the Registration Rights
Agreement) covering the Ordinary Shares to be issued in connection with the satisfaction
of such obligations exists or an exemption from registration of the Ordinary Shares is
available pursuant to Rule 144 of the Securities Act; and (ii) no Event of Default
hereunder exists and is continuing, unless such Event of Default is cured within any
applicable cure period or is otherwise waived in writing by the Holder in whole or in
part at the Holder&#146;s option.  </FONT></P>

<p align=center>
<font size=2>4</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any
amounts converted by the Holder pursuant to this Section 2.2 shall be deemed to constitute
payments of outstanding fees, interest and principal arising in connection with Monthly
Amounts for the remaining Repayment Dates, in chronological order. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;2.3 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Optional
Redemption in Cash</U>. The Borrower will have the option of prepaying this Note (&#147;<B>Optional
Redemption</B>&#148;) by paying to the Holder a sum of money equal to one hundred and
twenty percent (120%) of the then outstanding principal amount of this Note together with
accrued but unpaid interest thereon and any and all other sums due, accrued or payable to
the Holder arising under this Note, the Purchase Agreement, or any Related Agreement (the
<B>&#147;Redemption Amount</B>&#148;) outstanding on the day written notice of redemption
(the &#147;<B>Notice of Redemption</B>&#148;) is given to the Holder. The Notice of
Redemption shall specify the date for such Optional Redemption (the &#147;<B>Redemption
Payment Date</B>&#148;) which date shall be seven (7) business days after the date of the
Notice of Redemption (the &#147;<B>Redemption Period</B>&#148;). A Notice of Redemption
shall not be effective with respect to any portion of this Note for which the Holder has
a pending election to convert pursuant to Section 3.1, or for conversions initiated or
made by the Holder pursuant to Section 3.1 during the Redemption Period. The Redemption
Amount shall be determined as if such Holder&#146;s conversion elections had been
completed immediately prior to the date of the Notice of Redemption. On the Redemption
Payment Date, the Redemption Amount must be paid in good funds to the Holder. In the
event the Borrower fails to pay the Redemption Amount on the Redemption Payment Date as
set forth herein, then such Redemption Notice will be null and void.  </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ARTICLE III <BR>
CONVERSION RIGHTS </FONT></H1>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;3.1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Holder&#146;s Conversion Rights</U>. The Holder shall have the right, but not
          the obligation, to convert all or any portion of the then aggregate outstanding
          principal amount of this Note, together with interest and fees due hereon, into
          Ordinary Shares subject to the terms and conditions set forth in this Article
          III. The Holder may exercise such right by delivery to the Borrower of a written
          notice of conversion in the form of <U>Exhibit A</U> attached hereto (the
          &#147;Notice of Conversion&#148;) not less than one (1) business day prior to
          the date upon which such conversion shall occur. The date upon which such
          conversion shall occur is the &#147;<B>Conversion Date</B>&#148;. </FONT></P>

<p align=center>
<font size=2>5</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;3.2 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Conversion
Limitation</U>. Notwithstanding anything contained herein to the contrary, the Holder
shall not be entitled to convert pursuant to the terms of the Note an amount that would
(a) be convertible into that number of Ordinary Shares which, when added to the number of
Ordinary Shares otherwise beneficially owned by such Holder including those issuable upon
exercise of warrants held by such Holder would exceed 4.99% of the outstanding Ordinary
Shares of the Borrower at the time of conversion or (b) (ii) exceed twenty five percent
(25%) of the aggregate dollar trading volume of the Ordinary Shares for the thirty (30)
day trading period immediately preceding delivery of a Notice of Conversion to the
Borrower. For the purposes of the immediately preceding sentence, beneficial ownership
shall be determined in accordance with Section 13(d) of the Exchange Act and Regulation
13d-3 thereunder. The conversion limitation described in this Section 3.2 shall
automatically become null and void without any notice to Borrower upon the occurrence and
during the continuance beyond any applicable grace period of an Event of Default, or upon
75 days prior notice to the Borrower, except that at no time shall the beneficial
ownership exceed 19.99% of the Borrower&#146;s outstanding Ordinary Shares as of the date
hereof. Notwithstanding anything contained herein to the contrary, (i) the number of
Ordinary Shares issuable by the Borrower and acquirable by the Holder pursuant to the
terms of this Note and/or the Warrant issued by the Borrower to the Holder pursuant to
the Securities Purchase Agreement, plus (ii) the number of Ordinary Shares issuable by
the Borrower and acquirable by the Holder pursuant to the terms of the Note and/or
Warrant issued by the Borrower to the Holder pursuant to that Securities Purchase
Agreement entered into by and among the Borrower, BOScom Ltd. and the Holder as of
September 29, 2005, shall not exceed an aggregate of 1,270,720 of the Borrower&#146;s
Ordinary Shares (subject to appropriate adjustment for stock splits, stock dividends, or
other similar recapitalizations affecting the Ordinary Shares).  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;3.3 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Mechanics
of Holder&#146;s Conversion</U>. (a) In the event that the Holder elects to convert this
Note into Ordinary Shares, the Holder shall give notice of such election by delivering an
executed and completed Notice of Conversion to the Borrower and such Notice of Conversion
shall provide a breakdown in reasonable detail of the Principal Amount, accrued interest
and fees being converted. On each Conversion Date (as herein defined) and in accordance
with its Notice of Conversion, the Holder shall make the appropriate reduction to the
Principal Amount, accrued interest and fees as entered in its records and shall provide
written notice thereof to the Borrower within two (2) business days after the Conversion
Date.  </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
          Pursuant to the terms of the Notice of Conversion, the Borrower will issue
          instructions to the transfer agent accompanied by an opinion of counsel within 2
          business days of the date of the delivery to Borrower of the Notice of
          Conversion and shall cause the transfer agent to transmit the certificates
          representing the Note Shares to the Holder by crediting the account of the
          Holder&#146;s designated broker with the Depository Trust Corporation
          (&#147;<B>DTC</B>&#148;) through its Deposit Withdrawal Agent Commission
          (&#147;<B>DWAC</B>&#148;) system within three (3) business days after receipt by
          the Borrower of the Notice of Conversion (the &#147;<B>Delivery Date</B>&#148;).
          In the case of the exercise of the conversion rights set forth herein the
          conversion privilege shall be deemed to have been exercised and the Note Shares
          issuable upon such conversion shall be deemed to have been issued upon the date
          of receipt by the Borrower of the Notice of Conversion. The Holder shall be
          treated for all purposes as the record holder of such Ordinary Shares. </FONT></P>

<p align=center>
<font size=2>6</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;3.4 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Conversion
Mechanics.</U> </FONT> </P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          The number of Ordinary Shares to be issued upon each conversion of this Note
          shall be determined by dividing that portion of the principal and interest and
          fees to be converted, if any, by the then applicable Fixed Conversion Price. In
          the event of any conversions of outstanding principal amount under this Note in
          part pursuant to this Article III, such conversions shall be deemed to
          constitute conversions of outstanding principal amount applying to Monthly
          Amounts for the remaining Repayment Dates in chronological order. No fractional
          shares shall be issued upon any conversion of this Note. The value of any
          fractional shares shall be paid in cash. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          The Fixed Conversion Price and number and kind of shares or other securities to
          be issued upon conversion is subject to adjustment from time to time upon the
          occurrence of certain events, as follows: </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Stock Splits, Combinations and Dividends.</U> If the Ordinary Shares are
          subdivided or combined into a greater or smaller number of Ordinary Shares, or
          if a dividend is paid on the Ordinary Shares in Ordinary Shares, the Fixed
          Conversion Price, as the case may be, shall be proportionately reduced in case
          of subdivision of shares or stock dividend or proportionately increased in the
          case of combination of shares, in each such case by the ratio which the total
          number of Ordinary Share outstanding immediately after such event bears to the
          total number of Ordinary Shares outstanding immediately prior to such event. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          During the period the conversion right exists, the Borrower will reserve from
          its authorized and unissued Ordinary Shares a sufficient number of shares to
          provide for the issuance of Ordinary Shares upon the full conversion of this
          Note. The Borrower represents that upon issuance, such shares will be duly and
          validly issued, fully paid and non-assessable. The Borrower agrees that its
          issuance of this Note shall constitute full authority to its officers, agents,
          and transfer agents who are charged with the duty of executing and issuing share
          certificates to execute and issue the necessary certificates for Ordinary Shares
          upon the conversion of this Note. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;C.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Share Issuances</U>. Subject to the provisions of this Section 3.4, if the
          Borrower shall at any time prior to the conversion or repayment in full of the
          Principal Amount issue any Ordinary Shares or securities convertible into
          Ordinary Shares to a person other than the Holder (except (i) pursuant to
          Subsections A or B above; (ii) pursuant to options, warrants, or other
          obligations to issue shares outstanding on the date hereof as disclosed to
          Holder in writing; (iii) pursuant to any financing transaction in which the
          Holder (or any of its affiliates) participates or is entitled to any fees; (iv)
          pursuant to options that may be issued under any employee stock option plan
          adopted by the Borrower; or (v) grant of options to service provides against
          their services, issuances in connection with strategic alliances, and issuances
          in connection with merger and acquisition transactions approved by the board of
          directors of the Company, for a consideration per share (the &#147;Offer
          Price&#148;) less than the Fixed Conversion Price in effect at the time of such
          issuance, then the Fixed Conversion Price shall be adjusted at the time of
          issuance of such securities by multiplying the then applicable Fixed Conversion
          Price by the following fraction: </FONT></P>

<p align=center>
<font size=2>7</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>


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<TABLE WIDTH=100% CELLPADDING=3 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH="40%" STYLE="border:SOLID BLACK 0.5PT;" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
A + B </FONT></TD>
<TD WIDTH=55%>&nbsp;</TD>
</TR>
<TR VALIGN=TOP>
<TD>&nbsp;</TD>
<TD STYLE="border:SOLID BLACK 0.5PT; border-top:NONE;" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
(A
+ B) + [((C - D) x B) / C] </FONT></TD>
<TD>&nbsp;</TD>
</TR>
</TABLE>
<BR>





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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
A
= Actual shares outstanding prior to such offering  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
B
=  Actual shares sold in the offering </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
C
= Fixed Conversion Price </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
D
= Offering Price </FONT></TD>
</TR>
</TABLE>
<BR>



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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;D.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Reclassification, etc.</U> If the Borrower at any time shall, by
          reclassification or otherwise, change the Ordinary Shares into the same or a
          different number of securities of any class or classes, this Note, as to the
          unpaid Principal Amount and accrued interest thereon, shall thereafter be deemed
          to evidence the right to purchase an adjusted number of such securities and kind
          of securities as would have been issuable as the result of such change with
          respect to the Note Shares immediately prior to such reclassification or other
          change. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;3.5 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Issuance
of New Note</U>. Upon any partial conversion of this Note, a new Note containing the same
date and provisions of this Note shall, at the request of the Holder, be issued by the
Borrower to the Holder for the principal balance of this Note and interest which shall
not have been converted or paid. The Borrower will pay no costs, fees or any other
consideration to the Holder for the production and issuance of a new Note.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;3.6 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Rights
of Shareholders</U>. No Holder shall be entitled, as a Note holder, to vote or receive
dividends or be deemed the holder of the Note Shares or any other securities of the
Company which may at any time be issuable upon the conversion of this Note for any
purpose, nor shall anything contained herein be construed to confer upon the Holder, as
such, any of the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of shares, reclassification of shares, change of nominal
value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings,
or to receive dividends or subscription rights or otherwise until the Note Shares
purchasable upon the conversion hereof shall have become deliverable, as provided herein.  </FONT></P>

