THIS  WARRANT  AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT  BEEN  REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT
AND  THE  COMMON  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 OR AN OPINION OF
COUNSEL  REASONABLY  SATISFACTORY  TO  DATA  SYSTEMS  &  SOFTWARE INC. THAT SUCH
REGISTRATION  IS  NOT  REQUIRED.

                                   Right  to  Purchase  190,000 Shares of Common
                                   Stock  of  Data  Systems  &  Software  Inc.
                                   (subject  to  adjustment  as provided herein)

                          COMMON STOCK PURCHASE WARRANT

No.  2002-2                                        Issue  Date:  December 4,2002

     DATA SYSTEMS & SOFTWARE INC., a corporation organized under the laws of the
State  of  Delaware  (the "COMPANY"), 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 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 five (5) years after such date (the "EXPIRATION DATE"), up to
190,000  fully  paid  and  nonassessable  shares of Common Stock (as hereinafter
defined),  $.01  par  value per share, of the Company, at the Purchase Price (as
defined  below). The number and character of such shares of Common Stock and the
Purchase  Price  are  subject  to  adjustment  as  provided  herein.

     As  used herein the following terms, unless the context otherwise requires,
have  the  following  respective  meanings:

     (a)     The  term  "Company" shall include Data Systems & Software Inc. and
any  corporation which shall succeed or assume the obligations of Data Systems &
Software  Inc.  hereunder.

     (b)     The  term  "Common  Stock" includes (a) the Company's Common Stock,
$.01  par  value  per share, as authorized on the date hereof, and (b) any other
securities into which or for which any of the securities described in (a) may be
converted  or  exchanged pursuant to a plan of recapitalization, reorganization,
merger,  sale  of  assets  or  otherwise.

     (c)  The  term  "Other  Securities"  refers  to  any  stock  (other  than
Common Stock) 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  Common  Stock, or which at any time shall be issuable or shall
have  been  issued  in  exchange  for or in replacement of Common Stock or Other
Securities  pursuant  to  Section  4  or  otherwise.

     (d)  The  term  "Purchase  Price"  shall  be  as  follows:

         (i)     30,000  shares  at  $2.00;
         (ii)    60,000  shares  at  $2.34;
         (iii)   100,000  shares  at  $3.34.



     1.  EXERCISE  OF  WARRANT.

                                        1
<PAGE>

     1.1.     NUMBER  OF SHARES ISSUABLE UPON EXERCISE.  From and after the date
hereof  through  and  including  the Expiration Date, the holder hereof shall be
entitled  to  receive, upon exercise of this Warrant in whole in accordance with
the  terms  of  subsection  1.2  or  upon  exercise  of  this Warrant in part in
accordance  with  subsection 1.3, shares of Common Stock of the Company, subject
to  adjustment  pursuant to Section 4 and subject to the restriction on transfer
pursuant  to  Section  1.7.

     1.2.     FULL  EXERCISE.  This  Warrant  may  be  exercised  in full by the
holder hereof by delivery of an original or fax copy of the form of subscription
attached  as  Exhibit  A  hereto (the "SUBSCRIPTION FORM") duly executed by such
Holder,  to  the Company at its principal office or at the office of its warrant
agent (as provided hereinafter), accompanied by payment, in cash, wire transfer,
or  by  certified or official bank check payable to the order of the Company, in
the  amount  obtained  by  multiplying  the number of shares of Common Stock for
which  this  Warrant  is  then exercisable by the Purchase Price (as hereinafter
defined)  then  in  effect.

     1.3.     PARTIAL  EXERCISE.  This Warrant may be exercised in part (but not
for  a  fractional  share) by surrender of this Warrant in the manner and at the
place provided in subsection 1.2 except that the amount payable by the holder on
such partial exercise shall be the amount obtained by multiplying (a) the number
of  shares  of Common Stock designated by the holder in the Subscription Form by
(b)  the  Purchase  Price  then  in  effect.  On  any such partial exercise, the
Company,  at  its expense, will forthwith issue and deliver to or upon the order
of  the  holder  hereof  a  new Warrant of like tenor, in the name of the holder
hereof or as such holder (upon payment by such holder of any applicable transfer
taxes)  may request, the number of shares of Common Stock for which such Warrant
may  still  be  exercised.

     1.4.     FAIR MARKET VALUE. Fair Market Value of a share of Common Stock as
of  a  particular  date  (the  "DETERMINATION  DATE")  shall  mean:

               (a)  If the Company's Common Stock is traded on an exchange or is
quoted  on  the  National  Association  of  Securities  Dealers,  Inc. Automated
Quotation  ("NASDAQ") National Market System or the NASDAQ SmallCap Market, then
the closing or last sale price, respectively, reported for the last business day
immediately  preceding  the  Determination  Date.

