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                                                                     Exhibit 4.4

                         SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT, dated as of January 31, 2001, is entered
into by and between IIS INTELLIGENT INFORMATION SYSTEMS LIMITED, an Israeli
company, located at Gutwirth Science-Based Industrial Center, Technion City,
Haifa 32000, Israel (the "Company"), and the purchasers listed on Exhibit A
attached hereto (each, a "Purchaser," and collectively, the "Purchasers").

                              W I T N E S S E T H:

WHEREAS, the Purchasers wish to purchase, and the Company wishes to issue, upon
the terms and subject to the conditions of this Agreement, units (the "Units"),
each Unit consisting of $100,000 principal amount of the Company's convertible
secured debentures (the "Debentures") and three-year non-redeemable warrants to
acquire 10,000 Ordinary Shares, par value NIS .003 per share (the "Ordinary
Shares") of the Company (the "Warrants").  The Debentures are convertible into
the Company's Ordinary Shares, on the terms set forth therein, and the Warrants
may be exercised for the purchase of the Company's Ordinary Shares, on the terms
set forth therein; and

WHEREAS, the Company and the Purchasers are executing and delivering this
Agreement in reliance upon the exemptions from registration provided by
Regulation D ("Regulation D") promulgated by the United States Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act"), and/or Section 4(2) of the Securities Act.

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

1. AGREEMENT TO PURCHASE; PURCHASE PRICE

   a. Purchase.  Each of the Purchasers hereby agrees to purchase from the
      Company the number of Units set forth next to its name on Exhibit A
      hereto.  The Debentures shall be issued in substantially the form attached
      hereto as Exhibit B, and the Warrants shall be issued in substantially the
      form attached hereto as Exhibit C.  The purchase price for the Units is as
      set forth on Exhibit A hereto.

   b. Closing.  The Debentures and Warrants to be purchased by the Purchasers
      hereunder, in definitive form, shall be delivered by or on behalf of the
      Company for the account of each such Purchaser, in consideration of
      payment that was effected by such Purchaser on December 20, 2000, at the
      offices of Efrati, Galili & Co., 6 Wissotsky Street, Tel-Aviv at 9:30
      a.m., Israeli time on January __, 2001, or at such other time and date as
      the

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      purchasers or their representative, if any, and the Company may agree
      upon in writing, such date being referred to herein as the "Closing Date".

2. PURCHASER REPRESENTATIONS AND WARRANTIES; ACCESS TO INFORMATION; INDEPENDENT
   INVESTIGATION.

   Each Purchaser represents and warrants to, and covenants and agrees with, the
   Company as follows (except that Meir Noga is not making the representation
   set out in b. below):

  a. The Purchaser is purchasing the Units and will be acquiring the Ordinary
     Shares issuable upon conversion of, and in lieu of interest payments on,
     the Debentures and upon exercise of the Warrants for its own account, for
     investment purposes only and not with a view towards the public sale or
     distribution thereof and not with a view to or for sale in connection with
     any distribution thereof;

  b. The Purchaser is (i) an "accredited investor," as that term is defined in
     Rule 501 of the General Rules and Regulations under the Securities Act,
     (ii) experienced in making investments of the kind described in this
     Agreement and the related documents, (iii) able, by reason of the business
     and financial experience of its officers (if an entity) and professional
     advisors,  to protect its own interests in connection with the transactions
     described in this Agreement and the related documents, and (iv) able to
     afford the entire loss of its investment in the Units;

  c. All subsequent offers and sales of the Debentures or the Warrants and the
     Ordinary Shares issuable upon conversion or exercise of, or in lieu of
     interest payments on, the Debentures, or upon exercise of the Warrants
     shall be made pursuant to an effective registration statement under the
     Securities Act or pursuant to an applicable exemption from registration;

  d. The Purchaser understands that the Units are being offered and sold to it
     in reliance upon exemptions from the registration requirements of the
     United States federal and state securities laws, and that the Company is
     relying upon the truth and accuracy of the Purchaser's representations and
     warranties, and the Purchaser's compliance with its agreements, each as set
     forth herein, in order to determine the availability of such exemptions and
     the eligibility of the Purchaser to acquire the Units;

  e. The Purchaser and its advisors, if any, have been furnished with all
     materials relating to the business, finances and operations of the Company
     and materials relating to the offer and sale of the Units which have been
     requested by such Purchaser.  The Purchaser and its advisors, if any, have
     been afforded the opportunity to ask questions of the Company, and have
     received answers to any such inquiries to their satisfaction.

  f. The Purchaser acknowledges that it has been furnished with or has acquired
     copies of the Company's Annual Report on Form 20-F (the "1999 Annual
     Report") filed with the Commission for year ended December 31, 1999, and
     each Form 6-K filed thereafter until the date hereof and the Proxy
     Statement of the Company dated July 31, 2000 (the "Offering Materials").
     The Purchaser is not relying upon any representations or

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     other information (whether oral or written) other than as set forth in this
     Agreement, and the Offering Materials.

  g. The Purchaser acknowledges that in making its decision to purchase the
     Units, it has relied upon independent investigations made by it and its
     representatives, if any, and the Purchaser and such representatives, if
     any, have been provided access and the opportunity to examine all material,
     publicly available books and records of the Company, all material contracts
     and documents relating to this offering and have had an opportunity to ask
     questions and to receive answers from the Company or persons acting on its
     behalf concerning the terms and conditions of this offering.  The Purchaser
     and its advisors, if any, have been furnished with access to all publicly
     available materials relating to the business, finances and operations of
     the Company and materials relating to the offer and sale of the Units which
     have been requested.  The Purchaser and its advisors, if any, have received
     answers to any such inquiries which they have deemed to be satisfactory.

  h. The Purchaser understands that no federal or state agency has passed on or
     made any recommendation or endorsement of the Units.

  i. Among the risks associated with an investment by the Purchaser in the Units
     are: (1) the Company's limited access to additional capital, (2) risks
     associated with technology-based companies generally, including the risks
     of technological change and new products, and (3) the limited trading
     market of the Ordinary Shares, and the consequent lack of liquidity of an
     investment in the Debentures and the Warrants. In addition, the Purchasers
     acknowledge that they are aware that StoreAge Networks Ltd ("StoreAge") is
     a start-up high-tech company and that the shares held by the Company in
     StoreAge are the Company's only material asset; in the event that the
     Company does not obtain significant cash for its shares in StoreAge, the
     Company may not be able to repay the principal amount of the Debentures,
     and the Purchasers could lose their entire investment. In addition, the
     Purchasers acknowledge that the Company has not made any representations to
     the Purchasers as to the prospects of success of StoreAge. In addition, the
     Purchaser acknowledges that the transfer of the shares of StoreAge held by
     the Company are subject to certain restrictions on transfer and, to the
     extent relevant, the Purchaser undertakes to comply with such restrictions.

  j. This Agreement has been duly and validly authorized, executed and delivered
     on behalf of the Purchaser and is a valid and binding agreement of the
     Purchaser, enforceable in accordance with its terms, except to the extent
     that enforcement of this Agreement may be limited by bankruptcy,
     insolvency, reorganization, moratorium, fraudulent conveyance or other
     similar laws now or hereafter in effect relating to creditors' rights
     generally and to general principles of equity.

  k. Organization.  The Purchaser (if a company) is a company duly organized,
     validly existing and in good standing under its respective jurisdiction of
     incorporation.

  l. Legality. The Purchaser has the power and authority to enter into this
     Agreement to purchase the Debentures and the Warrants. This Agreement has
     been duly and validly

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     executed and delivered by and on behalf of the Purchaser, and is a valid
     and binding agreement of the Purchaser, enforceable against it in
     accordance with its terms, except to the extent that enforcement of this
     Agreement may be limited by bankruptcy, insolvency, reorganization,
     moratorium, fraudulent conveyance or other similar laws now or hereafter in
     effect relating to creditors' rights generally and to general principles of
     equity.