<p align=center>
<font size=2>8</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ARTICLE IV <BR>
EVENTS OF DEFAULT </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Upon
the occurrence and continuance of an Event of Default beyond any applicable grace period,
the Holder may make all sums of principal, interest and other fees then remaining unpaid
hereon and all other amounts payable hereunder immediately due and payable. In the event
of such an acceleration, within five (5) days after written notice from Holder to Borrower
(each occurrence being a &#147;<B>Default Notice Period</B>&#148;) the amount due and
owing to the Holder shall be 120% of the outstanding principal amount of the Note (plus
accrued and unpaid interest and fees, if any) (the &#147;<B>Default Payment</B>&#148;).
If, with respect to any Event of Default, the Borrower cures the Event of Default by the
end of the Default Notice Period, the Event of Default will be deemed to no longer exist
and any rights and remedies of Holder pertaining to such Event of Default will be of no
further force or effect. The Default Payment shall be applied first to any fees due and
payable to Holder pursuant to the Note or the Related Agreements, then to accrued and
unpaid interest due on the Note and then to the outstanding principal balance of the Note. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
occurrence of any of the following events set forth in Sections 4.1 through 4.8,
inclusive, is an &#147;<B>Event of Default</B>&#148;: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.1 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Failure
to Pay Principal, Interest or other Fees</U>. The Borrower (i) fails to pay when due any
installment of principal, interest or other fees hereon in accordance herewith, or (ii)
the Borrower fails to pay when due any amount exceeding $200,000 due under any other
promissory note issued by Borrower (unless the Borrower shall in good faith contest the
validity of such amounts), and in any such case, such failure shall continue for a period
of three (3) days following the date upon which any such payment was due.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.2 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Breach
of Covenant</U>. The Borrower breaches any covenant or any other term or condition of
this Note, the Purchase Agreement or the Registration Rights Agreement in any material
respect, or the Borrower or its Subsidiary, BOScom Ltd. (the &#147;Subsidiary&#148;),
breaches any covenant or any other term or condition of any Related Agreement in any
material respect and, any such case, such breach, if subject to cure, continues for a
period of fifteen (15) days after the occurrence thereof.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.3 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Breach
of Representations and Warranties</U>. Any representation or warranty made by the
Borrower in this Note or the Purchase Agreement, or by the Borrower or the Subsidiary in
any Related Agreement, shall, in any such case, be false or misleading in any material
respect on the date that such representation or warranty was made or deemed made that has
a material adverse effect on the Company&#146;s performance of its obligations to the
Holder, or the practical realization by the Holder of any benefit or remedy it may have
under the Note or the Related Agreements.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.4 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Receiver
or Trustee</U>. The Borrower shall make an assignment for the benefit of creditors, or
apply for or consent to the appointment of a receiver or trustee for it or for a
substantial part of its property or business; or such a receiver or trustee shall
otherwise be appointed.  </FONT></P>

<p align=center>
<font size=2>9</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.5 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Judgments</U>.
Any money judgment, writ or similar final process shall be entered or filed against the
Borrower or its Subsidiary or any of their respective property or other assets for more
than $200,000, and shall remain unvacated, unbonded or unstayed for a period of thirty
(30) days.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.6 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Bankruptcy</U>.
Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings or
relief under any bankruptcy law or any law for the relief of debtors shall be instituted
by or against the Borrower or its Subsidiariy and such proceedings, solely if instituted
against the Borrower or its Subsidiary, shall continue undismissed or unstayed for ninety
(90) business days. No cure period shall apply for proceedings or relief under any
bankruptcy law or any law for the relief of debtors instituted by the Borrower.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.7 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Stop
Trade</U>. An SEC stop trade order or Principal Market trading suspension of the Ordinary
Shares shall be in effect for ten (10) consecutive days or five (5) trading days during a
period of ten (10) consecutive days, excluding in all cases a suspension of all trading
on a Principal Market, <U>provided</U> that the Borrower shall not have been able to cure
such trading suspension within thirty (30) days of the notice thereof or list the
Ordinary Shares on another Principal Market within sixty (60) days of such notice. The
&#147;Principal Market&#148; for the Ordinary Shares shall include the NASD OTC Bulletin
Board, NASDAQ SmallCap Market, NASDAQ National Market System, American Stock Exchange,
New York Stock Exchange (whichever of the foregoing is at the time the principal trading
exchange or market for the Ordinary Shares), or any securities exchange or other
securities market on which the Ordinary Shares is then being listed or traded.
Notwithstanding the above, any suspension of trading on, or the delisting of the Ordinary
Shares of the Tel Aviv Stock Exchange shall not be deemed an Event of Default hereunder
or under the Related Agreements.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.8 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Failure
to Deliver Ordinary Shares or Replacement Note</U>. The Borrower shall fail (i) to timely
deliver Ordinary Shares to the Holder pursuant to and in the form required by this Note,
and Section 10 of the Purchase Agreement, if such failure to timely deliver Ordinary
Shares shall not be cured within two (2) business days; or (ii) to deliver a replacement
Note to Holder within seven (7) business days following the required date of such
issuance pursuant to this Note, the Purchase Agreement or any Related Agreement (to the
extent required under such agreements). Notwithstanding the foregoing, the Borrower will
not be deemed in default hereunder for any delay in the delivery of the Ordinary Shares
or a replacement Note, which is out of the control of the Borrower (including any delays
in processing by a transfer agent) and the Borrower is actively trying to cure the cause
of such delay.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.9 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Default
Under Related Agreements or Other Agreements.</U> The occurrence and continuance of any
Event of Default (as defined in any Related Agreement) or any event of default (or
similar term) under any other material indebtedness in excess of $200,000.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.10 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Reserved] </FONT></P>

<p align=center>
<font size=2>10</font></p>
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<page>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>DEFAULT RELATED
PROVISIONS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.11 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Payment
Grace Period</U>. Following the occurrence and continuance of an Event of Default beyond
any applicable cure period hereunder, and for as long as such Event of Default has not
been cured, the Borrower shall pay the Holder an additional default interest rate of five
and one half percent (5.5%) per annum on all amounts due and owing under the Note, which
default interest shall be payable upon demand.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.12 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Conversion
Privileges</U>. The conversion privileges set forth in Article III shall remain in full
force and effect immediately from the date hereof and until this Note is paid in full.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;4.13 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Cumulative
Remedies</U>. The remedies under this Note shall be cumulative. </FONT> </P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ARTICLE V <BR>
MISCELLANEOUS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5.1 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Failure
or Indulgence Not Waiver</U>. No failure or delay on the part of any party hereof in the
exercise of any power, right or privilege hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege. All rights
and remedies existing hereunder are cumulative to, and not exclusive of, any rights or
remedies otherwise available.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5.2 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Notices</U>.
Any notice herein required or permitted to be given shall be in writing and shall be
deemed effectively given: (a) upon personal delivery to the party notified, (b) when sent
by confirmed telex or facsimile if sent during normal business hours of the recipient, if
not, then on the next business day, (c) ten business days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or (d) two
business days after deposit with a internationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All communications
shall be sent to the Borrower at the address provided in the Purchase Agreement executed
in connection herewith, with a copy to Shlomo Landress, Esq. Amit, Pollak, Matalon &amp;Co.,
NYP Tower, 17 Yitzhak Sadeh Street, 19<SUP>th</SUP> Floor, Tel Aviv 67775, facsimile
number (972) 3 561-3620 and to the Holder at the address provided in the Purchase
Agreement for such Holder, with a copy to John E. Tucker, Esq., 825 Third Avenue, 14<SUP>th</SUP> Floor,
New York, New York 10022, facsimile number (212) 541-4434, or at such other address as
the Borrower or the Holder may designate by ten days advance written notice to the other
parties hereto. A Notice of Conversion shall be deemed given when made to the Borrower
pursuant to the Purchase Agreement.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5.3 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Amendment
Provision</U>. The term &#147;Note&#148; and all reference thereto, as used throughout
this instrument, shall mean this instrument as originally executed, or if later amended
or supplemented, then as so amended or supplemented, and any successor instrument issued
pursuant to Section 3.5 hereof, as it may be amended or supplemented.  </FONT></P>

<p align=center>
<font size=2>11</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5.4 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Assignability</U>.
This Note shall be binding upon the Borrower and its successors and assigns, and shall
inure to the benefit of the Holder and its successors and assigns, and may be assigned by
the Holder in accordance with the requirements of the Purchase Agreement. This Note shall
not be assigned by the Borrower without the consent of the Holder.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5.5 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Governing
Law</U>. This Note shall be governed by and construed in accordance with the laws of the
State of New York, without regard to principles of conflicts of laws. Any action brought
by either party against the other concerning the transactions contemplated by this
Agreement shall be brought only in the state courts of New York or in the federal courts
located in the state of New York. Both parties and the individual signing this Note on
behalf of the Borrower agree to submit to the jurisdiction of such courts. The prevailing
party shall be entitled to recover from the other party its reasonable attorney&#146;s
fees and costs. In the event that any provision of this Note is invalid or unenforceable
under any applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed modified to
conform with such statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or unenforceability of any
other provision of this Note. Nothing contained herein shall be deemed or operate to
preclude the Holder from bringing suit or taking other legal action against the Borrower
in any other jurisdiction to collect on the Borrower&#146;s obligations to Holder, to
realize on any collateral or any other security for such obligations, or to enforce a
judgment or other court in favor of the Holder.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5.6 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Maximum
Payments</U>. Nothing contained herein shall be deemed to establish or require the
payment of a rate of interest or other charges in excess of the maximum permitted by
applicable law. In the event that the rate of interest required to be paid or other
charges hereunder exceed the maximum permitted by such law, any payments in excess of
such maximum shall be credited against amounts owed by the Borrower to the Holder and
thus refunded to the Borrower.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5.7 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Security
Interest and Guarantee</U>. The Holder has been granted a security interest in certain
assets of the Borrower as more fully described in the Master Security Agreement dated as
of the date hereof.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5.8 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Construction</U>.
Each party acknowledges that its legal counsel participated in the preparation of this
Note and, therefore, stipulates that the rule of construction that ambiguities are to be
resolved against the drafting party shall not be applied in the interpretation of this
Note to favor any party against the other.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5.9 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Cost
of Collection</U>. If default is made in the payment of this Note, the Borrower shall pay
to Holder reasonable costs of collection, including reasonable attorney&#146;s fees.  </FONT></P>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[Balance
of page intentionally left blank; signature page follows.] </FONT></P>

<p align=center>
<font size=2>12</font></p>
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<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>IN
WITNESS WHEREOF</B>, the Borrower has caused this Convertible Term Note to be signed in
its name effective as of this 16th day of August, 2006. </FONT></P>








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<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>B.O.S. BETTER ON-LINE SOLUTIONS LTD.</B><BR><BR>
<BR>By: <BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Name: Adiv Baruch<BR>Title: CEO</FONT></TD>
</TR>
</TABLE>
<BR>




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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<BR>By: <BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Name: Nehemia Kaufman<BR>Title: CFO</FONT></TD>
</TR>
</TABLE>
<BR>


<p align=center>
<font size=2>13</font></p>
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<page>


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<p ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">EXHIBIT A<BR>
<U><B>NOTICE OF CONVERSION</B></U> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(To be executed by the Holder in
order to convert all or part of the Note into Ordinary Shares) </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[Name and Address of
Holder] </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Undersigned hereby converts
$_________ of the principal and $_______ of accrued interest due on [specify applicable
Repayment Date] under the Convertible Term Note issued by B.O.S. BETTER ON-LINE SOLUTIONS
LTD. dated August ____, 2006 by delivery of Ordinary Shares of B.O.S. BETTER ON-LINE
SOLUTIONS LTD. on and subject to the conditions set forth in Article III of such Note. </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.  </FONT></TD>
<TD WIDTH=45%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Conversion
Date           </FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>_______________________  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.  </FONT></TD>
<TD WIDTH=45%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Fixed
Conversion Price:    </FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$_______________________  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.  </FONT></TD>
<TD WIDTH=45%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Shares
to Be Delivered:    </FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>_______________________  </FONT></TD>
</TR>
</TABLE>
<BR>














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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Date: ____________</FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>LAURUS MASTER FUND, LTD.<BR><BR>
<BR>By:_______________________________<BR>
Name:_____________________________<BR>Title:______________________________</FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>14</font></p>
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<page>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>EXHIBIT B </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>MONTHLY CONVERSION
NOTICE</U> </FONT> </H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(To be executed by the Holder in
order to convert all or part of a Monthly Amount into Ordinary Shares) </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[Name and Address of
Holder] </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Holder hereby converts $_________ of
the Monthly Amount due on [specify applicable Repayment Date] under the Convertible Term
Note issued by B.O.S. BETTER ON-LINE SOLUTIONS LTD. dated August ____, 2006 by delivery of
Ordinary Shares of B.O.S. BETTER ON-LINE SOLUTIONS LTD. on and subject to the conditions
set forth in Article III of such Note. </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.  </FONT></TD>
<TD WIDTH=45%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Fixed
Conversion Price:    </FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$_______________________  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.  </FONT></TD>
<TD WIDTH=45%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Amount
to be paid:  </FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$_______________________  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.  </FONT></TD>
<TD WIDTH=45%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Shares
To Be Delivered (2 divided by 1):  </FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>__________________  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.  </FONT></TD>
<TD WIDTH=45%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Cash
payment to be made by Borrower:  </FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$_____________________  </FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Date: ____________</FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>LAURUS MASTER FUND, LTD.<BR><BR>
<BR>By:_______________________________<BR>
Name:_____________________________<BR>Title:______________________________</FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>15</font></p>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.2
<SEQUENCE>3
<FILENAME>exhibit_4-2.htm
<TEXT>