               (b) If the Company's Common Stock is not traded on an exchange or
on the NASDAQ National Market System or the NASDAQ SmallCap Market 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.

               (c)  Except  as  provided  in  clause (d) below, if the Company's
Common Stock is 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
standing  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.

               (d)  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 charter, then all amounts to be payable
per share to holders of the Common Stock pursuant to the charter in the event of
such  liquidation,  dissolution  or  winding  up,  plus  all other amounts to be
payable  per  share  in  respect  of  the  Common Stock in liquidation under the
charter,  assuming for the purposes of this clause (d) that all of the shares of
Common  Stock  then issuable upon exercise of the Warrant are outstanding at the
Determination  Date.

     1.5.     COMPANY  ACKNOWLEDGMENT. The Company will, at the time of the
exercise  of  the  Warrant, upon the request of the holder hereof acknowledge in

                                        2
<PAGE>
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.

     1.6.     TRUSTEE  FOR  WARRANT  HOLDERS.  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.

     1.7     RESTRICTED  PERIOD.  During  the six month period commencing on the
date  hereof,  the  Holder  shall not sell or otherwise dispose of any shares of
Common  Stock  issued  to  the  Holder  upon  exercise  of  this  Warrant.

     2.1     DELIVERY  OF  STOCK  CERTIFICATES,  ETC.  ON  EXERCISE. The Company
agrees  that  the shares of Common Stock purchased upon exercise of this Warrant
shall  be  deemed  to be issued to the holder hereof 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 as aforesaid. As soon as
practicable  after  the  exercise of this Warrant in full or in part, and in any
event  within  7  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 hereof, 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 shares of Common Stock (or
Other Securities) to which such 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  stock or other securities and
property  (including  cash,  where  applicable) to which such holder is entitled
upon  such  exercise  pursuant  to  Section  1  or  otherwise.

     2.2.     CASHLESS  EXERCISE.

               (a)  Payment  may  be  made either in (i) cash or by certified or
official  bank check payable to the order of the Company equal to the applicable
aggregate  Purchase  Price, (ii) by delivery of the Warrant, Common Stock and/or
Common  Stock 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 Common Shares specified in such form (as such exercise number shall be
adjusted to reflect any adjustment in the total number of shares of Common Stock
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  shares  of  Common  Stock (or Other Securities)
determined  as  provided  herein.

               (b) Notwithstanding any provisions herein to the contrary, if the
Fair  Market  Value  of  one  share of Common Stock is greater than the Purchase
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 cancelled)
by  surrender  of  this  Warrant at the principal office of the Company together
with  the  properly  endorsed Subscription Form in which event the Company shall
issue  to  the  holder  a  number  of  shares of Common Stock computed using the
following  formula:

                X=Y  (A-B)
                      ---
                        A

                                        3
<PAGE>
         Where      X=   the  number  of  shares of Common Stock to be issued to
                         the  holder

                    Y=   the  number of shares of Common Stock 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)

                    A=   the  Fair  Market  Value  of one share of the Company's
                         Common  Stock  (at  the  date  of  such  calculation)

                    B=   Purchase  Price  (as  adjusted  to  the  date  of  such
                         calculation)

  3.  ADJUSTMENT  FOR  REORGANIZATION,  CONSOLIDATION,  MERGER,  ETC.

     3.1.     REORGANIZATION, CONSOLIDATION, MERGER, ETC. 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,  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
Common  Stock  (or  Other  Securities)  issuable  on such exercise prior to such
consummation or such effective date, the stock 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.

     3.2.     DISSOLUTION.  In  the  event  of  any  dissolution  of the Company
following  the transfer of all or substantially all of its properties or assets,
the Company, prior to such dissolution, shall at its expense deliver or cause to
be  delivered the stock and other securities and property (including cash, where
applicable) receivable by the holders of the Warrant after the effective date of
such  dissolution  pursuant  to this Section 3 to a bank or trust company having
its  principal  office  in New York, NY, as trustee for the holder or holders of
the  Warrant.

     3.3.     CONTINUATION  OF  TERMS.  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 of stock 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 stock 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 transaction described in this Section 3, then only in such
event  will  the  Company's  securities  and  property  (including  cash,  where
applicable) receivable by the holders of the Warrant be delivered to the Trustee
as  contemplated  by  Section  3.2.

