THIS  NOTE  AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
     NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
     THIS  NOTE  AND THE SHARES OF COMMON STOCK 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 OR THE
     SHARES  OF  COMMON STOCK UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
     SATISFACTORY  TO  DATA  SYSTEMS  & SOFTWARE INC. (IN THE CASE OF THE COMMON
     STOCK) AND COMVERGE TECHNOLOGIES, INC. (IN THE CASE OF THE NOTE), THAT SUCH
     REGISTRATION  IS  NOT  REQUIRED.


                                CONVERTIBLE NOTE
                                ----------------

               FOR  VALUE  RECEIVED,  COMVERGE  TECHNOLOGIES,  INC.,  a Delaware
corporation  (the  "BORROWER"),  hereby  promises  to pay to LAURUS MASTER FUND,
LTD.,  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
"HOLDER") or its registered assigns or successors in interest, on order, without
demand,  the outstanding principal amount of all loans made by the Holder to the
Borrower  under  the  terms of this Note (each an "Advance" and collectively the
"Advances").  The  aggregate  principal  amount  of  all  Advances  outstanding
hereunder  shall  not exceed TWO MILLION AND 00/100 DOLLARS ($2,000,000), and no
Advance  shall  be made after December 4, 2005 (the "Maturity Date"). The amount
and  date  of each Advance shall be entered by the Holder into Holder's records,
which  records shall be conclusive evidence of the subject matter thereof absent
manifest  error.

               Capitalized  terms  used herein without definition shall have the
meanings  ascribed  to such terms in the Purchase and Security Agreement between
the  Borrower  and  the Holder dated the date hereof (the "PURCHASE AGREEMENT").

               The  following  terms  shall  apply  to  this  Note:


                                    ARTICLE I

                                    INTEREST

               1.1  INTEREST  RATE.  Interest payable on the Advances made under
this  Note shall accrue at the Contract Rate, but in no event shall be less than
an  annual  rate  of 7%, and be payable in arrears commencing one month from the
date  hereof  and  on  the first business day of each consecutive calendar month
thereafter,  and on the Maturity Date, accelerated or otherwise, due and payable
as  described  below.
                                        1
<PAGE>

               1.2 PAYMENT GRACE PERIOD. The Borrower shall have a three (3) day
grace  period to pay any monetary amounts due under this Note, after which grace
period a default interest rate of five percent (5%) per annum above the Contract
Rate  hereunder  shall  apply  to  the  amounts  owed  hereunder.


                                   ARTICLE II

                               ADVANCES UNDER NOTE

               2.1  AUTHORIZED  PERSON.

               (a)  Any  officer  of  the Borrower who has been disclosed to the
Holder  in  writing  as  an authorized officer for such purposes (an "AUTHORIZED
PERSON")  may  request  an  Advance  on any day other than a Saturday, Sunday or
other  day  when commercial banks located in New York, New York are not open for
commercial banking business.  Such request shall be made in writing delivered to
the  Holder  by  not  later than 12:00 p.m. on the day of the requested Advance.

               (b)  The  Borrower  hereby authorizes the Holder to rely upon the
written  instructions  of  any  person  identifying  himself  or  herself  as an
Authorized  Person  and  upon  any  signature  which  the  Holder believes to be
genuine,  and  the Borrower shall be bound thereby in the same manner as if such
person  were  authorized  or  such  signature  were  genuine.

               2.2  LIMITATION  ON ADVANCES. It is expressly understood that the
Holder  is  under  no  obligation to make any Advance to the Borrower under this
Note (whether by reason of any provision hereof or otherwise) (i) if an Event of
Default, as hereinafter defined, has occurred and is continuing, or (ii) if such
Advance  or  any  part  thereof would cause the aggregate amount of all Advances
made  hereunder  to  exceed  the  Collateral  Availability.