  m. Non-contravention.  The execution and delivery of this Agreement, and each
     of the other Primary Documents, and the consummation by the Purchaser of
     the other transactions contemplated by this Agreement and each of the other
     Primary Documents (as defined in section 3.g. below), does not and will not
     conflict with or result in a breach by the Purchaser of any of the terms or
     provisions of, or constitute a default under any indenture, mortgage, deed
     of trust or other material agreement or instrument to which the Purchaser
     is a party or by which it or any of its properties or assets are bound, or
     any material existing applicable law, rule, or regulation or any applicable
     decree, judgment or order of any court, in their respective jurisdictions,
     federal or state regulatory body, administrative agency, or any other
     governmental body having jurisdiction over the Purchasers, their
     subsidiaries, or any of their properties or assets, except such conflict,
     breach or default which would not have a material adverse effect on the
     transactions contemplated by this Agreement or by the other Primary
     Documents.

  n. Approvals.  No authorization, approval or consent of any court,
     governmental body, regulatory agency, self-regulatory organization, stock
     exchange or market or the shareholders of any of the Purchaser is required
     to be obtained by the Purchaser for the entry into or the performance of
     this Agreement and the other Primary Documents, except such authorizations,
     approvals and consents that have been obtained.

3. REPRESENTATIONS OF THE COMPANY

The Company represents and warrants to each Purchaser that:

  a. Organization.  The Company is a corporation duly organized, validly
     existing and in good standing under the laws of the State of Israel.  Each
     of the Company's subsidiaries is a corporation duly organized, validly
     existing and in good standing under the laws of its respective
     jurisdiction.

  b. Capitalization.  On the date hereof, the authorized capital of the Company
     shall consist of 16,666,666 Ordinary Shares, of which  8,907,126 were
     issued and outstanding as of December 21, 2000.  Schedule 1 hereto sets
     forth the options, warrants and convertible securities of the Company (the
     "Derivative Securities") which are outstanding on the date hereof.

  c. Concerning the Ordinary Shares.  The Ordinary Shares issuable upon
     conversion of,  the Debentures, and upon exercise of the Warrants, when so
     issued, shall be duly and validly issued, fully paid and non-assessable,
     and will not subject the holder thereof to personal liability by reason of
     being such a holder.  There are no preemptive rights of any

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     stockholder of the Company, as such, to acquire the Ordinary Shares
     issuable to the Purchaser's pursuant to the terms of the Debentures or the
     Warrants.

  d. Reporting Company Status.  The Company's Ordinary Shares are registered
     under Section 12 of the Securities Exchange Act of 1934, as amended (the
     "Exchange Act").  The Company has duly and timely filed all materials and
     documents required to be filed pursuant to all reporting obligations under
     either Section 13(a) or 15(d) of the Exchange Act for a period of at least
     twelve (12) months immediately preceding the offer and sale of the Units.
     The Company's Ordinary Shares are listed and traded on the Nasdaq
     SmallCapMarket ("Nasdaq"), and the Company is not aware of any pending
     action or proceeding of any kind to suspend the trading of the Ordinary
     Shares.

  e. Authorized Shares.  The Company has legally available a sufficient number
     of authorized and unissued Ordinary Shares as may be reasonably necessary
     to effect the conversion of the Debentures and the exercise of the
     Warrants.

  f. Legality.  The Company has the requisite corporate power and authority to
     enter into this Agreement and to issue and deliver the Debentures and the
     Warrants.  The issuance of the Debentures and the Warrants (and the
     Ordinary Shares issuable upon conversion of,  the Debentures and exercise
     of the Warrants) have been duly and validly authorized by all necessary
     corporate action by the Company, and this Agreement has been duly and
     validly executed and delivered by and on behalf of the Company, and is a
     valid and binding agreement of the Company, enforceable against it in
     accordance with its terms, except to the extent that enforcement of this
     Agreement may be limited by bankruptcy, insolvency, reorganization,
     moratorium, fraudulent conveyance or other similar laws now or hereafter in
     effect relating to creditors' rights generally and to general principles of
     equity.

  g. Transaction Agreements.  This Agreement, the Registration Rights Agreement,
     the form of which is attached hereto as Exhibit D (the "Registration Rights
     Agreement" and together with this Agreement, the Debentures and the
     Warrants, the "Primary Documents"), and the transactions contemplated
     thereby, have been duly and validly authorized by the Company, this
     Agreement has been duly executed and delivered by the Company and this
     Agreement is, and the Primary Documents, when executed and delivered by the
     Company, will each be,  valid and binding agreements of the Company,
     enforceable in accordance with their respective terms, except to the extent
     that enforcement of each of the Primary Documents may be limited by
     bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
     or other similar laws now or hereafter in effect relating to creditors'
     rights generally and to general principles of equity.

  h. Non-contravention.  The execution and delivery of this Agreement, and each
     of the other Primary Documents, and the consummation by the Company of the
     other transactions contemplated by this Agreement and each of the other
     Primary Documents, does not and will not conflict with or result in a
     breach by the Company of any of the terms or provisions of, or constitute a
     default under, the Memorandum of Association or the Articles of Association
     of the Company, or any indenture, mortgage, deed of trust or

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     other material agreement or instrument to which the Company or any of its
     subsidiaries is a party or by which they or any of their properties or
     assets are bound, or any material existing applicable law, rule, or
     regulation or any applicable decree, judgment or order of any court,
     Israeli or United States federal or state regulatory body, administrative
     agency, or any other governmental body having jurisdiction over the
     Company, its subsidiaries, or any of their properties or assets, except
     such conflict, breach or default which would not have a material adverse
     effect on the transactions contemplated by this Agreement or by the other
     Primary Documents.

  i. Approvals.  No authorization, approval or consent of any court,
     governmental body, regulatory agency, self-regulatory organization, stock
     exchange or market or the Shareholders of the Company is required to be
     obtained by the Company for the entry into or the performance of this
     Agreement and the other Primary Documents, except such authorizations,
     approvals and consents that have been obtained.

  j. SEC Filings.  None of the reports or documents filed by the Company with
     the Commission since January 1, 1999 contained, at the time they were
     filed, any untrue statement of a material fact or omitted to state any
     material fact required to be stated therein, or necessary to make the
     statements made therein in light of the circumstances under which they were
     made, not misleading.

  k. Absence of Certain Changes.  Since December 31, 1999, except as disclosed
     in the Company's reports on Form 6-K, there has been no material adverse
     change and no material adverse development in the business properties,
     operations, financial condition or results of operations of the Company.

  l. Title to Properties; Liens and Encumbrances.  The Company has good and
     marketable title to all of its properties and assets, both real and
     personal, and has good title to all its leasehold interests, in each case
     subject only liens, and conditional sale agreementscreated in the ordinary
     course of business. The Company's assets are not subject to any pledge or
     charges, of any kind whatsoever, except certain pledges imposed on certain
     motor vehicles and the first -ranking floating charge on all its assets
     which have been registered in favor of the Purchasers.

  m. Patents and Other Proprietary Rights.  The Company has sufficient title and
     ownership of all patents, trademarks, service marks, trade names,
     copyrights, trade secrets, information, proprietary rights and processes
     necessary for the conduct of its business as now conducted and as proposed
     to be conducted, and such business does not, and would not, conflict with
     or constitute an infringement on the rights of others.

  n. Permits.  The Company has all franchises, permits, licenses and any similar
     authority necessary for the conduct of its business as now conducted, the
     lack of which would materially and adversely affect the business, or
     financial condition of the Company.  The Company is not in default in any
     material respect under any of such franchises, permits, licenses or similar
     authority.

  o. Absence of Litigation. Except as set forth in the Offering Material, there
     is no action,