<HTML>
<HEAD>
     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        \\Backup\office\EDGAR Filing\BOS better online solutions Ltd\62889\a62889.eep -->
     <!-- Control Number: 62889                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    BOS better online solutions Ltd                                  -->
     <!-- Project Name:   F-3                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>F-3</TITLE>
</HEAD>
<BODY>

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<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Exhibit 4.2</B></U> </FONT> </P>

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<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
THIS
WARRANT AND THE ORDINARY SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.
THIS WARRANT AND THE ORDINARY SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO B.O.S. BETTER ON-LINE
SOLUTIONS LTD. THAT SUCH REGISTRATION IS NOT REQUIRED. </FONT></TD>
</TR>
</TABLE>
<BR>


<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Right to Purchase up to 73,052 Ordinary Shares of
<BR><U>B.O.S. Better On-Line Solutions Ltd.
</U><BR>(subject to adjustment as provided herein) </FONT>
</P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ORDINARY SHARES
PURCHASE WARRANT </FONT></H1>


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     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=47% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>No. _________________</FONT></TD>
     <TD WIDTH=53% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Issue Date:  August 16, 2006&nbsp;</FONT></TD></TR>
</TABLE>
<BR>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.O.S.
 BETTER  ON-LINE  SOLUTIONS LTD. a corporation  incorporated  under the laws of the State
of Israel hereby certifies  that, for value received,  LAURUS MASTER FUND,  LTD., or
assigns (the  "Holder"),  is entitled,  subject to the terms set forth  below,  to
purchase  from the Company (as defined  herein)  from and after the Issue Date of this
Warrant and at any time or from time to time before 5:00 p.m., New York time,  through
the close of business  August 16, 2013 (the "Expiration  Date"),  up to 73,052  fully
paid and  nonassessable  Ordinary  Shares  (as  hereinafter  defined),  NIS 4.00 nominal
 value per share,  at the  applicable  Exercise  Price per share (as defined  below).
 The number and character of such Ordinary Shares and the applicable Exercise Price per
share are subject to adjustment as provided herein. </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
used herein the  following  terms,  unless the  context  otherwise  requires,  have the
 following  respective meanings: </FONT></P>


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<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=5%></TD>
<TD WIDTH=95%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;                  (a) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
term "Company"  shall include  B.O.S.  Better  On-Line  Solutions Ltd. and any
 corporation          which shall succeed, or assume the obligations of, B.O.S. Better
On-Line Solutions Ltd. hereunder. </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=5%></TD>
<TD WIDTH=95%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;                  (b) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
term "Ordinary Shares" includes (i) the Company's  Ordinary Shares,  nominal value NIS
4.00          per share;  and (ii) any other  securities into which or for which any of
the securities  described in (i) may be          converted  or  exchanged  pursuant  to a
plan of  recapitalization,  reorganization,  merger,  sale of  assets or
         otherwise. </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=5%></TD>
<TD WIDTH=95%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;                  (c) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
term  "Other  Securities"  refers to any shares  (other  than  Ordinary  Shares)  and
other          securities of the Company or any other person  (corporate  or  otherwise)
 which the Holder of the Warrant at any          time shall be entitled to receive,  or
shall have  received,  on the  exercise of the  Warrant,  in lieu of or in
         addition to  Ordinary  Shares,  or which at any time shall be issuable or shall
have been issued in exchange  for          or in replacement of Ordinary Shares or Other
Securities pursuant to Section 4 or otherwise. </FONT></P></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2></font></p>
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<page>

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<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=5%></TD>
<TD WIDTH=95%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;                           (d) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
 "Exercise  Price"  applicable  under this  Warrant  shall be a price of $4.04 per
                  Ordinary Share for the first 24,350  Ordinary Shares acquired
 hereunder,  and thereafter,  the Exercise                   Price applicable under this
Warrant shall be a price of $5.30 per Ordinary Share. </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capitalized
 terms used herein without  definition shall have the meanings ascribed to such terms in
that certain Securities Purchase Agreement dated as of the date hereof between the
Borrower and the Holder. </FONT></P>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;1. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Exercise
of Warrant.</U> </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>Number
of Shares Issuable upon Exercise</U>. From and after the date hereof through and
including the Expiration Date, the Holder shall be entitled to
receive, upon exercise of this Warrant in whole or in part, by
delivery of an original or fax copy of an exercise notice in the form
attached hereto as Exhibit A (the "Exercise Notice") and payment in
accordance with Section 2.2 below, Ordinary Shares of the Company
(the "Warrant Shares"), subject to adjustment pursuant to Section 4.
This Warrant may be exercised in whole or in part. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.2 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>Fair
Market Value</U>. For purposes hereof, the "Fair Market Value" of an Ordinary Share as of
a particular date (the "Determination Date") shall mean: </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If
the Company's  Ordinary Shares are traded on the American Stock Exchange or another
 national  exchange or are                            quoted  on the  National  or
 SmallCap  Market of The  Nasdaq  Stock                            Market,
 Inc.("Nasdaq"),  then  the  closing  or  last  sale  price,
                           respectively,   reported  for  the  last  business  day
 immediately                            preceding the Determination Date. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If
the Company's  Ordinary Shares are not traded on the American Stock Exchange or another
 national  exchange or                            on the Nasdaq  but is traded on the
NASD OTC  Bulletin  Board,  then                            the  mean  of the  average
 of the  closing  bid  and  asked  prices                            reported  for  the
 last  business  day  immediately  preceding  the
                           Determination Date. </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>2</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Except
as provided in clause (d) below,  if the Company's  Ordinary Shares are not publicly
 traded,  then as the                            Holder and the  Company  agree or in the
 absence of  agreement,  by                            arbitration  in  accordance  with
the  rules  then in  effect of the                            American Arbitration
 Association,  before a single arbitrator to be                            chosen from a
panel of persons  qualified by education  and training                            to pass
on the matter to be decided. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(d) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If
the  Determination  Date is the date of a liquidation,  dissolution or winding up, or any
event deemed to be a                            liquidation,  dissolution  or winding up
pursuant  to the  Company's                            Articles of  Association  (the
 "Articles"),  then all amounts to be                            payable per share to
holders of the Ordinary  Shares pursuant to the                            Articles in
the event of such  liquidation,  dissolution  or winding                            up,
 plus all other  amounts to be  payable  per share in respect of
                           the Ordinary Shares in liquidation under the Articles,
 assuming for                            the  purposes  of this  clause (d) that all of
the  Ordinary  Shares                            then issuable upon  exercise of the
Warrant are  outstanding  at the                            Determination Date. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.3 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>Company
Acknowledgment</U>. The Company will, at the time of the exercise of the Warrant, upon
the request of the Holder hereof acknowledge in writing its
continuing obligation to afford to such Holder any rights to which
such Holder shall continue to be entitled after such exercise in
accordance with the provisions of this Warrant. If the Holder shall fail
to make any such request, such failure shall not affect the continuing
obligation of the Company to afford to such Holder any such rights. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.4 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>Trustee
for Warrant Holders</U>. In the event that a bank or trust company shall have been
appointed as trustee for the Holders of the Warrant pursuant to
Subsection 3.2, such bank or trust company shall have all the powers
and duties of a warrant agent (as hereinafter described) and shall
accept, in its own name for the account of the Company or such successor
person as may be entitled thereto, all amounts otherwise payable to
the Company or such successor, as the case may be, on exercise of
this Warrant pursuant to this Section 1. </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>3</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;2. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Procedure
for Exercise</U>.  </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>Delivery
of Share Certificates, Etc., on Exercise</U>. The Company agrees that the Ordinary Shares
purchased upon exercise of this Warrant shall be deemed to be
issued to the Holder as the record owner of such shares as of the
close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares in accordance herewith.
As soon as practicable after the exercise of this Warrant in full or
in part, and in any event within three (3) business days
thereafter, the Company at its expense (including the payment by it
of any applicable issue taxes) will cause to be issued in the name of
and delivered to the Holder, or as such Holder (upon payment by such
Holder of any applicable transfer taxes) may direct in compliance
with applicable securities laws, a certificate or certificates
for the number of duly and validly issued, fully paid and
nonassessable Ordinary Shares (or Other Securities) to which the
Holder shall be entitled on such exercise, plus, in lieu of any fractional share
to which such Holder would otherwise be entitled, cash equal to
such fraction multiplied by the then Fair Market Value of one full
share, together with any other shares or other securities and
property (including cash, where applicable) to which such Holder is
entitled upon such exercise pursuant to Section 1 or otherwise. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2.2 </FONT> </TD>
<TD WIDTH=90%><U></U><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>Exercise</U>.
(a) Payment may be made either (i) in cash, by wire transfer or by certified or
official bank check payable to the order of the Company equal to the
applicable aggregate Exercise Price, (ii) by delivery of the Warrant,
or Ordinary Shares receivable upon exercise of the Warrant in
accordance with Section (b) below, or (iii) by a combination of any of the
foregoing methods, for the number of Ordinary Shares specified in
such Exercise Notice (as such exercise number shall be adjusted to
reflect any adjustment in the total number of Ordinary Shares
issuable to the Holder per the terms of this Warrant) and the Holder
shall thereupon be entitled to receive the number of duly authorized,
validly issued, fully-paid and non-assessable Ordinary Shares (or
Other Securities) determined as provided herein. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
 Notwithstanding  any provisions  herein to the contrary,  if the Fair Market Value of
one Ordinary Share is greater than the Exercise Price (at the date of  calculation as set
forth below),  in lieu of exercising this Warrant for cash, the Holder may elect to
receive  shares equal to the value (as  determined  below) of this Warrant (or the
portion  thereof being  exercised)  by surrender of this Warrant at the  principal
 office of the Company  together  with the  properly  endorsed  Exercise  Notice in which
event the  Company  shall issue to the Holder a number  Ordinary Shares computed using
the following formula: </FONT></P>

<p align=center>
<font size=2>4</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="BOTTOM">
     <TH WIDTH="5%"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
     <TH WIDTH="5%"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
     <TH WIDTH="90%"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH></TR>
<TR VALIGN="TOP">
     <TD ><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ><FONT FACE="Times New Roman, Times, Serif" SIZE="2">X=Y</FONT></TD>
     <TD ><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>&nbsp;&nbsp;&nbsp;(A-B)&nbsp;&nbsp;&nbsp;</U><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A </FONT></TD></TR>
</table>