                                   ARTICLE III

                                CONVERSION RIGHTS


               3.1.  CONVERSION  INTO  THE  BORROWER'S  COMMON  STOCK.

               (a)  To  the  extent  that Advances have been made hereunder, the
Holder  shall  have  the  right, but not the obligation, from and after the date
hereof,  and  then  at  any  time  until  the Maturity Date, to convert up to an
aggregate  of  no greater than $600,000 of the principal portion of the Advances
made hereunder and/or interest due and payable into fully paid and nonassessable
shares  of  common  stock of Data Systems & Software Inc. ("DSSI") as such stock
exists  on  the date of issuance of this Note, or any shares of capital stock of
DSSI  into  which  such  stock  shall  hereafter be changed or reclassified (the
"COMMON  STOCK")  at  the  Fixed Conversion Price as defined below. In the event
that  the  Holder  elects  to convert this Note into Common Stock (to the extent
permitted  herein),  the Holder shall give notice of such election by delivering

                                        2
<PAGE>
an  executed and completed notice of conversion ("NOTICE OF CONVERSION") to DSSI
and  such Notice of Conversion shall provide a breakdown in reasonable detail of
the  amount  of  Note  principal, interest and fees that are being converted. On
each  Conversion Date (as hereinafter defined) and in accordance with its Notice
of  Conversion, the Holder shall make the appropriate reduction to the Advances,
interest  and  fees  as  entered in its records and shall provide written notice
thereof  to  the Borrower within 2 business days after the Conversion Date. Each
date  on  which  a  Notice  of  Conversion is delivered or telecopied to DSSI in
accordance  with  the  provisions  hereof shall be deemed a Conversion Date (the
"CONVERSION  DATE").  A form of Notice of Conversion that may be employed by the
Holder  is  annexed  hereto  as Exhibit A. DSSI will cause the transfer agent to
transmit  the  certificates representing the shares of the Common Stock issuable
upon  conversion  of  the  Note  to  the  Holder by crediting the account of the
Holder's designated broker with the Depository Trust Corporation ("DTC") through
its Deposit Withdrawal Agent Commission ("DWAC") system within four (4) business
days  after  receipt  by DSSI of the Notice of Conversion (the "DELIVERY DATE").
The  Holder  shall  include in the Notice of Conversion all information required
for crediting the account of the Holder's designated broker at DTC through DWAC,
including,  but  not  limited  to,  the name of the broker, and the broker's DTC
number  and  account  numberThe  Holder  undertakes that all sales of the Common
Stock by DWAC will be in compliance with the prospectus delivery requirements of
the  Securities  Act  and  will  direct  its  broker  to  do  the  same.

               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
shares  of  Common  Stock  issuable upon such conversion shall be deemed to have
been  issued  upon  the date of receipt by DSSI of the Notice of Conversion. The
Holder  shall  be  treated  for all purposes as the record holder of such Common
Stock,  unless  the  Holder  provides DSSI written instructions to the contrary.

               (b)  Subject  to adjustment as provided in Section 3.1(e) hereof,
the  Conversion  Price  per share shall be $1.50 (the "FIXED CONVERSION PRICE.")
If  after  the  Default  Notice  Period  (as defined below) the Borrower has not
repaid  in  full  the  amounts then due hereunder or cured the Event of Default,
then  the  Conversion  Price shall be reduced and shall be equal to the lower of
(i)  the Fixed Conversion Price; or (ii) seventy percent (70%) of the average of
the three lowest closing prices for the Common Stock on NASD OTC Bulletin Board,
NASDAQ  SmallCap Market, NASDAQ National Market System, American Stock Exchange,
or  New  York  Stock  Exchange  (whichever  of  the foregoing is at the time the
principal  trading  exchange  or  market  for  the  Common Stock, the "PRINCIPAL
MARKET"),  or on any securities exchange or other securities market on which the
Common  Stock  is  then being listed or traded, for the thirty (30) trading days
prior  to  but  not  including  the  Conversion  Date.

               (c)  Notwithstanding  anything  contained herein to the contrary,
the  Holder  shall not be entitled to convert pursuant to the terms of this Note
an  amount  that would be convertible into that number of shares of Common Stock
which  would  exceed  the  difference between (i) the number of shares of Common
Stock  beneficially  owned  by such holder or issuable upon exercise of warrants
held by such holder and 4.99% of the outstanding shares of Common Stock of DSSI.
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  Holder  may  void the conversion limitation
described  in this section upon 75 days prior notice to DSSI or upon an Event of
Default  hereunder.