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     suit, proceeding, inquiry or investigation before or by any court, public
     board or body pending or, to the knowledge of the Company or any of its
     subsidiaries, threatened against or affecting the Company or any of its
     subsidiaries, in which an unfavorable decision, ruling or finding would
     have a material adverse effect on the properties, business, condition
     (financial or other), results of operations or prospects of the Company and
     its subsidiaries, taken as a whole, or the transactions contemplated by the
     Primary Documents, or which would adversely affect the validity or
     enforceability of, or the authority or ability of the Company to perform
     its obligations under the Primary Documents.

  p. No Default. Each of the Company and its subsidiaries is not in default in
     the performance or observance of any material obligation,, covenant or
     condition contained in any material indenture, mortgage, deed of trust or
     other instrument or agreement to which it is a party or by which it or its
     property may be bound.

  q. Taxes.  All applicable tax returns required to be filed by the Company and
     each of its subsidiaries have been filed, or if not yet filed have been
     granted extensions of the filing dates which extensions have not expired,
     and all taxes, assessments, fees and other governmental charges upon the
     Company, its subsidiaries, or upon any of their respective properties,
     income or franchises, shown in such returns and on assessments received by
     the Company or its subsidiaries to be due and payable have been paid, or
     adequate reserves therefor have been set up if any of such taxes are being
     contested in good faith; or if any of such tax returns have not been filed
     or if any such taxes have not been paid or so reserved for, the failure to
     so file or to pay would not in the aggregate have a material adverse effect
     on the business or financial condition of the Company and its subsidiaries,
     taken as a whole.

  r. Investment Company Act.  The Company is not an "investment company" as
     defined in Section 3(a) of the Investment Company Act of 1940, as amended.

  s. Agent Fees. The Company has not incurred any liability for any finder's or
     brokerage fees or agent's commissions in connection with the offer and sale
     of the Units hereunder.

  t. Private Offering.  Subject to the accuracy of the Purchaser's
     representations and warranties set forth in Section 2 hereof, the offer,
     sale and issuance of the Units as contemplated by this Agreement are exempt
     from the registration requirements of the Securities Act.  The Company
     agrees that neither the Company nor anyone acting on its behalf will offer
     any of the Units, the Debentures or the Warrants or any similar securities
     for issuance or sale, or solicit any offer to acquire any of the same from
     anyone so as to render the issuance and sale of the Units subject to the
     registration requirements of the Securities Act.

  u. Full Disclosure.  The representations and warranties of the Company set
     forth in this Agreement do not contain any untrue statement of a material
     fact or omit any material fact necessary to make the statements contained
     herein, in light of the circumstances under which they were made, not
     misleading.

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4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.

  a. Transfer Restrictions.  Each Purchaser acknowledges that (1) neither the
     Debentures nor the Warrants have been, and are not being registered under
     the Securities Act and, except as provided in the Registration Rights
     Agreement, the Ordinary Shares issuable upon conversion of the Debentures,
     and upon exercise of the Warrants, have not been and are not being
     registered under the Securities Act, and may not be transferred unless (A)
     subsequently registered thereunder or (B) the Purchaser shall have
     delivered to the Company an opinion of counsel, reasonably satisfactory in
     form and substance to the Company, to the effect that such Debentures,
     Warrants or Ordinary Shares (collectively, the "Securities"), to be sold or
     transferred may be sold or transferred pursuant to an exemption from such
     registration; (2) any sale of the Securities made in reliance upon Rule 144
     under the Securities Act may be made only in accordance with the terms of
     said Rule and further, if said Rule is not applicable, any resale of the
     Securities under circumstances in which the seller, or the person through
     whom the sale is made, may be deemed to be an underwriter, as that term is
     used in the Securities Act, may require compliance with another exemption
     under the Securities Act and the rules and regulations of the Commission
     thereunder; and (3) neither the Company nor any other person is under any
     obligation to register the Securities (other than pursuant to the
     Registration Rights Agreement) under the Securities Act or to comply with
     the terms and conditions of any exemption thereunder. The provisions of
     Section 4(a) and 4(b) hereof shall be binding upon any subsequent
     transferee of the Debentures and the Warrants.

  b. Restrictive Legend.  Each Purchaser acknowledges and agrees that the
     Debentures and the Warrants, and, until such time as the Ordinary Shares
     issuable upon conversion of the Debentures, or upon exercise of the
     Warrants shall have been registered under the Securities Act as
     contemplated by the Registration Rights Agreement and sold in accordance
     with such Registration Statement, such securities shall bear a restrictive
     legend in substantially the following form (and a stop-transfer order may
     be placed against transfer of such Securities).

               THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
               ACT OF 1933, AS AMENDED.  THEY MAY NOT BE SOLD, OFFERED FOR SALE,
               PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
               AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
               SAID ACT OR AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY
               TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

  c. Filings.  The Company undertakes and agrees to make all necessary filings
     in connection with the sale of the Units to each  Purchaser as required by
     Israeli and/or United States laws and regulations, or by any domestic
     securities exchange or trading market,

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     including, if applicable, the filing of a notice on Form D (at such time
     and in such manner as required by the Rules and Regulations of the
     Commission), and to provide copies thereof to the Purchaser promptly after
     such filing or filings.

  d. Nasdaq Listing.  Within thirty (30) Business Days after the  Closing Date,
     the Company will take such actions as shall be necessary to cause the
     listing of the Ordinary Shares issuable upon conversion of the Debentures,
     and upon exercise of the Warrants on Nasdaq, and upon request, shall
     furnish to each Purchaser evidence of such actions, including copies of any
     documents filed with Nasdaq to effectuate such listing.

  e. Reporting Status.  So long as any of the Purchasers beneficially own any of
     the Securities, the Company shall file all reports required to be filed
     with the Commission pursuant to Section 13 or 15(d) of the Exchange Act,
     and, except in connection with an acquisition transaction in which at least
     50% of the Company's voting equity securities are acquired by another
     entity, the Company shall not terminate its status as an issuer required to
     file reports under the Exchange Act even if the Exchange Act or the rules
     and regulations thereunder would permit such termination.

  f. Use of Proceeds.  The Company has used the proceeds from the issuance of
     the Units (excluding amounts paid by the Company for legal fees and
     finder's fees in connection with the sale of the Units) for the sole
     purpose of investing in StoreAge as part of an investment by existing
     Shareholders and/or external investors of $25,000,000.

  g. Reservation of Ordinary Shares.  The Company will at all times have
     authorized and reserved for the purpose of issuance a sufficient number of
     Ordinary Shares to provide for the conversion of the Debentures and the
     exercise of the Warrants.

     The number of Ordinary Shares reserved for issuance by the Company upon
     conversion of the Debentures or upon exercise of the Warrants  shall at all
     times be allocated pro rata among the Purchasers based upon the aggregate
     purchase price of the Units purchased by each Purchaser, and no Purchaser
     may at any time convert its Debentures or exercise Warrants so as to obtain
     a greater number of Ordinary Shares than its pro rata allocation of the
     Company's reserved Ordinary Shares.  In the event that a Purchaser shall
     sell or otherwise transfer, in whole or in part, any of its Securities
     (except for Ordinary Shares of the Company subject to an effective
     registration statement under the Securities Act or otherwise freely
     tradable by such Purchaser), each transferee shall, for purposes of
     determining such transferee's allocation of the Company's reserved Ordinary
     Shares, be allocated a pro rata portion of the initial purchase price paid
     by the Transferor upon its purchase of the Units.

  h. Board of Directors. The Company shall use its best efforts to ensure that
     in the event that the Purchasers hold (together) at least five percent (5%)
     of the Company's issued and outstanding share capital, the Purchasers shall
     be entitled to appoint one (1) director to the Board of Directors of the
     Company. In addition, as long as the Debentures remain unpaid, the
     Purchasers (as a group) will have the right to appoint an observer to the
     Board of Directors of the Company. The observer will have the right to
     participate in the meetings of the Board of Directors, with no right to
     vote.