<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="BOTTOM">
     <TH WIDTH="5%"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
     <TH WIDTH="15%"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
     <TH WIDTH="80%"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Where X =</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">the number of  Ordinary Shares to be issued to the Holder</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Y =</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">the number of Ordinary Shares  purchasable under the Warrant or, if only a portion of the
Warrant is being  exercised,  the portion of the Warrant being  exercised (at the date of
such calculation)
</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">A =</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">the  Fair  Market  Value of one of the  Company's  Ordinary  Shares  (at the date of such<BR>
calculation)
</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">B =</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Exercise Price (as adjusted to the date of such calculation)</FONT></TD></TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;3. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Effect
of Reorganization, Etc.; Adjustment of Exercise Price</U>.  </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Reorganization,
Consolidation, Merger, Etc</U>. In case at any time or from time to time, the Company
shall (a) effect a reorganization, (b) consolidate with or merge into any other person,
including the sale of substantially all of the Company&#146;s outstanding share capital
to a corporate third party, in consideration for such third party&#146;s securities, or
(c) transfer all or substantially all of its properties or assets to any other person
under any plan or arrangement contemplating the dissolution of the Company, then, in each
such case, as a condition to the consummation of such a transaction, proper and adequate
provision shall be made by the Company whereby the Holder of this Warrant, on the
exercise hereof as provided in Section 1 at any time after the consummation of such
reorganization, consolidation or merger or the effective date of such dissolution, as the
case may be, shall receive, in lieu of the Ordinary Shares (or Other Securities) issuable
on such exercise prior to such consummation or such effective date, the shares and other
securities and property (including cash) to which such Holder would have been entitled
upon such consummation or in connection with such dissolution, as the case may be, if
such Holder had so exercised this Warrant, immediately prior thereto, all subject to
further adjustment thereafter as provided in Section 4. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.2 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Dissolution</U>.
In the event of any dissolution of the Company following the transfer of all or
substantially all of its properties or assets, the Company, concurrently with any
distributions made to holders of its Ordinary Shares, shall at its expense deliver or
cause to be delivered to the Holder the shares and other securities and property
(including cash, where applicable) receivable by the Holder of the Warrant pursuant to
Section 3.1, or, if the Holder shall so instruct the Company, to a bank or trust company
specified by the Holder and having its principal office in New York, NY as trustee for
the Holder of the Warrant (the &#147;Trustee&#148;). </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>5</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 1-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.3 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Continuation
of Terms</U>. Upon any reorganization, consolidation, merger or transfer (and any
dissolution following any transfer) referred to in this Section 3, this Warrant shall
continue in full force and effect and the terms hereof shall be applicable to the shares
and other securities and property receivable on the exercise of this Warrant after the
consummation of such reorganization, consolidation or merger or the effective date of
dissolution following any such transfer, as the case may be, and shall be binding upon
the issuer of any such shares or other securities, including, in the case of any such
transfer, the person acquiring all or substantially all of the properties or assets of
the Company, whether or not such person shall have expressly assumed the terms of this
Warrant as provided in Section 4. In the event this Warrant does not continue in full
force and effect after the consummation of the transactions described in this Section 3,
then the Company&#146;s securities and property (including cash, where applicable)
receivable by the Holders of the Warrant will be delivered to Holder or the Trustee as
contemplated by Section 3.2. </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Extraordinary
Events Regarding Ordinary Shares</U>. In the event that the           Company shall (a)
issue additional Ordinary Shares as a dividend or other           distribution on
outstanding Ordinary Shares, (b) subdivide its outstanding           Ordinary Shares, or
(c) combine its outstanding Ordinary Shares into a smaller           number of Ordinary
Shares, then, in each such event, the Exercise Price shall,           simultaneously with
the happening of such event, be adjusted by multiplying the           then Exercise Price
by a fraction, the numerator of which shall be the number of           Ordinary Shares
outstanding immediately prior to such event and the denominator           of which shall
be the number of Ordinary Shares outstanding immediately after           such event, and
the product so obtained shall thereafter be the Exercise Price           then in effect.
The Exercise Price, as so adjusted, shall be readjusted in the           same manner upon
the happening of any successive event or events described           herein in this
Section 4. The number of Ordinary Shares that the Holder of this           Warrant shall
thereafter, on the exercise hereof as provided in Section 1, be           entitled to
receive shall be increased or decreased, as the case may be, to a           number
determined by multiplying the number of Ordinary Shares that would           otherwise
(but for the provisions of this Section 4) be issuable on such           exercise by a
fraction of which (a) the numerator is the Exercise Price that           would otherwise
(but for the provisions of this Section 4) be in effect, and (b)           the
denominator is the Exercise Price in effect on the date of such exercise.  </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Certificate
as to Adjustments</U>. In each case of any adjustment or           readjustment in the
Ordinary Shares (or Other Securities) issuable on the           exercise of the Warrant,
the Company at its expense will promptly cause its           Chief Financial Officer or
other appropriate designee to compute such adjustment           or readjustment in
accordance with the terms of the Warrant and prepare a           certificate setting
forth such adjustment or readjustment and showing in detail           the facts upon
which such adjustment or readjustment is based, including a           statement of (a)
the consideration received or receivable by the Company for any           additional
Ordinary Shares (or Other Securities) issued or sold or deemed to           have been
issued or sold, (b) the number of Ordinary Shares (or Other           Securities)
outstanding or deemed to be outstanding, and (c) the Exercise Price           and the
number of Ordinary Shares to be received upon exercise of this Warrant,           in
effect immediately prior to such adjustment or readjustment and as adjusted           or
readjusted as provided in this Warrant. The Company will forthwith mail a           copy
of each such certificate to the Holder of the Warrant and any Warrant agent           of
the Company (appointed pursuant to Section 13 hereof).  </FONT></P>

<p align=center>
<font size=2>6</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;6. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Reservation
of Shares, Etc., Issuable on Exercise of Warrant</U>. The Company           will at all
times reserve and keep available, solely for issuance and delivery           on the
exercise of the Warrant, Ordinary Shares (or Other Securities) from time           to
time issuable on the exercise of the Warrant.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;7. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Representations
and Warranties by the Holder</U>. The Holder represents and           warrants to the
Company as follows:  </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Holder
understands that the Warrant is being offered and sold pursuant to an exemption or
exemptions from registration requirements of Israeli and US Federal and state securities
laws and that the Company is relying upon the truth and accuracy of Holder&#146;s
representations contained in that Securities Purchase Agreement of even date herewith,
including, without limitation, that the Holder is an &#147;accredited investor&#148;within
the meaning of Regulation D under the Securities Act of 1933. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7.2 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Holder
has substantial experience in evaluating and investing in private placement transactions
of securities in companies similar to the Company so that it is capable of evaluating the
merits and risks of its investment in the Company and has the capacity to protect its own
interests. Holder is able to bear the economic risk of this investment. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7.3 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Holder
is acquiring the Warrant and the Ordinary Shares issuable upon exercise of the Warrant
for its own account for investment only, and not as a nominee or agent and not with a
view towards or for resale in connection with their distribution. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;8. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Assignment;
Exchange of Warrant</U>. Subject to compliance with applicable           securities laws,
this Warrant, and the rights evidenced hereby, may be           transferred by any
registered Holder hereof (a &#147;Transferor&#148;) in whole           or in part. On the
surrender for exchange of this Warrant, with the           Transferor&#146;s endorsement
in the form of Exhibit B attached hereto (the           &#147;Transferor Endorsement Form&#148;)
and together with evidence reasonably           satisfactory to the Company demonstrating
compliance with applicable securities           laws, which shall include, without
limitation, a legal opinion from the           Transferor&#146;s counsel that such
transfer is exempt from the registration           requirements of applicable securities
laws, the Company at its expense (but with           payment by the Transferor of any
applicable transfer taxes) will issue and           deliver to or on the order of the
Transferor thereof a new Warrant of like           tenor, in the name of the Transferor
and/or the transferee(s) specified in such           Transferor Endorsement Form (each a
&#147;Transferee&#148;), calling in the           aggregate on the face or faces thereof
for the number of Ordinary Shares of           Ordinary Stock called for on the face or
faces of the Warrant so surrendered by           the Transferor.  </FONT></P>

<p align=center>
<font size=2>7</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;9. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Replacement
of Warrant</U>. On receipt of evidence reasonably satisfactory to           the Company
of the loss, theft, destruction or mutilation of this Warrant and,           in the case
of any such loss, theft or destruction of this Warrant, on delivery           of an
indemnity agreement or security reasonably satisfactory in form and amount           to
the Company or, in the case of any such mutilation, on surrender and
          cancellation of this Warrant, the Company at its expense will execute and
          deliver, in lieu thereof, a new Warrant of like tenor.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;10. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Registration
Rights</U>. The Holder of this Warrant has been granted certain           registration
rights by the Company. These registration rights are set forth in a
          Registration Rights Agreement entered into by the Company and the Purchaser
          dated as of even date of this Warrant.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;11. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Maximum
Exercise</U>. Notwithstanding anything contained herein to the           contrary, the
Holder shall not be entitled to convert pursuant to the terms of           the Note or
the Warrant an amount that would (a) be convertible into that number           of
Ordinary Shares which, when added to the number of Ordinary Shares otherwise
          beneficially owned by such Holder including those issuable upon exercise of
          warrants of the Company held by such Holder would exceed 4.99% of the
          outstanding Ordinary Shares of the Company at the time of conversion or (b)
(ii)           exceed twenty five percent (25%) of the aggregate dollar trading volume of
the           Ordinary Share for the thirty (30) day trading period immediately preceding
          delivery of a Notice of Conversion to the Company. For the purposes of the
          immediately preceding sentence, beneficial ownership shall be determined in
          accordance with Section 13(d) of the Exchange Act and Regulation 13d-3
          thereunder. The conversion limitation described in this Section 11 shall
          automatically become null and void without any notice to Company upon the
          occurrence and during the continuance beyond any applicable grace period of an
          Event of Default, or upon 75 days prior notice to the Company, except that at
no           time shall the beneficial ownership exceed 19.99% of the borrower&#146;s
          Ordinary Shares as of the date hereof. Notwithstanding anything contained
herein           to the contrary, (i) the number of Ordinary Shares issuable by the
Company and           acquirable by the Holder pursuant to the terms of this Warrant
and/or the Note           issued by the Company to the Holder pursuant to this Securities
Purchase           Agreement, plus (ii) the number of Ordinary Shares issuable by the
Company and           acquirable by the Holder pursuant to the terms of the Note and/or
Warrant issued           by the Company to the Holder pursuant to that Securities
Purchase Agreement           entered into by and among the Company, BOScom Ltd. and the
Holder as of           September 29, 2005, shall not exceed an aggregate of 1,270,720 of
the           Company&#146;s Ordinary Shares, (subject to appropriate adjustment for
stock           splits, stock dividends, or other similar recapitalizations affecting the
          Ordinary Shares).  </FONT></P>

<p align=center>
<font size=2>8</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;12. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Rights
of Shareholders</U>. No Holder shall be entitled, as a Warrant holder,           to vote
or receive dividends or be deemed the holder of the Ordinary Shares or           any
other securities of the Company, which may at any time be issuable upon the
          exercise of this Warrant for any purpose, nor shall anything contained herein
be           construed to confer upon the Holder, as such, any of the rights of a
shareholder           of the Company or any right to vote for the election of directors
or upon any           matter submitted to shareholders at any meeting thereof, or to give
or withhold           consent to any corporate action (whether upon any recapitalization,
issuance of           shares, reclassification of shares, change of nominal value,
consolidation,           merger, conveyance, or otherwise) or to receive notice of
meetings, or to           receive dividends or subscription rights or otherwise until the
Warrant shall           have been exercised and the Ordinary Shares issuable upon the
exercise hereof           shall have become deliverable, as provided herein.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;13. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Warrant
Agent</U>. The Company may, by written notice to each Holder of the           Warrant,
appoint an agent for the purpose of issuing Ordinary Shares (or Other
          Securities) on the exercise of this Warrant pursuant to Section 1, exchanging
          this Warrant pursuant to Section 8, and replacing this Warrant pursuant to
          Section 9, or any of the foregoing, and thereafter any such issuance, exchange
          or replacement, as the case may be, shall be made at such office by such agent.  </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;14. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Transfer
on the Company&#146;s Books</U>. Until this Warrant is transferred           on the books
of the Company, the Company may treat the registered holder hereof           as the
absolute owner hereof for all purposes, notwithstanding any notice to the
          contrary.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;15. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Notices,
Etc</U>. All notices and other communications from the Company to           the Holder of
this Warrant shall be mailed by first class registered or           certified mail,
postage prepaid, at such address as may have been furnished to           the Company in
writing by such Holder or, until any such Holder furnishes to the           Company an
address, then to, and at the address of, the last Holder of this           Warrant who
has so furnished an address to the Company.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;16. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Voluntary
Adjustment by the Company</U>. The Company may at any time during           the term of
this Warrant reduce the then current Exercise Price to any amount           and for any
period of time deemed appropriate by the Board of Directors of the           Company.  </FONT></P>

<p align=center>
<font size=2>10</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;17. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Miscellaneous</U>.
This Warrant and any term hereof may be changed, waived,           discharged or
terminated only by an instrument in writing signed by the party           against which
enforcement of such change, waiver, discharge or termination is           sought. This
Warrant shall be governed by and construed in accordance with the           laws of State
of New York without regard to principles of conflicts of laws. Any           action
brought concerning the transactions contemplated by this Warrant shall be
          brought only in the state courts of New York or in the federal courts located
in           the state of New York; provided, however, that the Holder may choose to
waive           this provision and bring an action outside the state of New York. The
Company           hereby agrees to submit to the jurisdiction of such courts and waive
trial by           jury. The prevailing party shall be entitled to recover from the other
party its           reasonable attorney&#146;s fees and costs. In the event that any
provision of           this Warrant is invalid or unenforceable under any applicable
statute or rule of           law, then such provision shall be deemed inoperative to the
extent that it may           conflict therewith and shall be deemed modified to conform
with such statute or           rule of law. Any such provision which may prove invalid or
unenforceable under           any law shall not affect the validity or enforceability of
any other provision           of this Warrant. The headings in this Warrant are for
purposes of reference           only, and shall not limit or otherwise affect any of the
terms hereof. The           invalidity or unenforceability of any provision hereof shall
in no way affect           the validity or enforceability of any other provision. Each of
the Company and           the Holder acknowledges that its legal counsel participated in
the preparation           of this Warrant and, therefore, stipulates that the rule of
construction that           ambiguities are to be resolved against the drafting party
shall not be applied           in the interpretation of this Warrant to favor any party
against the other           party.  </FONT></P>


<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>[BALANCE OF PAGE INTENTIONALLY LEFT BLANK;
<BR>SIGNATURE PAGE FOLLOWS.]</B> </FONT>
</P>

<p align=center>
<font size=2>10</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN
WITNESS WHEREOF, the Company has executed this Warrant as of the date first written above. </FONT></P>

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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>B.O.S. BETTER ON-LINE SOLUTIONS LTD.<BR><BR>
<BR>By: <BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Name:&nbsp;&nbsp;&nbsp;Adiv Baruch<BR>Title:&nbsp;&nbsp;&nbsp;&nbsp; CEO</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR>
<BR>By: <BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Name:&nbsp;&nbsp;&nbsp;Nehemia Kaufman<BR>Title:&nbsp;&nbsp;&nbsp;&nbsp; CEO</FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>11</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>EXHIBIT A </FONT></H1>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>EXERCISE NOTICE</B> </FONT> <BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2">(To Be Signed Only On
Exercise Of Warrant) </FONT> </P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>TO:  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>B.O.S.
Better On-Line Solutions Ltd.</FONT></TD>
</TR>
</TABLE>
<BR>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Attention:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Chief Financial Officer </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
undersigned, pursuant to the provisions set forth in the attached Warrant (No.____),
hereby irrevocably elects to purchase (check applicable box): </FONT></P>


<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="15%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">________ <BR>
<BR>
________ <BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></TD>
     <TD WIDTH="85%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">________ Ordinary Shares covered by such Warrant; or
<BR><BR>
the maximum  number of Ordinary  Shares covered by such Warrant  pursuant to the cashless  exercise
procedure set forth in Section 2.