                                        3
<PAGE>

               (d)  DSSI  understands that a delay in the delivery of the shares
of  Common  Stock  in  the  form  required  pursuant  to this Article beyond the
Delivery  Date  could  result  in economic loss to the Holder. In the event that
DSSI fails to direct its transfer agent to deliver the shares of Common Stock to
the Holder via the DWAC system within the time frame set forth in Section 3.1(a)
above  and  such  shares  of Common Stock are not delivered to the Holder by the
Delivery  Date,  as compensation to the Holder for such loss, DSSI agrees to pay
late  payments  to  the  Holder for late issuance of the such shares in the form
required  pursuant  to this Article 4 upon conversion of the Note, in the amount
equal  to  the  greater  of (i) $500 per business day after the Delivery Date or
(ii)  the  Borrower's  actual damages from such delayed delivery. DSSI shall pay
any  payments  incurred  under  this Section in immediately available funds upon
demand  and,  in  the  case  of  actual  damages,  accompanied  by  reasonable
documentation  of  the  amount  of  such  damages.

               (e)  The  Conversion Price and number and kind of shares or other
securities to be issued upon conversion shall be subject to adjustment from time
to time upon the happening of certain events while this conversion right remains
outstanding, as follows, subject, in each case to the Adjustment Cap (as defined
below):

                    A.  Merger,  Sale  of  Assets,  etc.  DSSI at any time shall
consolidate  with  or  merge into or sell or convey all or substantially all its
assets  to  any other corporation, this Note, as to the unpaid principal portion
thereof  and  accrued  interest thereon subject to a limitation of $600,000 less
amounts  of  principal  and interest (i) previously converted by the Holder into
Common  Stock  and (ii) deemed converted into shares of Common Stock pursuant to
Sections  3.1(e)(A)  and  (B) hereof (the "Adjustment Cap"), shall thereafter be
deemed to evidence the right to purchase such number and kind of shares or other
securities  and property as would have been issuable or distributable on account
of  such  consolidation, merger, sale or conveyance, upon or with respect to the
number  of  shares  of  Common  Stock the Holder could have acquired immediately
prior  to  such  consolidation,  merger,  sale  or conveyance based on the Fixed
Conversion  Price  and  subject  to  the  Adjustment  Cap as of the closing date
thereof.  The  foregoing  provision  shall  similarly  apply  to  successive
transactions  of  a  similar  nature by any such successor or purchaser. Without
limiting  the  generality of the foregoing, the provisions of this Section shall
apply  to  such  securities  of  such  successor  or  purchaser  after  any such
consolidation,  merger,  sale  or  conveyance.

                    B.  Reclassification,  etc.  If  DSSI  at any time shall, by
reclassification  or  otherwise,  change  the  Common  Stock  into the same or a
different  number  of  securities  of any class or classes, this Note, as to the
unpaid  principal  portion  thereof  and  accrued  interest  thereon  up  to the
Adjustment  Cap, 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 number of shares of
Common  Stock  into which the Note would have been convertible immediately prior
to  such  reclassification  or  other  change  at the Fixed Conversion Price and
subject to the Adjustment Cap as of the effective date for such reclassification
or  change.

                    C.  Stock  Splits, Combinations and Dividends. If the shares
of  Common  Stock are subdivided or combined into a greater or smaller number of
shares  of  Common Stock, or if a dividend is paid on the Common Stock in shares
of  Common Stock, the Fixed Conversion Price 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

                                        4
<PAGE>

total  number of shares of Common Stock outstanding immediately after such event
bears  to  the  total  number  of shares of Common Stock outstanding immediately
prior  to  such  event.

                    D.  Share  Issuance.  Subject  to  the  provisions  of  this
Section, if DSSI at any time shall issue any shares of Common Stock prior to the
conversion  of  the  portion  of  the  principal amount of the Note permitted by
Section  3.1(a) (otherwise than as: (i) provided in Sections 3.1(e)A, 3.1(e)B or
3.1(e)C or this subparagraph D; or (ii) pursuant to warrants or options that may
be  granted  in  the  future  under  any  option  plan  of  the Borrower, or any
employment  agreement,  joint  venture,  credit,  leasing  or  other  financing
agreement  or any joint venture or other strategic arrangement, in each case now
or  hereinafter  entered  into  by the Borrower, (iii) pursuant to any agreement
entered  into  by  the Company or any of its subsidiaries for the acquisition of
another  business  (whether  by  stock  purchase  or  asset  purchase, merger or
otherwise;  ((i),  (ii)  and  (iii)  above,  are  hereinafter referred to as the
"EXCLUDED  ISSUANCES")) for a consideration less than the Fixed Conversion Price
that  would  be  in  effect  at  the  time  of  such issue, then, and thereafter
successively  upon  each such issue, the Fixed Conversion Price shall be reduced
as  follows:  (i)  the  number of shares of Common Stock outstanding immediately
prior  to such issue shall be multiplied by the Fixed Conversion Price in effect
at  the  time  of  such  issue  and  the product shall be added to the aggregate
consideration,  if any, received by DSSI upon such issue of additional shares of
Common  Stock;  and  (ii)  the sum so obtained shall be divided by the number of
shares  of  Common Stock outstanding immediately after such issue. The resulting
quotient  shall  be the adjusted Fixed Conversion Price. Except for the Excluded
Issuances  for purposes of this adjustment, the issuance of any security of DSSI
carrying  the  right  to convert such security into shares of Common Stock or of
any  warrant,  right  or  option  to  purchase  Common  Stock shall result in an
adjustment  to  the Conversion Price upon the issuance of shares of Common Stock
upon  exercise  of  such  conversion  or  purchase  rights.