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5. TRANSFER AGENT INSTRUCTIONS.

  a. The Company warrants that no instruction other than the instructions
     referred to in this Section 5 and stop transfer instructions to give effect
     to Sections 4(a) and 4(b) hereof prior to the registration and sale of the
     Ordinary Shares issuable upon conversion of the Debentures, or upon
     exercise of the Warrants under the Securities Act will be given by the
     Company to the transfer agent and that such Ordinary Shares shall otherwise
     be freely transferable on the books and records of the Company as and to
     the extent provided in this Agreement, the Registration Rights Agreement,
     and applicable law.  Nothing in this Section shall affect in any way the
     Purchaser's obligations and agreement to comply with all applicable
     securities laws upon resale of the Securities.  If a Purchaser provides the
     Company with an opinion of counsel reasonably satisfactory to the Company
     that registration of a resale by the Purchaser of any of the Securities in
     accordance with clause (1)(B) of Section 4(a) of this Agreement is not
     required under the Securities Act, the Company shall (except as provided in
     clause (2) of Section 4(a) of this Agreement) permit the transfer of the
     Securities and, in the case of the Ordinary Shares, promptly instruct the
     Company's transfer agent to issue one or more certificates for Ordinary
     Shares without legend in such names and in such denominations as specified
     by the Purchaser.

  b. The Company will permit each Purchaser to exercise its right to convert the
     Debentures or to exercise the Warrants by faxing an executed and completed
     Notice of Conversion or Form of Election to Purchase, as applicable, to the
     Company, and delivering within three (3) business days thereafter, the
     original Notice of Conversion (and the related original Debentures) or Form
     of Election to Purchase (and the related  original Warrants) to the Company
     by express courier, duly endorsed.  Each date on which a Notice of
     Conversion or Form of Election to Purchase  is received by the Company in
     accordance with the provisions hereof shall be deemed a "Conversion Date."
     The Company will transmit the certificates representing the Ordinary Shares
     issuable upon conversion of any Debentures or upon exercise of any Warrants
     (together with the Debentures not so converted, or the Warrants not so
     exercised) to such Purchaser via express courier or by electronic transfer,
     as soon as practicable thereafter (but in all events within three (3)
     business days), after receipt by the Company of the original Notice of
     Conversion (and the related original Debentures) or the original Form of
     Election to Purchase (and the related original Warrants) to be converted
     (the "Delivery Date"). For purposes of this Agreement, such conversion of
     the Debentures or exercise of the Warrants shall be deemed to have been
     made immediately prior to the close of business on the Conversion Date.

  c. In lieu of delivering physical certificates representing the Ordinary
     Shares issuable upon the conversion of the Debentures or exercise of the
     Warrants, provided the Company's transfer agent is participating in the
     Depositary Trust company ("DTC") Fast Automated Securities Transfer
     program, on the written request of a Purchaser who shall have previously
     instructed such Purchaser's prime broker to confirm such request to the
     Company's transfer agent, the Company shall use commercially reasonable
     efforts to cause its transfer agent to electronically transmit such
     Ordinary Shares to the Purchaser by crediting the account of the
     Purchaser's prime broker with DTC through its Deposit

                                       10
<PAGE>

     Withdrawal Agent Commission ("DWAC") system no later than the applicable
     Delivery Date.

6. CONDITIONS TO THE COMPANY'S OBLIGATION TO ISSUE THE UNITS.

The Purchaser understands that the Company's obligation to issue the Units on
the Closing Date to the Purchasers pursuant to this Agreement is conditioned
upon:

  a. The accuracy on the  Closing Date of the representations and warranties of
     the applicable Purchaser contained in this Agreement as if made on such
     Closing Date and the performance by the Purchasers on or before such
     Closing Date of all covenants and agreements of the applicable Purchasers
     required to be performed on or before such Closing Date;

  b. There shall not be in effect any law, rule or regulation prohibiting or
     restricting the transactions contemplated hereby, or requiring any consent
     or approval which shall not have been obtained.

7. CONDITIONS TO THE PURCHASERS' OBLIGATION TO PURCHASE THE UNITS.

The Company understands that each Purchaser's obligation to purchase the Units
on the  Closing Date is conditioned upon:

  a. The accuracy in all material respects on the Closing Date of the
     representations and warranties of the Company contained in this Agreement
     as if made on the Closing Date, and the performance in all material
     respects by the Company on or before the Closing Date of all covenants and
     agreements of the Company required to be performed on or before the Closing
     Date;

  b. On the Closing Date, the Purchaser shall have received an opinion of
     Israeli counsel for the Company, dated the Closing Date, in form, scope and
     substance reasonably satisfactory to each Purchaser, to the effect set
     forth in Exhibit E hereto, and an opinion of U.S. counsel for the Company,
     dated the Closing Date, in form, scope and substance reasonably
     satisfactory to each Purchaser, to the effect set forth in Exhibit F
     attached hereto;

  c. The Company shall have executed and delivered a signed counterpart to the
     Registration Rights Agreement;

  d. On or prior to the Closing Date, there shall not have occurred any of the
     following: (i) a suspension or material limitation in the trading of
     securities generally on the New York Stock Exchange or Nasdaq or; (ii) a
     general moratorium on commercial banking activities in New York or the
     State of Israel declared by the applicable banking authorities.

                                       11
<PAGE>

8. EXPENSES.

The Company covenants and agrees with the Purchasers that the Company will pay
or cause to be paid the following: (a) the fees, disbursements and expenses of
the Company's counsel and accountants in connection with the issuance of the
Securities, and (b) all other costs and expenses incident to the performance of
its obligations hereunder which are not otherwise specifically provided for in
this Section 8.  If the Company fails to satisfy its obligations or to satisfy
any condition set forth in this Agreement, as a result of which the Units are
not delivered to any of the Purchasers on the terms and conditions set forth
herein, the Company shall reimburse such Purchasers for any out-of-pocket
expenses reasonably incurred by such in making preparations for the purchase,
sale and delivery of the Units not so delivered, without derogating from any
other remedy available to the Purchasers under these circumstances.

9. GOVERNING LAW; MISCELLANEOUS

This Agreement shall be governed by and interpreted in accordance with the laws
of the State of Israel.  Each of the parties consents to the exclusive
jurisdiction of the Tel-Aviv courts, Israel in connection with any dispute
arising under this Agreement or any of the Primary Documents or relating to the
offer or sale of the Units, the Debentures, the Warrants and Ordinary Shares,
and hereby waives, to the maximum extent permitted by law, any objection,
including any objections based on forum non conveniens, to the bringing of any
such proceeding in such jurisdictions.  The Purchasers are entering into this
Agreement, each separately from the others, thus each Purchaser will not be
responsible for any act or omission of the other Purchasers, including a breach
by the latter of any of the provisions or representations contained herein. This
Agreement may be signed in one or more counterparts, each of which shall be
deemed an original.  The headings of this Agreement are for convenience of
reference only and shall not form part of, or affect the interpretation of this
Agreement.  If any provision of this Agreement shall be invalid or unenforceable
in any jurisdiction, such invalidity or enforceability shall not affect the
validity or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction.  This Agreement
shall inure to the benefit of, and be binding upon the successors and assigns of
each of the parties hereto, including any transferees of the Securities. This
Agreement may be amended only by an instrument in writing signed by the party to
be charged with enforcement.  This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.

10. NOTICES.

Any notice required or permitted hereunder shall be given in writing (unless
otherwise specified herein) and shall be effective upon personal delivery, via
facsimile (upon receipt of confirmation or error-free transmission) or two
business days following deposit of such notice with an internationally
recognized courier service, with postage prepaid and addressed to each of the
other parties thereunto entitled at the following addresses, or at such other
addresses as a party may designate by ten days advance written notice to each of
the other parties hereto.