</FONT></TD></TR>
</TABLE>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
 undersigned  herewith  makes  payment  of the full  Exercise  Price  for such  shares at
the price per share provided for in such Warrant, which is $___________.  Such payment
takes the form of (check applicable box or boxes): </FONT></P>

<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="15%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">________<BR>
<BR>
________<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<BR>
<BR>
________
</FONT></TD>
     <TD WIDTH="85%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$__________ in lawful money of the United States; and/or<BR>
<BR>
the  cancellation of such portion of the attached  Warrant as is exercisable for a total of _______<BR>
Ordinary  Shares  (using  a  Fair  Market  Value  of  $_______  per  share  for  purposes  of  this<BR>
calculation); and/or<BR>
<BR>
the cancellation of such number of  Ordinary Shares as is necessary, in accordance with the formula set forth
in Section 2.2, to exercise this Warrant with respect to the maximum number of Ordinary Shares purchasable
pursuant to the cashless exercise procedure set forth in Section 2.
</FONT></TD></TR>
</TABLE>
<BR>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
undersigned  requests that the  certificates for such shares be issued in the name of,
and delivered to ________________________  whose
                  address                  is
____________________________________. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
undersigned  represents and warrants that all offers and sales by the undersigned of the
securities  issuable upon exercise of the within  Warrant shall be made pursuant to
 registration  of the Ordinary  Shares under the Securities Act of 1933, as amended (the
"Securities Act") or pursuant to an exemption from registration under the Securities Act. </FONT></P>


<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Dated: _______________________________
</FONT></TD>
     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_____________________________________________<BR>
(Signature must conform to name of Holder as <BR>
specified on the face of the Warrant)<BR>
<BR>
Address: ____________________________________<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;____________________________________
</FONT></TD></TR>
</TABLE>


<p align=center>
<font size=2>A-1</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>EXHIBIT B </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<p ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>FORM OF TRANSFEROR
ENDORSEMENT</B> </FONT> <BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2">(To Be Signed Only On
Transfer Of Warrant) </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>FOR VALUE RECEIVED, THE
UNDERSIGNED HEREBY SELLS, ASSIGNS, AND TRANSFERS UNTO THE PERSON(S) NAMED BELOW UNDER THE
HEADING &#147;TRANSFEREES&#148; THE RIGHT REPRESENTED BY THE WITHIN WARRANT TO PURCHASE
THE PERCENTAGE AND NUMBER OF SHARES OF ORDINARY SHARES OF B.O.S. BETTER ON-LINE SOLUTIONS
LTD. INTO WHICH THE WITHIN WARRANT RELATES SPECIFIED UNDER THE HEADINGS &#147;PERCENTAGE
TRANSFERRED&#148; AND &#147;NUMBER TRANSFERRED,&#148; RESPECTIVELY, OPPOSITE THE NAME(S)
OF SUCH PERSON(S) AND APPOINTS EACH SUCH PERSON ATTORNEY TO TRANSFER ITS RESPECTIVE RIGHT
ON THE BOOKS OF B.O.S. BETTER ON-LINE SOLUTIONS LTD. WITH FULL POWER OF SUBSTITUTION IN
THE PREMISES.</B> </FONT></P>


<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="600" ALIGN="CENTER">
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Transferees</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Address</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Percentage<BR>Transferred</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Number Transferred</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>

<TR>
      <TD>&nbsp; </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD></TR><TR>
      <TD>&nbsp; </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD></TR>
<TR>
     <TD COLSPAN="2" ALIGN="CENTER"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD ALIGN="CENTER"></TD>
     <TD COLSPAN="2" ALIGN="CENTER"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD ALIGN="CENTER"></TD>
     <TD COLSPAN="2" ALIGN="CENTER"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD ALIGN="CENTER"></TD>
     <TD COLSPAN="2" ALIGN="CENTER"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD ALIGN="CENTER"></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD></TR>
<TR VALIGN=Bottom>
     <TD WIDTH="12%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="12%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="12%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="12%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
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     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN="2" ALIGN="CENTER"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD ALIGN="CENTER"></TD>
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     <TD COLSPAN=3></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD WIDTH="40%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>DATED: _______________________________</B> </FONT>
</TD>
     <TD WIDTH="60%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>_____________________________________________<BR>
(SIGNATURE MUST CONFORM TO NAME OF <BR>HOLDER AS
SPECIFIED ON THE FACE OF <BR>THE WARRANT)<BR>
<BR>
ADDRESS: ____________________________________<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;____________________________________</B> </FONT>
</TD></TR>
</TABLE>


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<TD WIDTH="50%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>SIGNED IN THE PRESENCE OF:<BR><BR>
<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
(NAME)</B> </FONT></TD>
</TR>
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<BR>


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<TD WIDTH="50%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>ACCEPTED AND AGREED:<BR>[TRANSFEREE]<BR>
<BR> &#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
(NAME)</B> </FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
</TR>
</TABLE>
<BR>