               (f)  During  the  period  the  conversion right exists, DSSI will
reserve  from  its  authorized  and unissued Common Stock a sufficient number of
shares  to  provide for the issuance of Common Stock upon the conversion of this
Note  to  the  extent  permitted  by  Section  3.1(a). DSSI represents that upon
issuance,  such  shares  will  be  duly  and  validly  issued,  fully  paid  and
non-assessable.  DSSI  agrees  that  the  Borrower's issuance of this Note shall
constitute  full  authority  to DSSI's officers, agents, and transfer agents who
are charged with the duty of executing and issuing stock certificates to execute
and  issue  the  necessary  certificates  for  shares  of  Common Stock upon the
conversion  of  this  Note.

               3.3  REGISTRATION  RIGHTS.  The  Holder  has  been  granted
registration  rights  with  respect  to the shares of Common Stock issuable upon
conversion  of  this  Note  as  more  fully  set  forth in a Registration Rights
Agreement  dated  the  date  hereof  (the  "REGISTRATION  RIGHTS  AGREEMENT.")

               3.4  SALES  LIMITATION. During the six month period commencing on
the date hereof, the Holder shall not sell or otherwise dispose of, on a monthly
basis, the number of shares Common Stock issued upon the conversion of this Note
that  exceeds  25%  of  the average daily trading volume of the shares of Common
Stock on the Principal Market for such month (as determined on a rolling basis).

                                   ARTICLE IV

                                EVENT OF DEFAULT

                                        5
<PAGE>
               If  an  Event of Default occurs and is continuing, the Holder may
make  all  sums  of  principal, accrued but unpaid interests and other fees then
remaining  unpaid hereon and all other amounts payable hereunder due and payable
within  10  days  of  written  notice  from  the  Holder  to  the Borrower (each
occurrence  being  a "DEFAULT NOTICE PERIOD") of an Event of Default (as defined
below).  If  during  the  Default Notice Period, the Borrower cures the Event of
Default, the Event of Default will no longer exist and any rights the Holder had
pertaining  to  the  Event  of  Default  will  no  longer  exist.

               The  occurrence  of  any  of  the following events is an Event of
Default  ("EVENT  OF  DEFAULT"):

               4.1  FAILURE  TO  PAY  PRINCIPAL,  INTEREST  OR  OTHER  FEES. The
Borrower  fails  to  pay  any  installment  of principal, interest or other fees
hereon  or  on  any  other  promissory  note  issued  pursuant  to  the Purchase
Agreement,  Registration  Rights  Agreement  and  this  Note  when  due.

               4.2  FAILURE  TO DELIVER COMMON STOCK OR REPLACEMENT NOTE. DSSI's
failure to timely deliver Common Stock to the Holder pursuant to and in the form
required  by  this  Note.

               4.3  DEFAULT  UNDER RELATED AGREEMENT. An Event of Default occurs
under  and  as  defined  in  the Purchase Agreement, dated as of the date hereof
between  Borrower  and  Holder,  as  such agreement may be amended, modified and
supplemented  from  time  to  time.

               4.4  NON-REGISTRATION  EVENT.  An  Event,  as  defined  in  the
Registration  Rights  Agreement shall have occurred and be continuing; provided,
however,  that the Company shall have thirty (30) days to cure an Event pursuant
to  Section  2(b)(ii)  of  the  Registration  Rights  Agreement.