COMPANY:    IIS INTELLIGENT INFORMATION SYSTEMS LIMITED
            Gutwirth Science-Based Industrial Center, Technion City
            Haifa 31015, Israel

                                       12
<PAGE>

                       ATT: Chairman and CEO
                       TEL:  972-4-8328803
                       FAX:  972-4- 8328804

                       with a copy to:
                       Efrati, Galili & Co.
                       6 Wissotsky Street
                       Tel-Aviv 62338
                       ATT: Ian Rostowsky, Adv.
                       TEL: 972-3-605 1010
                       FAX: 972-3-604 0111

PURCHASERS:            At the addresses set forth on the signature page of
                       this Agreement, as such addresses may be updated in
                       writing from time to time by each of the Purchasers.

                       with a copy to:
                       Gil Ron, Advocate
                       3A Jabotinsky Street
                       Ramat-Gan 52520 Israel
                       ATT: Gil Ron
                       TEL: 972-3-613-7979
                       FAX: 972-3-613-7969

11. CONFIDENTIALITY.

Each of the Company and the Purchaser agrees to keep confidential, and not to
disclose to or use for the benefit of any third party the terms of this
Agreement, any of the other Primary Documents or any other information which at
any time is designated in writing by the other party as confidential without the
prior written approval of the other party; provided, however, that this
                                           --------  --------

provision shall not apply to information which, at the time of disclosure, is
already part of the public domain (except by breach of this Agreement) and
information which is required to be disclosed by law or applicable regulation.

                            [Signature Page Follows]

                                       13
<PAGE>

IN WITNESS WHEREOF, this Agreement has been duly executed by each of the
undersigned.

                              "COMPANY"

                              I.I.S. INTELLIGENT INFORMATION SYSTEMS

                              By: _________________________________
                              Name: Robi Hartman
                              Title:   Chairman and CEO

                              "PURCHASERS"

                              CDC Holdings Ltd.

                              By: _________________________________
                              Name:
                              Title:

                              Armour Investments Ltd.

                              By:
                              Name:
                              Title:

                              Industrial Systems & Equipment Co.

                              By: _________________________________
                              Name:
                              Title:

                              _________________
                              Meir Noga

                              _________________
                              Nachum Ezra

                                       14
<PAGE>

EXHIBIT A                      PURCHASERS

EXHIBIT B                      FORM OF DEBENTURE

EXHIBIT C                      FORM OF WARRANT

EXHIBIT D                      REGISTRATION RIGHTS AGREEMENT

EXHIBIT E                      OPINION OF EFRATI, GALILI & CO.

EXHIBIT F                      OPINION OF BROWN, RAYSMAN

                               OPTIONS WARRANTS AND CONVERTIBLE SECURITIES

                                       15
<PAGE>

                   EXHIBIT A TO SECURITIES PURCHASE AGREEMENT
                   ------------------------------------------

                                   PURCHASERS

<TABLE>
<CAPTION>
                                       Principal Amount of
Purchaser                              Debentures Purchased       Number of Warrants
---------                              --------------------       ------------------
<S>                                   <C>                     <C>
CDC Holdings Ltd.                                 $2,100,000                 210,000
------------------------------------------------------------------------------------
Armour Investments Ltd.                           $  400,000                  40,000
------------------------------------------------------------------------------------
Industrial Systems & Equipment Co.                $  300,000                  30,000
------------------------------------------------------------------------------------
Meir Noga                                         $  100,000                  10,000
------------------------------------------------------------------------------------
Nachum Ezra                                       $  100,000                  10,000
------------------------------------------------------------------------------------
</TABLE>

                                       16
<PAGE>

                  SCHEDULE 1 TO SECURITIES PURCHASE AGREEMENT

                   OPTIONS, WARRANTS & CONVERTIBLE SECURITIES

                                       17<PAGE>

                                                                     Exhibit 4.5

                         SHAREHOLDERS' RIGHTS AGREEMENT
                         ------------------------------

     THIS SHAREHOLDERS RIGHTS AGREEMENT (this "Agreement") made as of the 18th
day of January, 2001, by and among:

 STOREAGE NETWORKING TECHNOLOGIES LTD., a private company organized under the
 laws of the State of Israel, with offices at Gutwirth Science Center, Building
 640, Technion City, Haifa, Israel (the "Company");

 -and-

 IIS INTELLIGENT INFORMATION SYSTEMS LTD., a private company that is a wholly-
 owned subsidiary of IIS INTELLIGENT INFORMATION SYSTEMS LTD. organized under
 the laws of the State of Israel, with offices at Gutwirth Science Center,
 Building 640, Technion City, Haifa, Israel ("IIS");

 -and-

 NELSON NAHUM, of 36a Shimkin Street, Haifa (the "Key Employee");

 -and-

 OPHIRTECH LTD., a company organized under the laws of the State of Israel, with
 offices at 8 Shderot Shaul Hamelech, Tel Aviv, Israel ("Ophir");

 -and-

 KOONRAS TECHNOLOGIES LTD., a company organized under the laws of the State of
 Israel, with offices at 21 Ha'arba'ah Street, Tel Aviv, Israel ("Koonras");

 -and-

GENESIS PARTNERS II L.D.C., a Limited Duration Company organized under the laws
of the State of Cayman Islands ("Genesis Partners") and GENESIS PARTNERS II
(Israel) L.P., a limited partnership organized under the laws of the Cayman
Islands ("Genesis Partners (Israel)"), with offices at Top Tower, 50 Dizengoff
St., Tel Aviv, Israel (Genesis Partners and Genesis Partners (Israel) shall be
referred to collectively as "Genesis");

-and-

CISCO SYSTEMS, INC., a public company incorporated under the laws of the state
of California ("Cisco"), with office at 170 West Tasman Drive, San Jose,
California, 95134-17066,   U.S.A.

                                      -1-
<PAGE>

-and-

MORGAN KEEGAN & COMPANY, INC., MORGAN KEEGAN OPPORTUNITY FUND, L.P. and MORGAN
KEEGAN EMPLOYEE INVESTMENT FUND, L.P., corporations incorporated under the laws
of the state of Delaware (collectively, "Morgan"), with offices at 50 North
Front Street, Memphis, Tennessee  38103, U.S.A.

-and-

The other investors listed in Annex 1 attached hereto (the "Other Investors").
                              -------

(Ophir, Koonras, Genesis and IIS shall be referred, collectively, as the
"Initial Purchasers"; Cisco, Morgan and the Other Investors shall be referred
to, collectively, as the "Additional Purchasers"; each of the Initial Purchasers
and the Additional Purchasers shall be referred to individually as a "Purchaser"
and collectively as "Purchasers")

Each of the above mentioned parties to this Agreement shall be referred to as a
"Party" and all of such parties as the "Parties".

                              W I T N E S S E T H:

     WHEREAS, the Initial Purchasers purchased 4,139,271 Series B Convertible
Preferred Shares of the Company (the "Preferred B Shares") in accordance with
the terms of that certain Share Purchase Agreement, dated December 13, 2000, as
amended on January 18, 2001 (the "Initial SPA"); and

     WHEREAS, the Additional Purchasers are subscribing for additional Preferred
B Shares in accordance with the terms of the Share Purchase Agreement, dated
January 18, 2001 (the "Additional SPA")

(the Initial SPA and the Additional SPA shall be referred to, collectively, as
the "Share Purchase Agreement"); and

     WHEREAS,  the Parties wish to terminate the Shareholders Rights Agreement
entered into on October 21, 1999 and the Shareholders Rights Agreement entered
into on December 13, 2000, among certain shareholders of the Company and the
Company (collectively, the "Previous SRA") so that, all the provisions of the
Previous SRA would have no further force or effect (as of the date of this
Agreement), and as of the date of this Agreement would be replaced by all the
provisions of this Agreement as detailed below; and

     WHEREAS, in order to induce the Company and its shareholders to approve the
issuance of the Preferred B Shares to the Additional Purchasers and to induce
the Additional Purchasers to invest funds in the Company pursuant to the Share
Purchase Agreement, the Parties hereby agree that certain rights shall be
granted to the

                                      -2-
<PAGE>

Company's shareholders as set forth herein;