<p align=center>
<font size=2>B-1</font></p>
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<DOCUMENT>
<TYPE>EX-4.4
<SEQUENCE>4
<FILENAME>exhibit_4-4.htm
<TEXT>
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<HEAD>
     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        \\backup\office\EDGAR Filing\BOS better online solutions Ltd\62889\a62889.eep -->
     <!-- Control Number: 62889                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    BOS better online solutions Ltd                                  -->
     <!-- Project Name:   F-3                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>F-3</TITLE>
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<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Exhibit 4.4</B></U> </FONT> </P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>REGISTRATION RIGHTS
AGREEMENT </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Registration Rights Agreement (this &#147;Agreement&#148;) is made and entered into as of
August 16, 2006 by and between B.O.S. Better On-Line Solutions Ltd., an Israeli
corporation (the &#147;Company&#148;), and Laurus Master Fund, Ltd., a Cayman Islands
Company (the &#147;Purchaser&#148;). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date
hereof, by and between the Purchaser and the Company (the &#147;Securities Purchase
Agreement&#148;), and pursuant to the Note and the Warrant referred to therein. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company and the Purchaser hereby agree as follows: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;1. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Definitions</U>.
Capitalized terms used and not otherwise defined herein that           are defined in the
Securities Purchase Agreement shall have the meanings given           to such terms in
the Securities Purchase Agreement. As used in this Agreement,           the following
terms shall have the following meanings:  </FONT></P>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Affiliate</I>&#148; of
any specified person means any other person, directly or indirectly, controlling or
controlled by or under common control with such specified person. For the purpose of this
definition &#147;control&#148; as used with respect to any person, shall mean the
possession, directly or indirectly, of the power to direct or cause the direction of the
management or policies of such person, whether through the ownership of voting securities
or by agreement or otherwise.  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Commission</I>&#148; means
the Securities and Exchange Commission.  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Ordinary
S</I>hares&#148; means the Company&#146;s Ordinary Shares, NIS 4.00 nominal value per
share.  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Effectiveness
Date</I>&#148; means the 135th day following the date hereof.  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Effectiveness
Period</I>&#148; shall have the meaning set forth in Section 2(a).  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Exchange
Act</I>&#148; means the Securities Exchange Act of 1934, as amended, and any successor
statute.  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Filing
Date</I>&#148; means, with respect to the Registration Statement required to be filed
hereunder, a date no later than forty five (45) days following the date hereof, and with
respect to Ordinary Shares issuable to the Holder as a result of adjustments to the Fixed
Conversion Price made pursuant to Section 3.4 of the Secured Convertible Term Note or
Section 4 of the Warrant or otherwise, sixty (60) days (ninety (90) days if the request
is made between February 1 and March 31,) days after the occurrence of such event or the
date of the adjustment of the Fixed Conversion Price.  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Holder</I>&#148; or
&#147;<I>Holders</I>&#148; means the Purchaser or any of its successors to the extent any
of them hold Registrable Securities, provided that only registered holders of Registrable
Securities shall be counted for purposes of calculating any proportion of holders
entitled to take any action, receive any damages or give any notice pursuant to this
Agreement.  </FONT>
</TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2></font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Indemnified
Party</I>&#148; shall have the meaning set forth in Section 5(c).  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Indemnifying
Party</I>&#148; shall have the meaning set forth in Section 5(c).  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Majority
Holders</I>&#148; shall means the Holders of a majority of the then outstanding aggregate
principal amount of Registrable Securities, provided that Registrable Securities which
have been sold or otherwise transferred pursuant to the Registration Statement or Rule
144 shall not be included in the calculation of Majority Holders.  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Note</I>&#148; has
the meaning set forth in the Securities Purchase Agreement.  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Proceeding</I>&#148; means
an action, claim, suit, investigation or proceeding (including, without limitation, an
investigation or partial proceeding, such as a deposition), whether commenced or
threatened.  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Prospectus</I>&#148; means
the prospectus included in the Registration Statement (including, without limitation, a
prospectus that includes any information previously omitted from a prospectus filed as
part of an effective registration statement in reliance upon Rule 430A promulgated under
the Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable Securities covered
by the Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated by
reference or deemed to be incorporated by reference in such Prospectus.  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Registrable
Securities</I>&#148; means the shares of Ordinary Shares issued upon the conversion of
the Note and issuable upon exercise of the Warrant.  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Registration
Statement</I>&#148; means each registration statement required to be filed hereunder,
including the Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre-and post-effective amendments, all exhibits thereto, and all
material incorporated by reference or deemed to be incorporated by reference in such
registration statement.  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Rule
144</I>&#148; means Rule 144 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as such Rule.  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Rule
415</I>&#148; means Rule 415 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as such Rule.  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Securities
Act</I>&#148; means the Securities Act of 1933, as amended, and any successor statute.  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Trading
Market</I>&#148; means any of the NASD OTC Bulletin Board, NASDAQ SmallCap Market, the
Nasdaq National Market, the American Stock Exchange, the New York Stock Exchange and the
Tel Aviv Stock Exchange.  </FONT>
</TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>2</font></p>
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<page>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Warrant</I>&#148;means
the Ordinary Shares Purchase Warrant issued pursuant to the Securities Purchase
Agreement.  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;2. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
references in this Agreement to amendments or supplements to the           Registration
Statement, any preliminary Prospectus or Prospectus shall be deemed           to mean and
include the filing of any document under the Exchange Act, after the           date of
such Registration Statement, preliminary Prospectus or Prospectus, as           the case
may be, which is incorporated by reference therein.  </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Registration.</U> </FONT></P>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On
or prior to the Filing Date the Company shall prepare and file with the
               Commission a Registration Statement covering the Registrable Securities
for an                offering to be made on a continuous basis pursuant to Rule 415. The
Registration                Statement shall be on Form F-3 (except if the Company is not
then eligible to                register for resale the Registrable Securities on Form
F-3, in which case such                registration shall be on another appropriate form
in accordance herewith). The                Company shall cause the Registration
Statement to become effective and remain                effective as provided herein. The
Company shall use its reasonable commercial                efforts to cause the
Registration Statement to be declared effective under the                Securities Act
as promptly as possible after the filing thereof, but in any                event no
later than the Effectiveness Date. The Company shall use its reasonable
               commercial efforts to keep the Registration Statement continuously
effective                under the Securities Act until the date which is the earlier
date of when (i)                all Registrable Securities have been sold; (ii) all
Registrable Securities may                be sold by non-Affiliates of the Company
immediately without registration under                the Securities Act and without
volume restrictions pursuant to Rule 144(k), as                determined by the counsel
to the Company on the basis of the Holders&#146;               representations, pursuant
to a written opinion letter to such effect, addressed                and acceptable to
the Company&#146;s transfer agent; or (iii) the second                anniversary of the
Closing Date (the &#147;Effectiveness Period&#148;). </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If:
(i) the Registration Statement is not filed on or prior to the Filing Date;
               (ii) the Registration Statement is not declared effective by the
Commission by                the Effectiveness Date; (iii) after the Registration
Statement is filed with and                declared effective by the Commission, the
Registration Statement ceases to be                effective (by suspension, excluding a
suspension of all trading on the Trading                Market, or otherwise) as to all
Registrable Securities to which it is required                to relate at any time prior
to the expiration of the Effectiveness Period                (without being succeeded
immediately by an additional registration statement                filed and declared
effective) for a period of time which shall exceed 30 days in                the
aggregate per year or more than 20 consecutive calendar days (defined as a
               period of 365 days commencing on the date the Registration Statement is
declared                effective); or (iv) the Ordinary Shares are not listed or quoted
on any Trading                Market, or is suspended from trading on any Trading Market
(except for the Tel                Aviv Stock Exchange) for a period of three (3)
consecutive trading days                (provided the Company shall not have been able to
cure such trading suspension                within 30 days of the notice thereof or list
the Ordinary Stock on another                Trading Market); (any such failure or breach
being referred to as an                &#147;Event,&#148; and for purposes of clause (i)
or (ii) the date on which such                Event occurs, or for purposes of clause
(iii) the date which such 30 day or 20                consecutive day period (as the case
may be) is exceeded, or for purposes of                clause (iv) the date on which such
three (3) trading day period is exceeded,                being referred to as &#147;Event
Date&#148;), then until the applicable Event is                cured, the Company shall
pay to each Holder an amount in cash, as liquidated                damages, equal to 1.0%
for each thirty (30) day period (prorated for partial                periods) on a daily
basis of the outstanding principal amount of the Note. While                such Event
continues, such liquidated damages shall be paid not less often than                each
thirty (30) days. Any unpaid liquidated damages as of the date when an
               Event has been cured by the Company shall be paid within seven (7)
business days                following the date on which such Event has been cured by the
Company. </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>3</font></p>
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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Within
three business days of the Effectiveness Date, the Company shall cause                its
counsel to issue a blanket opinion in the form attached hereto as Exhibit A,
               to the transfer agent stating that the shares are subject to an effective
               registration statement and can be reissued free of restrictive legend upon
               notice of a sale by Purchaser and confirmation by Purchaser that it has
complied                with the prospectus delivery requirements, provided that the
Company has not                advised the transfer agent orally or in writing that the
opinion has been                withdrawn. Copies of the blanket opinion required by this
Section 2(c) shall be                delivered to Purchaser within the time frame set
forth above. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;3. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Registration
Procedures</U>. If and whenever the Company is required by the                provisions
hereof to effect the registration of any Registrable Securities under                the
Securities Act, the Company will, by the Filing Date:  </FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>prepare
and file with the Commission the Registration Statement with respect to
               such Registrable Securities, respond as promptly as possible to any
comments                received from the Commission, and use its reasonable commercial
efforts to cause                the Registration Statement to become and remain effective
for the Effectiveness                Period with respect thereto, and promptly provide to
the Purchaser copies of all                filings and Commission letters of comment
relating thereto; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>prepare
and file with the Commission such amendments and supplements to the
               Registration Statement and the Prospectus used in connection therewith as
may be                necessary to comply with the provisions of the Securities Act with
respect to                the disposition of all Registrable Securities covered by the
Registration                Statement and to keep such Registration Statement effective
until the expiration                of the Effectiveness Period; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>furnish
to the Purchaser such number of copies of the Registration Statement and
               the Prospectus included therein (including each preliminary Prospectus) as
the                Purchaser reasonably may request to facilitate the public sale or
disposition of                the Registrable Securities covered by the Registration
Statement; </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>4</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(d) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>use
its commercially reasonable efforts to register or qualify the                Purchaser&#146;s
Registrable Securities covered by the Registration Statement                under the
securities or &#147;blue sky&#148; laws of such jurisdictions within                the
United States as the Purchaser may reasonably request, provided, however,
               that the Company shall not for any such purpose be required to qualify
generally                to transact business as a foreign corporation in any
jurisdiction where it is                not so qualified or to consent to general service
of process in any such                jurisdiction; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(e) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>list
the Registrable Securities covered by the Registration Statement with any
               securities exchange on which the Ordinary Shares of the Company are then
listed; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(f) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>immediately
notify the Purchaser at any time when a Prospectus relating thereto                is
required to be delivered under the Securities Act, of the happening of any
               event, of which the Company has knowledge, as a result of which the
Prospectus                contained in such Registration Statement, as then in effect,
includes an untrue                statement of a material fact or omits to state a
material fact required to be                stated therein or necessary to make the
statements therein not misleading in                light of the circumstances then
existing; and </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(g) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>make
available for inspection by the Purchaser and any attorney, accountant or
               other agent retained by the Purchaser, all relevant publicly available,
               non-confidential financial and other records, pertinent corporate
documents and                properties of the Company as is customary for due diligence
examinations in                connection with public offerings, and cause the Company&#146;s
officers,                directors and employees to supply all such relevant publicly
available                non-confidential information reasonably requested by the
attorney, accountant or                agent of the Purchaser. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Registration
Expenses</U>. All expenses relating to the Company&#146;s                compliance with
Sections 2 and 3 hereof, including, without limitation, all                registration
and filing fees, printing expenses, fees and disbursements of                counsel and
independent public accountants for the Company, fees and expenses
               (including reasonable counsel fees) incurred in connection with complying
with                state securities or &#147;blue sky&#148; laws, fees of the NASD,
transfer taxes,                fees of transfer agents and registrars, fees of, and
disbursements incurred by,                one counsel for the Holders (to the extent such
counsel is required due to                Company&#146;s failure to meet any of its
obligations hereunder), are called                &#147;Registration Expenses&#148;. All
selling commissions applicable to the                sale of Registrable Securities,
including any fees and disbursements of any                special counsel to the Holders
beyond those included in Registration Expenses,                are called &#147;Selling
Expenses.&#148; The Company shall only be responsible                for all Registration
Expenses and not for any Selling Expenses.  </FONT></P></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>5</font></p>
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<page>