     4.     EXTRAORDINARY  EVENTS  REGARDING  COMMON  STOCK.  In  the event that
the  Company shall (a) issue additional shares of the Common Stock as a dividend
or other distribution on outstanding Common Stock, (b) subdivide its outstanding
shares  of  Common  Stock,  or  (c) combine its outstanding shares of the Common
Stock  into  a  smaller number of shares of the Common Stock, then, in each such
event,  the  Purchase  Price  shall,  simultaneously  with the happening of such
event,  be  adjusted  by  multiplying the then Purchase Price by a fraction, the

                                        4
<PAGE>

numerator  of  which  shall  be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the number
of  shares  of  Common  Stock  outstanding immediately after such event, and the
product  so  obtained shall thereafter be the Purchase Price then in effect. The
Purchase  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  shares  of  Common  Stock that the holder of this Warrant shall
thereafter,  on  the  exercise  hereof  as provided in Section 1, be entitled to
receive  shall  be increased to a number determined by multiplying the number of
shares  of  Common  Stock  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  Purchase  Price  that  would  otherwise (but for the provisions of this
Section 4) be in effect, and (b) the denominator is the Purchase Price in effect
on  the  date  of  such  exercise.

     5.     CERTIFICATE  AS  TO  ADJUSTMENTS.  In each case of any adjustment or
readjustment in the shares of Common Stock (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 shares of Common Stock (or Other Securities) issued or sold or deemed
to  have been issued or sold, (b) the number of shares of Common Stock (or Other
Securities)  outstanding or deemed to be outstanding, and (c) the Purchase Price
and  the  number  of shares of Common Stock 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  11 hereof).

     6.     RESERVATION  OF  STOCK,  ETC.  Issuable  on  Exercise  of  Warrant;
Financial  Statements. The Company will at all times reserve and keep available,
solely  for  issuance and delivery on the exercise of the Warrant, all shares of
Common Stock (or Other Securities) from time to time issuable on the exercise of
the  Warrant.  This  Warrant entitles the holder hereof to receive copies of all
financial and other information distributed or required to be distributed to the
holders  of  the  Company's  Common  Stock.

     7.     ASSIGNMENT;  EXCHANGE  OF  WARRANT.  Subject  to  compliance  with
applicable  Securities  laws, this Warrant, and the rights evidenced hereby, may
be  transferred by any registered holder hereof (a "TRANSFEROR") with respect to
any  or  all  of the Shares. On the surrender for exchange of this Warrant, with
the  Transferor's  endorsement  in  the  form  of Exhibit B attached hereto (the
"TRANSFEROR  ENDORSEMENT  FORM")  and  together  with  evidence  reasonably
satisfactory  to the Company demonstrating compliance with applicable Securities
Laws,  which  shall  include,  without  limitation,  a  legal  opinion  fro  the
Transferor's  counsel  that  such  transfer  is  exempt  from  the  registration
requirements  of  federal  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 "TRANSFEREE"), calling in the aggregate on
the face or faces thereof for the number of shares of Common Stock called for on
the  face  or  faces  of  the  Warrant  so  surrendered  by  the  Transferor.

     8.     REPLACEMENT  OF  WARRANT.  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.

     9.     REGISTRATION RIGHTS. The Holder of this Warrant has been granted
certain  registration  rights  by the Company. These registration rights are set

                                        5
<PAGE>

forth  in  a  Registration  Rights Agreement entered into by the Company and the
Holder.

     10.     MAXIMUM  EXERCISE.   The  Holder  shall not be entitled to exercise
this  Warrant  on  an exercise date, in connection with that number of shares of
Common  Stock which would be in excess of the sum of (i) the number of shares of
Common  Stock beneficially owned by the Holder and its affiliates on an exercise
date,  and  (ii) the number of shares of Common Stock issuable upon the exercise
of this Warrant with respect to which the determination of this proviso is being
made  on  an  exercise  date,  which would result in beneficial ownership by the
Holder and its affiliates of more than 4.99% of the outstanding shares of Common
Stock  of  the  Company  on  such  date.  For the purposes of the proviso to the
immediately  preceding  sentence,  beneficial  ownership  shall be determined in
accordance  with  Section  13(d)  of  the  Securities  Exchange  Act of 1934, as
amended,  and Regulation 13d-3 thereunder.  Subject to the foregoing, the Holder
shall  not  be limited to aggregate exercises which would result in the issuance
of  more than 4.99%.  The restriction described in this paragraph may be revoked
upon  75  days  prior notice from the Holder to the Company and is automatically
null  and  void  upon  an  Event  of  Default  under  the  Note.