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

1.   Affirmative Covenants
     ---------------------

     1.1. Delivery of Financial Statements. The Company shall deliver to (a)
          --------------------------------
          each holder of Preferred B Shares and each holder of Series A
          Convertible Preferred Shares (the "Preferred A Shares") and (b) each
          holder of Ordinary Shares for so long as such holder owns more than 5%
          of the outstanding share capital in the Company on a fully diluted
          basis (in each case in this Section 1 an "Entitled Shareholder"):

          1.1.1. As soon as practicable, but in any event within fifty (50) days
               after the end of each fiscal year of the Company, audited
               consolidated financial statements of the Company and of the
               Company's subsidiary - StoreAge Networking Technologies, Inc.
               (the "Subsidiary"), including the balance sheet as of the end of
               such year and statements of income and cash flow of the Company
               for such year, setting forth in each case in comparative form the
               figures for the previous fiscal year, all in reasonable detail,
               United States dollar denominated, prepared in accordance with US
               generally accepted accounting principles ("GAAP"), audited by a
               firm of Independent Certified Public Accountants who are members
               of the Israeli Institute of Certified Public Accountants and are
               affiliated with one of the "Big Five" accounting firms (an
               "Israeli CPA"), accompanied by an opinion of such firm which
               opinion shall state that such balance sheet and statements of
               income and cash flow have been prepared in accordance with GAAP
               consistently applied, and present fairly and accurately the
               financial position of the Company as of their date, and that the
               audit by such accountants in connection with such financial
               statements has been made in accordance with US generally accepted
               auditing standards, and in a form suitable for such Entitled
               Shareholder to conform with the reporting requirements which
               apply to a publicly traded company; and

          1.1.2. As soon as practicable, but in any event within forty five (45)
               days after the end of the first, second and third quarter in each
               year, the unaudited, but reviewed, consolidated financial
               statements of the Company and of the Subsidiary, including the
               balance sheet as at the end of each such period and unaudited
               statements of income and cash flow of the Company for such
               period, setting forth in each case in comparative form the
               figures for the corresponding period of the previous fiscal year,

                                      -3-
<PAGE>

                 all in reasonable detail, United States dollar-denominated,
                 certified, by the chief financial officer of the Company (the
                 "CFO"), reviewed by an Israeli CPA and in a form suitable for
                 such Entitled Shareholder to conform with the reporting
                 requirements which apply to a publicly traded company. The
                 CFO's certificate shall state that such financial statements
                 were prepared in accordance with GAAP consistently applied.

          1.1.3. As soon as practicable, but in any event within fifteen (15)
                 days after the end of each calendar month, the Company shall
                 deliver to the Entitled Shareholders monthly management reports
                 containing information of the business of the Company for such
                 month in the form acceptable to the Company and the Purchasers
                 and any such other reports as shall from time to time be
                 directed by the Board of Directors.

          1.1.4. At least forty five (45) days prior to the first day of each
                 fiscal year, the Company shall prepare and present to the
                 Entitled Shareholders detailed financial and operational
                 projections for the year and a financial summary projection,
                 broken down into yearly and quarterly financial forecasts and
                 other such projections as directed by the Purchasers.

          1.1.5. Any other information as may be reasonably requested by the
                 Entitled Shareholders, including, inter alia, information
                 required for the purpose of preparing or filing a prospectus
                 and/or any other filing pursuant to the securities authorities
                 and/or any other information required under any law. It is
                 agreed that in such events the Entitled Shareholder may be
                 entitled to transfer that information, if necessary for the
                 purposes mentioned above, to any of its affiliates or
                 subsidiaries, provided that the Entitled Shareholder shall
                 reimburse the Company for any and all expenditure which is
                 borne by the Company in connection with obtaining or providing
                 such information, if information of that kind in not obtained
                 by the Company in the ordinary course of business.

          1.1.6. All of the information provided under this Section 1.1 shall be
                 presented to the Purchasers in English.

    1.2. Additional Information. Until a firm commitment underwritten public
         ----------------------
         offering managed by an internationally recognized underwriter of
         Ordinary Shares of the Company yielding at least $30 million (Thirty
         Million US Dollars) net to the Company and which reflects a pre-
         offering valuation of the Company of more than U.S. $150,000,000 (One
         Hundred Fifty Million US Dollars) ("Qualified IPO"), the Company will
         permit the authorized representative of each Entitled Shareholder at
         such Entitled Shareholder's expense, full and free access, at
         reasonable times and upon reasonable notice, to any of the properties
         of the Company, including its books and records, and to discuss its
         affairs, finances and accounts with the Company's officers

                                      -4-
<PAGE>

               and auditors. Without derogating from the foregoing, should the
               Company receive written notification from a Party that it does
               not desire to receive any further Confidential Information (as
               defined herein) from the Company, as provided in Section 12.2
               below, such Party shall not be entitled to any additional
               information pursuant to this Section 1.2.

          1.3. Delivery of Information to Directors. In addition, the Company
               ------------------------------------
               will deliver to each of the Preferred Directors (as defined
               below), to the Cisco and Koonras Observers and to the Directors
               appointed by IIS the following information: (a) promptly
               following the occurrence of any Event, as defined hereinafter
               likely to have a material adverse effect upon the Company or its
               business, a written summary of such Event and its foreseeable
               implications. "Event" - includes, without limitation: (i) any
               material change in the information that was known to the Company
               which may have a material adverse affect on the Company; (ii)
               occurrence of new Events that render the information supplied to
               the Entitled Shareholders untrue or incomplete in any material
               way; or (iii) occurrence of any technological impediment which
               may cause a material adverse change in the current or prospective
               business of the Company; and (b) with reasonable promptness, such
               other information and data with respect to the Company, as an
               Entitled Shareholder may from time to time reasonably request.
               This Section 1.3 shall not derogate from any rights which any
               Entitled Shareholder or the directors designated by any of them
               may be entitled to under applicable law.

          1.4. Accounting. The Company will maintain and cause each of its
               ----------
               subsidiaries to maintain adequate records and books of accounts,
               and a system of accounting established and administered in
               accordance with GAAP consistently applied, and will reserve on
               its books and cause each of its operating subsidiaries to reserve
               on its books all such proper reserves as shall be required by
               GAAP.

          1.5. Insurance. The Company will maintain and shall pay all premiums
               ---------
               and maintain in full force and effect, employers liability, fire
               and casualty insurance policies with coverage sufficient in
               amount to allow it to replace its material properties, which
               might be damaged or destroyed. In addition to the foregoing, at
               the direction of the Board of Directors, the Company shall obtain
               from financially sound and reputable insurers a product liability
               insurance policy as is necessary for the Company to conduct its
               business. The Company shall obtain a Directors and Officers
               liability insurance policy in an amount as shall be determined by
               the Company's Board of Directors, within such time as resolved by
               the Board of Directors. All the above insurance shall be of such
               type and in such amount customary for companies similarly
               situated.

          1.6. Confidentiality and Non-Competition Agreements. Unless otherwise
               ----------------------------------------------
               specifically approved by the Board of Directors, the Company will
               not employ or otherwise

                                      -5-
<PAGE>

               contract with, or continue to employ or otherwise contract with,
               any person who will have access to confidential information with
               respect to the Company and its operations unless such person has
               executed and delivered a Confidentiality and Non-Competition
               Agreement in such form approved by the Company's Board of
               Directors.

          1.7. Protection of Intellectual Property. The Company undertakes to
               -----------------------------------
               use its best efforts to diligently protect any future development
               of the Company and of its subsidiaries by, inter alia, filing for
               patents in the United States and other jurisdictions, conducting
               searches to verify the status of the intellectual property, and
               taking such customary measures, in any such case, to protect the
               secrecy and value of the Company's and its subsidiaries
               intellectual property. The Company shall avoid and shall cause
               its subsidiaries to avoid an infringement of intellectual
               property rights of others of which it is aware, including by the
               design and use of non-infringing products, processes or the like.