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<TD><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Indemnification</U>.  </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In
the event of a registration of any Registrable Securities under the
               Securities Act pursuant to this Agreement, the Company will indemnify and
hold                harmless the Purchaser, and its officers, directors and each other
person, if                any, who controls the Purchaser within the meaning of the
Securities Act,                against any losses, claims, damages or liabilities, joint
or several, to which                the Purchaser, or such persons may become subject
under the Securities Act or                otherwise, insofar as such losses, claims,
damages or liabilities (or actions in                respect thereof) arise out of or are
based upon any untrue statement or alleged                untrue statement of any
material fact contained in any Registration Statement                under which such
Registrable Securities were registered under the Securities Act                pursuant
to this Agreement, any preliminary Prospectus or final Prospectus
               contained therein, or any amendment or supplement thereof, or arise out of
or                are based upon the omission or alleged omission to state therein a
material fact                required to be stated therein or necessary to make the
statements therein not                misleading, and will reimburse the Purchaser, and
each such person for any                reasonable legal or other expenses incurred by
them in connection with                investigating or defending any such loss, claim,
damage, liability or action;                provided, however, that the Company will not
be liable in any such case if and                to the extent that any such loss, claim,
damage or liability arises out of or is                based upon (A) any untrue
statement or alleged untrue statement or omission or                alleged omission so
made in conformity with information furnished by or on                behalf of the
Purchaser or any such person in writing specifically for use in                any such
document; (B) use of the Registration Statement or the related                Prospectus
following a Discontinuation Event, provided Purchaser received prior
               notice of such Discontinuation Event; or (C) if the Purchaser fails to
deliver a                Prospectus, as then amended or supplemented, provided that the
Company shall                have delivered to the Purchaser such Prospectus. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Notwithstanding
the foregoing, the Company shall not be liable for any losses, claims, damages or
liabilities by reason of any compromise, consent to entry of judgment, or settlement
effected without the Company&#146;s prior written consent, which consent shall not be
unreasonably withheld or conditioned. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In
the event of a registration of the Registrable Securities under the
               Securities Act pursuant to this Agreement, the Purchaser will indemnify
and hold                harmless the Company, and its officers, directors and each other
person, if any,                who controls the Company within the meaning of the
Securities Act, against all                losses, claims, damages or liabilities, joint
or several, to which the Company                or such persons may become subject under
the Securities Act or otherwise,                insofar as such losses, claims, damages
or liabilities (or actions in respect                thereof) arise out of or are based
upon any untrue statement or alleged untrue                statement of any material fact
which was furnished in writing by the Purchaser                to the Company expressly
for use in (and such information is contained in) the                Registration
Statement under which such Registrable Securities were registered                under
the Securities Act pursuant to this Agreement, any preliminary Prospectus
               or final Prospectus contained therein, or any amendment or supplement
thereof,                or arise out of or are based upon the omission or alleged
omission to state                therein a material fact required to be stated therein or
necessary to make the                statements therein not misleading, and will
reimburse the Company and each such                person for any reasonable legal or
other expenses incurred by them in connection                with investigating or
defending any such loss, claim, damage, liability or                action, provided,
however, that the Purchaser will be liable in any such case if                and only to
the extent that any such loss, claim, damage or liability arises out                of or
is based upon an untrue statement or alleged untrue statement or omission
               or alleged omission so made in conformity with information furnished in
writing                to the Company by or on behalf of the Purchaser specifically for
use in any such                document. Notwithstanding the provisions of this
paragraph, the Purchaser shall                not be required to indemnify any person or
entity in excess of the amount of the                aggregate net proceeds received by
the Purchaser in respect of Registrable                Securities in connection with any
such registration under the Securities Act. </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>6</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Promptly
after receipt by a party entitled to claim indemnification hereunder                (an
&#147;Indemnified Party&#148;) of notice of the commencement of any action,
               such Indemnified Party shall, if a claim for indemnification in respect
thereof                is to be made against a party hereto obligated to indemnify such
Indemnified                Party (an &#147;Indemnifying Party&#148;), notify the
Indemnifying Party in                writing thereof, but the omission so to notify the
Indemnifying Party shall not                relieve it from any liability which it may
have to such Indemnified Party other                than under this Section 5(c) and
shall only relieve it from any liability which                it may have to such
Indemnified Party under this Section 5(c) if and to the                extent the
Indemnifying Party is substantially prejudiced by such omission. In                case
any such action shall be brought against any Indemnified Party and it shall
               notify the Indemnifying Party of the commencement thereof, the
Indemnifying                Party shall be entitled to participate in and, to the extent
it shall wish, to                assume and undertake the defense thereof with counsel
satisfactory to such                Indemnified Party, and, after notice from the
Indemnifying Party to such                Indemnified Party of its election so to assume
and undertake the defense                thereof, the Indemnifying Party shall not be
liable to such Indemnified Party                under this Section 5(c) for any legal
expenses subsequently incurred by such                Indemnified Party in connection
with the defense thereof; if the Indemnified                Party retains its own
counsel, then the Indemnified Party shall pay all fees,                costs and expenses
of such counsel, provided, however, that, if the defendants                in any such
action include both the indemnified party and the Indemnifying Party                and
the Indemnified Party shall have reasonably concluded that there may be
               reasonable defenses available to it which are different from or additional
to                those available to the Indemnifying Party or if the interests of the
Indemnified                Party reasonably may be deemed to conflict with the interests
of the                Indemnifying Party, the Indemnified Party shall have the right to
select one                separate counsel and to assume such legal defenses and
otherwise to participate                in the defense of such action, with the
reasonable expenses and fees of such                separate counsel and other expenses
related to such participation to be                reimbursed by the Indemnifying Party
as incurred. </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>7</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(d) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In
order to provide for just and equitable contribution in the event of joint
               liability under the Securities Act in any case in which that an
Indemnified                Party or any officer, director or controlling person thereof,
makes a claim for                indemnification pursuant to this Section 5 but it is
judicially determined (by                the entry of a final judgment or decree by a
court of competent jurisdiction and                the expiration of time to appeal or
the denial of the last right of appeal) that                such indemnification may not
be enforced, notwithstanding the fact that this                Section 5 provides for
indemnification in such case, then the Indemnifying Party                will contribute
to the aggregate losses, claims, damages or liabilities to which                it may be
subject (after contribution from others) in such proportion as is
               appropriate to reflect the relative fault of the Indemnifying Party and
the                relative fault of the Indemnified Party as well as any other relevant
equitable                considerations. Relative fault shall be determined by reference
to, among other                things, whether any untrue statement or omission or
alleged untrue statement of                a material fact or the omission to state a
material fact relates to information                provided by the Indemnifying Party or
the Indemnified Party, and the                parties&#146; relative intent, knowledge,
access to information and opportunity                to correct or prevent such statement
or omission. Notwithstanding the foregoing,                no person or entity guilty of
fraudulent misrepresentation (within the meaning                of Section 11(f) of the
Securities Act) will be entitled to contribution from                any person or entity
who was not guilty of such fraudulent misrepresentation. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(e) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
provisions of this Section 5 will remain in full force and effect and
               survive the sale by the Purchaser of the Registrable Securities covered by
the                Registration Statement. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;6. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>[Reserved]</U>.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;7. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Miscellaneous</U>.  </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Remedies</U>.
In the event of a breach by the Company or by a Holder, of any                of their
respective obligations under this Agreement, each Holder or the                Company,
as the case may be, in addition to being entitled to exercise all                rights
granted by law and under this Agreement, including recovery of damages,
               will be entitled to specific performance of its rights under this
Agreement. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>No
Piggyback on Registrations</U>. Except as and to the extent specified in
               Schedule 7(b) hereto, neither the Company nor any of its security holders
(other                than the Holders in such capacity pursuant hereto) may, without the
consent of                the Holder, which consent shall not be unreasonably withheld,
include securities                of the Company in any Registration Statement other than
the Registrable                Securities, and the Company shall not after the date
hereof enter into any                agreement providing any such right for inclusion of
shares in the Registration                Statement to any of its security holders.
Except as and to the extent specified                in Schedule 7(b) hereto, the Company
has not previously entered into any                agreement granting any registration
rights with respect to any of its securities                to any person that have not
been fully satisfied. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Compliance</U>.
Each Holder covenants and agrees that it will comply with the                prospectus
delivery requirements of the Securities Act as applicable to it in
               connection with sales of Registrable Securities pursuant to the
Registration                Statement. </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>8</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(d) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Discontinued
Disposition</U>. Each Holder agrees by its acquisition of such                Registrable
Securities that, upon receipt of a notice from the Company of the
               occurrence of a Discontinuation Event (as defined below), such Holder will
               forthwith discontinue disposition of such Registrable Securities under the
               applicable Registration Statement until such Holder&#146;s receipt of the
copies                of the supplemented Prospectus and/or amended Registration
Statement or until it                is advised in writing by the Company that the use of
the applicable Prospectus                may be resumed, and, in either case, has
received copies of any additional or                supplemental filings that are
incorporated or deemed to be incorporated by                reference in such Prospectus
or Registration Statement. The Company may provide                appropriate stop orders
to enforce the provisions of this paragraph. For                purposes of this Section
7(d), a &#147;Discontinuation Event&#148; shall mean                (i) when the
Commission notifies the Company whether there will be a                &#147;review&#148; of
such Registration Statement and whenever the Commission                comments in
writing on such Registration Statement (the Company shall provide                true and
complete copies thereof and all written responses thereto to each of                the
Holders); (ii) any request by the Commission or any other Federal or state
               governmental authority for amendments or supplements to such Registration
               Statement or Prospectus or for additional information; (iii) the issuance
by the                Commission of any stop order suspending the effectiveness of such
Registration                Statement covering any or all of the Registrable Securities
or the initiation of                any Proceedings for that purpose; (iv) the receipt by
the Company of any                notification with respect to the suspension of the
qualification or exemption                from qualification of any of the Registrable
Securities for sale in any                jurisdiction, or the initiation or threatening
of any Proceeding for such                purpose; (v) the occurrence of any event or
passage of time that makes the                financial statements included in such
Registration Statement ineligible for                inclusion therein or any statement
made in such Registration Statement or                Prospectus or any document
incorporated or deemed to be incorporated therein by                reference untrue in
any material respect or that requires any revisions to such                Registration
Statement, Prospectus or other documents so that, in the case of                such
Registration Statement or Prospectus, as the case may be, it will not
               contain any untrue statement of a material fact or omit to state any
material                fact required to be stated therein or necessary to make the
statements therein,                in light of the circumstances under which they were
made, not misleading; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(e) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Piggy-Back
Registrations</U>. If at any time during the Effectiveness Period                there is
not an effective Registration Statement covering all of the Registrable
               Securities and the Company shall determine to prepare and file with the
               Commission a registration statement relating to an offering for its own
account                or the account of others under the Securities Act of any of its
equity                securities, other than on Form F-4 or Form S-8 (each as promulgated
under the                Securities Act) or their then equivalents relating to equity
securities to be                issued solely in connection with any acquisition of any
entity or business or                equity securities issuable in connection with stock
option or other employee                benefit plans, then the Company shall send to
each Holder written notice of such                determination and, if within fifteen
(15) days after receipt of such notice, any                such Holder shall so request
in writing, the Company shall include in such                registration statement all
or any part of such Registrable Securities such                holder requests to be
registered to the extent the Company may do so without                violating
registration rights of others which exist as of the date of this
               Agreement, subject to customary underwriter cutbacks applicable to all
holders                of registration rights and subject to obtaining the consent of any
selling                stockholder(s) to such inclusion under such registration
statement. </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>9</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(f) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Amendments
and Waivers</U>. The provisions of this Agreement, including the
               provisions of this sentence, may not be amended, modified or supplemented,
and                waivers or consents to departures from the provisions hereof may not
be given,                unless the same shall be in writing and signed by the Company
and the Majority                Holders. Notwithstanding the foregoing, a waiver or
consent to depart from the                provisions hereof with respect to a matter that
relates exclusively to the                rights of certain Holders and that does not
directly or indirectly affect the                rights of other Holders may be given by
Holders of at least a majority of the                Registrable Securities to which such
waiver or consent relates; provided,                however, that the provisions of this
sentence may not be amended, modified, or                supplemented except in
accordance with the provisions of the immediately                preceding sentence. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(g) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Notices</U>.
Any notice or request hereunder may be given to the Company or                the
Purchaser at the respective addresses set forth below or as may hereafter be
               specified in a notice designated as a change of address under this Section
7(g).                Any notice or request hereunder shall be given by registered or
certified mail,                return receipt requested, hand delivery, overnight mail,
Federal Express or                other national overnight next day carrier
(collectively, &#147;Courier&#148;) or                telecopy (confirmed by mail).
Notices and requests shall be, in the case of                those by hand delivery,
deemed to have been given when delivered to any party to                whom it is
addressed, in the case of those by mail or overnight mail, deemed to                have
been given five (5) business days after the date when deposited in the mail
               or three (3) business days after the date when deposited with the
overnight mail                carrier, in the case of a Courier, the two (2) business
days following timely                delivery of the package with the Courier, and, in
the case of a telecopy, when                confirmed. The address for such notices and
communications shall be as follows: </FONT></TD>
</TR>
</TABLE>
<BR>






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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>If to the Company:</I></FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> B.O.S. Better On-Line Solutions Ltd.<BR>
To the address set forth under the Company's name on
the signature page hereto.
</FONT></TD>
</TR>
</TABLE>
<BR>


<p align=center>
<font size=2>10</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<TR VALIGN=TOP>
<TD WIDTH=50%>&nbsp;</TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>with
a copy to: </I><BR>
Amit, Pollak, Matalon &amp; Co. <BR>
NYP Tower, 17 Yitzhak Sadeh Street, 19<SUP>th</SUP> Floor <BR>
Tel Aviv 67775 <BR>
Attention: Shlomo Landress, Esq. <BR><BR>
Facsimile: (972) 3 561-3620</FONT></TD>
</TR>
</TABLE>
<BR>







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<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>If to a Purchaser:</I></FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> To the address set forth under Purchaser's name on the
signature page hereto.
</FONT></TD>
</TR>
</TABLE>
<BR>







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<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>If to any other person who is<BR>
then the registered Holder:  </I></FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR>To the address of such Holder as it appears in the
stock transfer books of the Company
</FONT></TD>
</TR>
</TABLE>
<BR>


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<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
or
such other address as may be designated in writing hereafter in accordance with this
Section 7(g) by such person. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(h) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Successors
and Assigns</U>. This Agreement shall inure to the benefit of and                be
binding upon the successors and permitted assigns of each of the parties and
               shall inure to the benefit of each Holder. The Company may not assign its
rights                or obligations hereunder without the prior written consent of each
Holder. Each                Holder may assign their respective rights hereunder in the
manner and to the                persons as permitted under the Note and the Securities
Purchase Agreement with                the prior written consent of the Company, which
consent shall not be                unreasonably withheld. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(i) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Execution
and Counterparts</U>. This Agreement may be executed in any number                of
counterparts, each of which when so executed shall be deemed to be an
               original and, all of which taken together shall constitute one and the
same                Agreement. In the event that any signature is delivered by facsimile
               transmission, such signature shall create a valid binding obligation of
the                party executing (or on whose behalf such signature is executed) the
same with                the same force and effect as if such facsimile signature were
the original                thereof. </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2></font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(j) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Governing
Law</U>. All questions concerning the construction, validity,                enforcement
and interpretation of this Agreement shall be governed by and                construed
and enforced in accordance with the internal laws of the State of New
               York, without regard to the principles of conflicts of law thereof. Each
party                agrees that all Proceedings concerning the interpretations,
enforcement and                defense of the transactions contemplated by this Agreement
shall be commenced                exclusively in the state and federal courts sitting in
the City of New York,                Borough of Manhattan. Each party hereto hereby
irrevocably submits to the                exclusive jurisdiction of the state and federal
courts sitting in the City of                New York, Borough of Manhattan for the
adjudication of any dispute hereunder or                in connection herewith or with
any transaction contemplated hereby or discussed                herein, and hereby
irrevocably waives, and agrees not to assert in any                Proceeding, any claim
that it is not personally subject to the jurisdiction of                any such court,
that such Proceeding is improper. Each party hereto hereby                irrevocably
waives personal service of process and consents to process being                served in
any such Proceeding by mailing a copy thereof via registered or                certified
mail or overnight delivery (with evidence of delivery) to such party                at
the address in effect for notices to it under this Agreement and agrees that
               such service shall constitute good and sufficient service of process and
notice                thereof. Nothing contained herein shall be deemed to limit in any
way any right                to serve process in any manner permitted by law. Each party
hereto hereby                irrevocably waives, to the fullest extent permitted by
applicable law, any and                all right to trial by jury in any legal proceeding
arising out of or relating to                this Agreement or the transactions
contemplated hereby. If either party shall                commence a Proceeding to
enforce any provisions hereunder, then the prevailing                party in such
Proceeding shall be reimbursed by the other party for its                reasonable
attorneys fees and other costs and expenses incurred with the
               investigation, preparation and prosecution of such Proceeding. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(k) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Cumulative
Remedies</U>. The remedies provided herein are cumulative and not
               exclusive of any remedies provided by law. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(l) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Severability</U>.
If any term, provision, covenant or restriction of this                Agreement is held
by a court of competent jurisdiction to be invalid, illegal,                void or
unenforceable, the remainder of the terms, provisions, covenants and
               restrictions set forth herein shall remain in full force and effect and
shall in                no way be affected, impaired or invalidated, and the parties
hereto shall use                their reasonable efforts to find and employ an
alternative means to achieve the                same or substantially the same result as
that contemplated by such term,                provision, covenant or restriction. It is
hereby stipulated and declared to be                the intention of the parties that
they would have executed the remaining terms,                provisions, covenants and
restrictions without including any of such that may be                hereafter declared
invalid, illegal, void or unenforceable. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(m) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Headings</U>.
The headings in this Agreement are for convenience of reference                only and
shall not limit or otherwise affect the meaning hereof. </FONT></TD>
</TR>
</TABLE>
<BR>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[BALANCE OF PAGE
INTENTIONALLY LEFT BLANK; <BR>SIGNATURE PAGE FOLLOWS] </FONT></H1>