               If  an  Event of Default occurs and is continuing, 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, all without
demand,  presentment  or  notice,  or  grace  period,  all  of  which hereby are
expressly  waived.  In the event of an acceleration, the amount due and owing to
the  Holder  shall be 130% of the outstanding principal amount of the Note (plus
accrued  and  unpaid  interest  and  fees, if any). The remedies under this Note
shall  be  cumulative.


                                    ARTICLE V

                                  MISCELLANEOUS

               5.1  FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the
part  of  the  Holder  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.

                                        6
<PAGE>

               5.2  NOTICES. 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)  five days after having been sent by registered or certified
mail,  return  receipt  requested, postage prepaid, or (d) one day after deposit
with  a  nationally  recognized overnight courier, specifying next day delivery,
with  written  verification  of receipt. All communications shall be sent to (i)
the  Borrower  at the address as set forth on the signature page to the Purchase
Agreement  executed  in  connection herewith and, as the case may be, to DSSI at
the  address  as set forth in Section 6(g) of the Registration Rights Agreement,
in each case, with a copy to Sheldon Krause, Esq., Ehrenreich Eilenberg & Krause
LLP,  11  East 44th Street, New York, NY 10017, facsimile number (212) 986-2399,
and  (ii)  the  Holder  at  the  address  set forth on the signature page to the
Purchase  Agreement  for such Holder, with a copy to Daniel M. Laifer, Esq., 152
West  57th  Street,  4th Floor, New York, New York 10019, facsimile number (212)
541-4434,  or  at  such  other  address  as the Borrower, DSSI or the Holder may
designate  by  ten  days advance written notice to the other parties hereto made
and  delivered  in  accordance  with  this  Section  5.2.

               5.3  AMENDMENT  PROVISION.  The  term  "Note"  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.

               5.4  ASSIGNABILITY.  This  Note (except for Article III) 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.  Article  III and Article V of this Note (excluding Section 5.6 and 5.7)
shall  be  binding  upon  DSSI  and  its  successors  and  assigns.

               5.5  GOVERNING  LAW. 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; provided, however that the Purchaser may choose to waive
this  provision  and bring an action outside the state of New York. Both parties
and  the  individual  signing  this Note on behalf of the Borrower, DSSI and the
Holder  agree to submit to the jurisdiction of such courts. The prevailing party
shall be entitled to recover from the other party its reasonable attorney'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.

               5.6 MAXIMUM PAYMENTS. 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.

               5.7 SECURITY INTEREST. The holder of this Note has been granted a
security  interest in certain assets of the Borrower more fully described in the
Purchase  Agreement.

                                        7
<PAGE>

               5.8  CONSTRUCTION. 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.

                                        8
<PAGE>

IN  WITNESS WHEREOF, each Borrower has caused this Note to be signed in its name
effective  as  of  this     4th  day  of  December,  2002.


                                    COMVERGE  TECHNOLOGIES,  INC.


                                    By:--------------------------------


                                    LAURUS  MASTER  FUND,  LTD.


                                    By:--------------------------------





                                    AS  TO  ARTICLES  III  AND  V  ONLY:

                                    DATA  SYSTEMS  &  SOFTWARE  INC.


                                    By:--------------------------------


                                    AS  TO  SECTION  3.4  ONLY

                                    LAURUS  MASTER  FUND,  LTD.

                                    By:--------------------------------


                                        9
<PAGE>
                              NOTICE OF CONVERSION
                              --------------------

(To be executed by the Holder in order to convert the Note)


     The  undersigned  hereby  elects to convert $-------- of the principal and
$-------- of the interest due on the Note issued by COMVERGE TECHNOLOGIES, INC.
on  December  --,  2002  into Shares of Common Stock of DATA SYSTEMS & SOFTWARE
INC.  (the  "Company") according to the conditions set forth in such Note, as of
the  date  written  below.



Date  of Conversion:----------------------------------------------------------

Conversion Price:-------------------------------------------------------------


Shares  To  Be Delivered:-----------------------------------------------------

DTC Number:-------------------------------------------------------------------

Account Number:---------------------------------------------------------------

Signature:--------------------------------------------------------------------


Print Name:-------------------------------------------------------------------


Address:----------------------------------------------------------------------
        ----------------------------------------------------------------------

                                       10

<PAGE>