          1.8. Employee Stock Option Plan. All options issued after the Closing
               --------------------------
               of the Share Purchase Agreement to employees, officers and
               consultants of the Company shall be in accordance with the
               Company's current employee stock option plan or any other
               employee stock option plan adopted by the Board of Directors.

          1.9. Use of Proceeds. The Company shall use the net cash proceeds from
               ---------------
               the sale of the Preferred B Shares in the manner set forth in
               Section 7 of the Share Purchase Agreement.

          1.10. Internal Auditor. Until an IPO, as long as Koonras holds more
                ----------------
               than 20% of the issued and outstanding share capital of the
               Company (on an as-converted basis), then, upon the demand of
               Koonras, the Company's Board of Directors shall appoint an
               internal auditor (as such term defined in the Companies Law -
               1999) to the Company.

          1.11. Compensation. The Company shall not pay and shall cause its
                ------------
               subsidiaries to not pay to its directors, officers and key
               employees management compensation in excess of that compensation
               customarily paid to management in companies in similar business
               without the consent of the Board or Directors.

          1.12. Reserved Conversion Shares. The Company shall at all time
                --------------------------
               reserve and keep available out of its authorized but unissued
               shares of Ordinary Shares, for the purpose of effecting the
               conversion of the Preferred B Shares and the Preferred A Shares
               and otherwise complying with the terms of this Agreement and the
               terms of the Share Purchase Agreement, such number of its duly
               authorized shares of Ordinary Shares as shall be sufficient to
               effect the conversion of the Preferred B Shares from time to time
               outstanding or otherwise comply with the terms of this Agreement
               and the terms of the Share Purchase Agreement.

          1.13. Restrictive Agreements Forbidden. The Company shall not become a
                --------------------------------
               party to any agreement, which by its terms restricts the
               Company's

                                      -6-
<PAGE>

               performance of this Agreement, the Share Purchase Agreement and
               any and all agreement and instruments entered by the parties
               hereunder and thereunder, or the Amended Articles.

          1.14. Compliance with Laws. The Company shall comply, and cause its
                --------------------
               subsidiaries to comply, with all applicable laws, rules,
               regulations and orders, noncompliance with which could materially
               and adversely affect their respective business or condition,
               financial or otherwise.

          1.15. IIS-StoreAge Agreement. The Company and IIS agree that, for such
                ----------------------
               time as Cisco (together with any Permitted Transferee of Cisco,
               as defined in the Amended Articles) holds shares in the Company
               constituting 5% or more of the issued and outstanding share
               capital of the Company, the Company and IIS shall not amend the
               agreement entered between the Company and IIS (in the form
               attached to the Share Purchase Agreement as Exhibit R(1) without
                                                           ------------
               the prior written consent of Cisco.

2.      Negative Covenants
        ------------------

        2.1.    Prior to such time as the consummation of a Qualifying IPO the
                following actions and resolutions shall not be taken by the
                Company (and the Company shall not cause any subsidiary thereof
                to take such action) without first obtaining the written consent
                of at least two of the Preferred Directors, as defined below (in
                the case of actions of the Board of Directors), or the written
                consent of the holders of at least a 70% of the Preferred A
                Shares and Preferred B Shares then issued and outstanding
                collectively (in the case of actions of the shareholders):

                2.1.1.  voluntary liquidation, winding up, reorganization,
                        merger or consolidation with or into any corporation or
                        entity, or sale, assignment, lease, or other disposition
                        of all or substantially all of the Company's assets;

                2.1.2.  the declaration or payment of any dividend (whether in
                        cash or shares) or any other distribution of cash or
                        other assets;

                2.1.3.  any amendment to or modification of the Company's
                        Articles or Memorandum of Association;

                2.1.4.  Without limitation to Section 2.2 below, any increase in
                        or modification of the Company's authorized share
                        capital, and the issuance of any securities of the
                        Company (including but not limited to option, warrants
                        etc.) at an exercise or price per share which is lower
                        than US$ 3.28695 (purchase price per each Preferred B
                        Share), subject to recapitalization adjustments;

                2.1.5.  any material change in the nature or character of the
                        business as currently conducted or contemplated to be
                        conducted by the Company;

                2.1.6.  any transaction, agreement or arrangement, which is not
                        in the

                                      -7-
<PAGE>

                        ordinary course of business of the Company relating to
                        the Company's intellectual property;

                2.1.7.  the terms of an IPO;

                2.1.8.  the purchase of any securities or substantially all of
                        the assets, of any person or entity;

                2.1.9.  entering into any transaction with (i) any shareholder
                        or director of the Company or any of their respective
                        affiliates, shareholders, partners, directors or
                        officers or (ii) with any officer of the Company;

                2.1.10. any loan granted to the Company exceeding the amount of
                        US$100,000, the imposition of liens and/or charges on
                        any of the Company's assets and any grant of guarantees
                        to or by the Company;

                2.1.11. any loan granted by the Company exceeding the aggregate
                        amount of US$50,000;

                2.1.12. designation or discharge of the chief executive officer
                        and other executive officers of the Company;

                2.1.13. approval of the annual budget and working plan and any
                        expenditure which deviates therefrom;

                2.1.14. redemption on the Company's shares;

                2.1.15. call on the Company's shares;

                2.1.16. any amendment to the Company's Stock Option Plan or the
                        adoption of any compensation or stock plan; and

                2.1.17. entering into any engagement and/or agreement and/or
                        commitment and/or undertaking with Morgan Keegan &
                        Company, Inc.

        2.2.    Prior to the consummation of a Qualifying IPO, the following
                actions of the Company shall require the affirmative vote of the
                holders of Preferred A Shares or Preferred B Shares (in each
                case, each voting as a separate class), as the case may be:

                2.2.1.  The authorization, creation and/or issuance of
                        securities of the Company with rights same, pari passu
                        or superior to the rights conferred upon the holders of
                        Preferred A Shares or Preferred B Shares, as the case
                        may be; and

                2.2.2.  Any action which would have the effect of amending or
                        affecting the rights, preferences and privileges of the
                        Preferred A Shares or Preferred B Shares, as the case
                        may be.

3.      The Company's Board of Directors
        --------------------------------

        3.1.    Prior to the consummation of a Qualifying IPO, the Board of
                Directors of the Company and the board of each subsidiary
                thereof shall consist

                                      -8-
<PAGE>

                of not more than seven (7) directors, appointed as follows:

                3.1.1.  The majority of holders of Preferred A Shares shall
                        collectively be entitled to appoint one (1) member to
                        the Company's Board of Directors (the "Preferred A
                        Director");

                3.1.2.  The majority of holders of Preferred B Shares shall be
                        entitled to appoint two (2) members to the Company's
                        Board of Directors (the "Preferred B Directors");
                        (the Preferred A Director and the Preferred B Directors
                        shall be referred to herein, collectively, as the
                        "Preferred Directors")

                3.1.3.  The holder(s) of the majority of the Ordinary Shares
                        shall be entitled to appoint two (2) members to the
                        Company's Board of Directors.

                3.1.4.  The Company's Chief Executive Officer shall serve as a
                        member of the Board of Directors.

                3.1.5.  An additional member (one), who shall be an industry
                        expert, shall be appointed to the Board of Directors by
                        the other members of the Board.

        3.2.    For so long as Koonras holds 5% or more of the issued and
                outstanding share capital of the Company, it shall be entitled
                to appoint 1 non-voting observer to the Board of Directors of
                the Company.

        3.3.    For so long as Cisco holds 5% or more of the issued and
                outstanding share capital of the Company, it shall be entitled
                to appoint 1 non-voting observer to the Board of Directors of
                the Company and a member to the technical advisory sub-committee
                of the Board of Directors of the Company.