<p align=center>
<font size=2>12</font></p>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the
date first written above. </FONT></P>









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<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>B.O.S. BETTER ON-LINE SOLUTIONS LTD.<BR><BR>
<BR>By: ____________________________<BR>
Name: Adiv Baruch &nbsp;&nbsp;&nbsp;Nehemia Kaufman<BR>
Title: &nbsp;&nbsp;CEO &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CFO</FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>LAURUS MASTER FUND, LTD.<BR><BR>
<BR>By: _________________________<BR>
Name: _________________________<BR>Title: _________________________</FONT></TD>
</TR>
</TABLE>
<BR>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Address for Notices:</I></FONT></TD>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Address for Notices:</I></FONT></TD></TR>
</TABLE>
<BR>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Beit Rabin, 100 BOS Road</FONT></TD>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>825 Third Avenue - 14<SUP>th</SUP> Floor</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Teradyon Industrial Park, Misgav 20179 Israel</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>New York, NY 10022</FONT></TD></TR>
</TABLE>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
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     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
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<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=10% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Attention:</FONT></TD>
     <TD WIDTH=40% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Nehemia Kaufman, CFO</FONT></TD>
     <TD WIDTH=10% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Attention:</FONT></TD>
     <TD WIDTH=40% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>David Grin</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Facsimile:</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(972) 4 999-0334</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Facsimile:</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>212-541-4434</FONT></TD></TR>
</TABLE>


<BR>


<p align=center>
<font size=2>13</font></p>
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<page>



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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>EXHIBIT A </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[Month __, 200_] </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[Transfer Agent] </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Re: </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>B.O.S.
Better On-line Solutions Ltd. Registration Statement on Form [F-3] </U> </FONT> </TD>
</TR>
</TABLE>
<BR>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ladies
and Gentlemen: </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
counsel to [company name], an Israeli corporation (the &#147;Company&#148;), we have been
requested to render our opinion to you in connection with the resale by the individuals or
entitles listed on Schedule A attached hereto (the &#147;Selling Shareholders&#148;), of
an aggregate of [amount] shares (the &#147;Shares&#148;) of the Company&#146;s Ordinary
Shares. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
Registration Statement on Form [F-3] under the Securities Act of 1933, as amended (the
&#147;Act&#148;), with respect to the resale of the Shares was declared effective by the
Securities and Exchange Commission on [date]. Enclosed is the Prospectus dated [date]. We
understand that the Shares are to be offered and sold in the manner described in the
Prospectus. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based
upon the foregoing, upon request by the Selling Shareholders at any time while the
registration statement remains effective, it is our opinion that the Shares have been
registered for resale under the Act and new certificates evidencing the Shares upon their
transfer or re-registration by the Selling Shareholders may be issued without restrictive
legend. The Company will advise you if the registration statement is not available or
effective at any point in the future. </FONT></P>







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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Very truly yours,<BR><BR>
<BR>[Company counsel]</FONT></TD>
</TR>
</TABLE>
<BR>



<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Schedule A</B> </FONT></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TD COLSPAN="3" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>Selling Shareholder</U> </FONT></TD>
     <TD COLSPAN="3" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Shares<BR>
<U>Being Offered</U> </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=28% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=29% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=40% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
</TABLE>
<BR>

<p align=center>
<font size=2>14</font></p>
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</body>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5.1
<SEQUENCE>5
<FILENAME>exhibit_5-1.htm
<TEXT>
<HTML>
<HEAD>
     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        \\Backup\office\EDGAR Filing\BOS better online solutions Ltd\62889\a62889.eep -->
     <!-- Control Number: 62889                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    BOS better online solutions Ltd                                  -->
     <!-- Project Name:   F-3                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>F-3</TITLE>
</HEAD>
<BODY>

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<HR ALIGN=LEFT WIDTH=100% SIZE=4 NOSHADE STYLE="margin-top: -5px">
<HR ALIGN=LEFT WIDTH=100% SIZE=1 NOSHADE STYLE="margin-top: -10px">

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<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Exhibit 5.1</B></U> </FONT> </P>


<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="15%"><IMG SRC="apm.jpg"></TD>
     <TD WIDTH="85%"><FONT FACE="Times New Roman, Times, Serif" SIZE="3"><B>Amit, Pollak, Matalon &amp; Co.</B> </FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Advocates and Notary</FONT></TD></TR>
</TABLE>
<BR>




<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Default" -->
<P ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>September 7, 2006 </FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">B.O.S Better Online Solutions Ltd.
<BR>Beit Rabin,
<BR>Teradyon Industrial Park
<BR><U>Misgav, 20179, Israel</U> </FONT>
</P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Ladies and Gentlemen: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We have acted as Israeli counsel to
B.O.S. Better Online Solutions Ltd., an Israeli company (the &#147;Company&#148;), in
connection with the Registration Statement on Form F-3 (the &#147;Registration
Statement&#148;), filed by the Company with the Securities and Exchange Commission on the
date hereof. The Registration Statement relates to the resale from time to time by the
selling shareholder identified therein of up to 645,720 ordinary shares of the Company,
par value NIS 4.00 per share (&#147;Ordinary Shares&#148;) issuable upon conversion of a
secured convertible term note (the &#147;Note&#148;) and upon exercise of warrants (the
&#147;Warrants&#148;) held by the selling shareholder (the &#147;Underlying Shares&#148;). </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In so acting, we have examined such
corporate documents and have made such investigation of matters of fact and law as we have
deemed relevant and necessary as a basis for the opinion hereinafter set forth. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In such examination, we have assumed
the genuineness of all signatures, the legal capacity of natural persons, the authenticity
of all documents submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies and the
authenticity of the originals of such latter documents. As to all questions of fact
material to this opinion, we have relied, without independent investigation, upon
statements and certificates or comparable documents of officers and representatives of the
Company and upon certificates of public officials. We have considered such questions of
Israeli law as we have deemed necessary for the purpose of rendering this opinion. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We are members of the Bar of the
State of Israel and, in rendering our opinion, we do not pass (expressly or by
implication) on the laws of any jurisdiction other than the State of Israel. Our opinion
relates only to Israeli laws. In addition, we render no opinion in relation to any
representation made or given in the Registration Statement. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Based upon the foregoing, we are of
the opinion that the Underlying Shares have been duly authorized and upon conversion of
the Note in accordance with its terms and exercise of the Warrants in accordance with
their terms, shall be validly issued, fully paid and nonassessable. </FONT></P>

<p align=center>
<font size=2></font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>


<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="15%"><IMG SRC="apm.jpg"></TD>
     <TD WIDTH="85%"><FONT FACE="Times New Roman, Times, Serif" SIZE="3"><B>Amit, Pollak, Matalon &amp; Co.</B> </FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Advocates and Notary</FONT></TD></TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>This opinion is furnished to you
solely in connection with the Registration Statement and is not to be used, circulated,
quoted or otherwise referred to for any other purpose without our express prior written
permission. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We hereby consent to the filing of
this opinion with the Securities and Exchange Commission as Exhibit 5.1 to the
Registration Statement and to the reference to our firm under the captions &#147;Validity
of Securities&#148; and &#147;Enforceability of Civil Liabilities&#148; in the related
Prospectus. The issuance of such consent does not concede that we are an
&#147;expert&#148; for the purposes of the Securities Act of 1933, as amended. </FONT></P>

<!-- MARKER FORMAT-SHEET="Signature (Single)" FSL="Workstation" -->
<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH="50%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Very truly yours,<BR><BR>
<BR>/s/ Amit, Pollak, Matalon &amp; Co.<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
<B>Amit, Pollak, Matalon &amp; Co.</B></FONT></TD>
</TR>
</TABLE>
<BR>


<p align=center>
<font size=2>- 2 -</font></p>
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<DOCUMENT>
<TYPE>GRAPHIC
<SEQUENCE>6
<FILENAME>apm.jpg
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end
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.2
<SEQUENCE>7
<FILENAME>exhibit_23-2.htm
<TEXT>
<HTML>
<HEAD>
     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        \\Backup\office\EDGAR Filing\BOS better online solutions Ltd\62889\a62889.eep -->
     <!-- Control Number: 62889                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    BOS better online solutions Ltd                                  -->
     <!-- Project Name:   F-3                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>F-3</TITLE>
</HEAD>
<BODY>

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<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Exhibit 23.2</B></U> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CONSENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM </FONT></H1>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We consent to the references to our
firm under the caption &#147;Experts&#148; in Registration Statement on Form F-3 and
related prospectus of B.O.S Better Online Solutions Ltd. (&#147;BOS&#148;) for the
registration of 645,720 of its Ordinary shares and to the incorporation by reference
therein of our report dated March 27, 2006, 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, 2005, filed with the Securities and Exchange Commission on September 7, 2006. </FONT></P>


<!-- MARKER FORMAT-SHEET="Signature (Single)" FSL="Workstation" -->
<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR><BR><BR><BR><BR>Tel Aviv, Israel<BR>September 7, 2006</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH="50%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR><BR>
<BR>/s/ Kost Forer Gabbay &amp; Kasierer<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Kost Forer Gabbay &amp; Kasierer<BR>A Member of Ernst &amp; Young Global</FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2></font></p>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.3
<SEQUENCE>8
<FILENAME>exhibit_23-3.htm
<TEXT>
<HTML>
<HEAD>
     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        \\Backup\office\EDGAR Filing\BOS better online solutions Ltd\62889\a62889.eep -->
     <!-- Control Number: 62889                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    BOS better online solutions Ltd                                  -->
     <!-- Project Name:   F-3                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>F-3</TITLE>
</HEAD>
<BODY>

<!-- MARKER FORMAT-SHEET="Scotch Rule Top-TNR" FSL="Workstation" -->
<HR ALIGN=LEFT WIDTH=100% SIZE=4 NOSHADE STYLE="margin-top: -5px">
<HR ALIGN=LEFT WIDTH=100% SIZE=1 NOSHADE STYLE="margin-top: -10px">
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<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>EXHIBIT 23.3</B></U> </FONT> </P>

<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B> </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We hereby consent to the
incorporation by reference in the Registration Statement on Form F-3&nbsp;of B.O.S. Better
Online Solutions Ltd. (&#147;BOS&#148;) of our report dated March 25, 2005 relating to the
financial statements of Odem Electronic Technologies 1992 Ltd., which appears in BOS&#146;
Annual Report on Form 20-F/A, for the year ended December 31, 2005, filed with the SEC
on&nbsp;September 7, 2006. <BR><BR>We also consent to the references to us under the heading
&#147;Experts&#148; in such Registration Statement. </FONT></P>


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     <TD WIDTH=73% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>/s/ Kesselman &amp; Kesselman</U> </FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Jerusalem, Israel</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Kesselman &amp; Kesselman</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>September 7, 2006</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Certified Public Accountants (Israel)</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A member of PricewaterhouseCoopers International Limited</FONT></TD></TR>
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<TYPE>EX-23.4
<SEQUENCE>9
<FILENAME>exhibit_23-4.htm
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     <!-- Control Number: 62889                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    BOS better online solutions Ltd                                  -->
     <!-- Project Name:   F-3                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
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<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Exhibit 23.4</B></U> </FONT> </P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>September 7, 2006 </FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Mr. Nehemia Kaufman, CFO
<BR>B.O.S Better Online Solutions Ltd.
<BR>Teradyon, Misgav
<BR><U>Israel&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> </FONT>
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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Dear Mr. Kaufman: </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Re: <U>Consent letter</U> </FONT> </H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We consent to the reference to our
firm under the caption &#147;Experts&#148; in the Registration Statement on Form F-3 and
related prospectus of BOS Better Online Solutions Ltd. for the registration of up to
645,720 ordinary shares. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/S/ Variance Economic
Consulting Ltd. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Variance Economic
Consulting Ltd. </FONT></P>

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<TYPE>EX-23.5
<SEQUENCE>10
<FILENAME>exhibit_23-5.htm
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     <!-- Control Number: 62889                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    BOS better online solutions Ltd                                  -->
     <!-- Project Name:   F-3                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
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<H1 ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Exhibit 23.5</B></U> </FONT> </H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Melnik Oded Business
Advisory Ltd. </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Re: <U>Consent letter</U> </FONT> </H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We consent to the reference to our
firm under the caption &#147;Experts&#148; in the Registration Statement on Form F-3 and
related prospectus of BOS Better Online Solutions Ltd. </FONT></P>


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     <TD WIDTH=65% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>/s/ Melnik Oded Business Advisory Ltd.</U> </FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>September 7, 2006</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Melnik Oded Business Advisory Ltd.</FONT></TD></TR>
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