     11.    WARRANT AGENT. The Company may, by written notice to the each holder
of  the  Warrant,  appoint  an agent for the purpose of issuing Common Stock (or
Other  Securities)  on  the  exercise  of  this  Warrant  pursuant to Section 1,
exchanging  this  Warrant  pursuant  to  Section  7,  and replacing this Warrant
pursuant  to  Section  8,  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.

     12.     TRANSFER ON THE COMPANY'S BOOKS.  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.

     13.     NOTICES,  ETC.  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.

     14.     VOLUNTARY  ADJUSTMENT  BY THE COMPANY.  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.  Notwithstanding  the  foregoing,  unless  the  Company either
obtains shareholder approval, or an exemption from NASDAQ's corporate governance
rules as they may apply to the Company, the Holder may not receive upon exercise
of  this  Warrant more than the number of common shares that would result in the
Company  issuing  to  the  Holder  in  the  aggregate  greater than 19.9% of the
outstanding  shares  of  Common  Stock  of  the  Company  on  date  hereof.

     15.     MISCELLANEOUS.  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.  The individuals executing this Warrant on
behalf  of  the  Company  agree 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'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

                                        6
<PAGE>

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.  The
Company  acknowledges that 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.



                      [THIS SPACE INTENTIONALLY LEFT BLANK]

                                        7
<PAGE>

IN  WITNESS  WHEREOF, the Company has executed this Warrant under seal as of the
date  first  written  above.

                                           DATA  SYSTEMS  &  SOFTWARE  INC.



                                          By:___________________________________




Witness:


______________________________

                                        8
<PAGE>
                                                       EXHIBIT  A
                              FORM OF SUBSCRIPTION
                   (To be signed only on exercise of Warrant)

TO:  Data  Systems  &  Software  Inc.

The  undersigned,  pursuant  to the provisions set forth in the attached Warrant
(No.____),  hereby  irrevocably  elects  to  purchase  (check  applicable  box):

___     ________  shares  of  the  Common  Stock  covered  by  such  Warrant; or

___     the  maximum  number  of  shares of Common Stock covered by such Warrant
pursuant  to  the  cashless  exercise  procedure  set  forth  in  Section  2.

The  undersigned  herewith  makes  payment  of  the full purchase 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):

___     $__________  in  lawful  money  of  the  United  States;  and/or

___     the  cancellation  of  such  portion  of  the  attached  Warrant  as  is
exercisable  for  a total of _______ shares of Common Stock (using a Fair Market
Value  of  $_______  per  share  for  purposes  of  this  calculation);  and/or

___     the  cancellation  of  such  number  of  shares  of  Common  Stock as is
necessary,  in  accordance  with the formula set forth in Section 2, to exercise
this  Warrant  with  respect  to  the  maximum  number of shares of Common Stock
purchaseable pursuant to the cashless exercise procedure set forth in Section 2.

The  undersigned requests that the certificates for such shares be issued in the
name  of,  and  delivered  to  ____________________  whose  address  is_________
_________________________________________________________________.

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 Common Stock under the Securities Act of
1933,  as  amended  (the  "Securities  Act")  or  pursuant  to an exemption from
registration  under  the  Securities  Act.

Dated:___________________               _______________________________________
                                        (Signature  must  conform  to  name  of
                                        holder  as  specified on the face of the
                                        Warrant)
                                        _____________________________________
                                        (Address)

                                        9
<PAGE>
                                              Exhibit  B

                         FORM OF TRANSFEROR ENDORSEMENT
                   (To be signed only on transfer of Warrant)

     For  value  received,  the undersigned hereby sells, assigns, and transfers
unto  the  person(s)  named  below  under  the  heading  "Transferees" the right
represented  by  the  within  Warrant  to  purchase the percentage and number of
shares  of  Common  Stock  of  Data  Systems & Software Inc. to which the within
Warrant  relates  specified  under  the  headings  "Percentage  Transferred" and
"Number  Transferred,"  respectively, opposite the name(s) of such person(s) and
appoints each such person Attorney to transfer its respective right on the books
of Data Systems & Software Inc. with full power of substitution in the premises.


                                Percentage     Number
Transferees      Transferred     Transferred








Dated: __,  ___                         ________________________________________
                                        (Signature  must  conform  to  name  of
                                        holder  as  specified on the face of the
                                        warrant)

Signed in the presence of:


_______________________________         ________________________________________
     (Name)                              (address)

                                        ________________________________________
ACCEPTED  AND  AGREED:                    (address)
[TRANSFEREE]


_________________________________
     (Name)

                                       10

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