4.      Conversion and Anti-Dilution
        ----------------------------

        4.1.    The holders of Preferred Shares shall be entitled to broad-based
                anti- dilution protection. The terms of such anti-dilution
                protection are as described in Exhibit B.
                                               ---------

        4.2.    The Preferred A and B Shares are convertible into Ordinary
                Shares of the Company. The Conversion terms are as described in
                Exhibit B.
                ---------

5.      Liquidation Preference
        ----------------------
        The Preferred B shares will be senior to all other equity securities of
        the Company in the event of actual or deemed liquidation of the Company,
        bankruptcy or winding up of the Company, or sale of all or substantially
        all of the assets of the Company for cash or assets. The terms of the
        liquidation preference are as described in Exhibit B.
                                                   ---------

6.      Dividends
        --------

        The holders of Preferred B Shares and the holders of Preferred A Shares
        shall have a dividend preference. The terms of such preference are as
        described in Exhibit B.
                     ---------

                                      -9-
<PAGE>

7.      Key Employee No Sale
        --------------------

        7.1.    Until the earlier of: (i) a Qualifying IPO, (ii) Deemed
                Liquidation, where the shareholders of the Company prior to the
                merger do not hold more than 50% of the surviving entity, or
                (iii) sale of all or substantially all of the Company's assets
                (the "Restrictive Period") Key Employee shall not sell,
                transfer, assign, pledge or otherwise dispose of any shares of
                the Company held by him (each a "Transfer"), except to Permitted
                Transferees (as such term is defined in the Amended Articles),
                provided that such Permitted Transferee agrees in writing to be
                bound by the provisions of this Agreement and the Amended
                Articles including the No-Sale provision set forth in this
                Subsection 7.1, and except as provided pursuant to Section 7.2
                herein, as if such Permitted Transferees were Key Employee.

        7.2.    Notwithstanding the foregoing, during the Restrictive Period Key
                Employee shall be entitled to sell, in one or more transactions,
                shares of the Company owned by him not exceeding in the
                aggregate $200,000 (Two Hundred Thousand US Dollars) in value.

        7.3.    In the event that the Key Employee or any of his Permitted
                Transferees should sell any shares in contravention of this
                Agreement (a "Prohibited Transfer"), the Purchasers may proceed
                to protect and enforce their rights by suit in equity or by
                action at law, whether for the specific performance of any term
                contained in this Agreement or for an injunction against the
                breach of any such term or in furtherance of the exercise of any
                power granted in this Agreement, or to enforce any other legal
                or equitable right of the holders of Preferred A and B Shares or
                to take one or more of such actions.

8.      Exit
        ----

        The Parties shall have the right to transfer their respective shares in
        the Company, together with the right of first refusal and tag-along
        rights. The terms of such right to transfer shares are as described in
        the Amended Articles attached hereto as Exhibit B.
                                                ---------

9.      Bring-Along
        -----------

        The Parties agree that "bring-along" provisions with respect to sale of
        shares of the Company will be as set forth in Exhibit B.
                                                      ---------

10.     Preemptive Rights
        -----------------

        The Parties shall have preemptive rights in the event of issue of any
        additional shares of the Company. The terms of such preemption right are
        as described in Exhibit B.
                        ---------

11.     Right of First Refusal
        ----------------------

        The Parties shall have right of first refusal to purchase any shares
        of the

                                      -10-
<PAGE>

        Company offered for sale by and shareholder of the Company. The
        terms of such right are as described in Exhibit B.
                                                ---------

12.     Confidentiality
        ---------------

        12.1.   The Parties hereby undertake to maintain in strict
                confidentiality all trade, business, technical or other
                information regarding the Company, its affiliated entities and
                their business affairs including, without limitation, all
                marketing, sales, technical and business know-how, intellectual
                property, trade secrets, identity and requirements of customers
                and prospective customers, the Company's methods of doing
                business and any and all other information relating to the
                operation of the Company (collectively, the "Confidential
                Information"). The Parties shall at no time disclose any
                Confidential Information to any person, firm, or entity, and for
                any purpose, without the prior written consent of the Company
                and shall use their best efforts to cause their authorized
                representatives not to disclose such information without the
                prior written consent of the Company.

        12.2.   Confidential Information shall not include information that (i)
                is or becomes part of the public domain other than as a result
                of breach of this Agreement, (ii) becomes available to the
                Parties on a non-confidential basis from a source other than the
                Company, provided that the source is not bound with respect to
                that information by a confidentiality agreement with the Company
                or is otherwise prohibited from transmitting that information by
                a contractual legal or other obligation, (iii) have been in the
                possession or known to the parties prior to disclosure of the
                information by the Company, (iv) have been developed by or for
                them or their related entities without use of the Confidential
                Information, (v) becomes available to the Parties by wholly
                lawful inspection or analysis of products offered for sale,
                provided, however, that no Party shall be entitled to use or
                disclose such Confidential Information except in connection with
                its investment in the Company and in no event shall use it in a
                way that may materially adversely affect the Company's business,
                unless expressly authorized by the Company in writing, or (vi)
                is transmitted by a Party after receiving written notification
                from the other Party that it does not desire to receive any
                further Confidential Information. To avoid any doubt it is
                hereby clarified that the foregoing exclusions shall not be
                construed to exclude information pertaining to any and all
                intellectual property assigned and/or transferred by IIS to the
                Company. Notwithstanding the foregoing, each Party may disclose
                information with respect to the Company, which it is required to
                disclose pursuant to judicial action or other governmental
                agency action or applicable law or regulation. In the event
                either Party becomes legally compelled to disclose any
                Confidential Information, each Party shall provide the other
                with prompt notice. Both Parties shall cooperate with each other
                to the fullest extent possible so that the relevant Party may
                seek a protective order or other appropriate remedy, at its own
                expense.

                                      -11-
<PAGE>

        12.3.   Subject to the Section 10.11 (Public Announcements) of the Share
                                              ----------------------------------
                Purchase Agreement, all institutional investors in the Company
                ------------------
                may, without first obtaining such written consent, make general
                statements, not containing Confidential Information or technical
                information, regarding the nature and progress of the Company's
                business, and may provide summary information regarding the
                Company's financial information in its reports to its respective
                shareholders or limited partners and may, if required by law,
                annex to such reports the full financial information to be
                provided hereunder by the Company.

13.     Miscellaneous
        -------------

        13.1.   Termination of the Previous SRA. By entering into this
                -------------------------------
                Agreement, the shareholders of the Company hereby terminate the
                Previous SRA as of the date of this Agreement, and as of the
                date of this Agreement all the rights and privileges granted to
                either party by virtue of such Agreement shall become null and
                void.

        13.2.   Further Assurances. Each of the Parties hereto shall perform
                ------------------
                such further acts and execute such further documents as may
                reasonably be necessary to carry out and give full effect to the
                provisions of this Agreement and the intentions of the Parties
                as reflected hereby.

        13.3.   Governing Law; Jurisdiction. This Agreement shall be governed by
                ---------------------------
                and construed exclusively according to the laws of the State of
                Israel, without regard to the conflict of laws provisions
                thereof. Any dispute arising under or in relation to this
                Agreement shall be resolved exclusively in the competent courts
                for the Tel Aviv-Jaffa district, and each of the Parties hereby
                submits irrevocably to the jurisdiction of such court.

        13.4.   Successors and Assigns. Except as otherwise expressly limited
                ----------------------
                herein, this Agreement shall be binding upon and inure to the
                benefit of and be enforceable by the Purchasers and the Company
                and their respective successors and assigns. None of the rights,
                privileges, or obligations set forth in, arising under, or
                created by this Agreement may be assigned or transferred without
                the prior consent in writing of each Party to this Agreement,
                with the exception of (a) assignments and transfers from a
                Purchaser to any other entity which controls, is controlled by
                or is under common control with, such Purchaser, (b) assignments
                and transfers to a Purchaser's limited partners and to
                affiliated limited partnerships managed by the same management
                company or managing general partner or by an entity which
                controls, is controlled by, or is under common control with,
                such management company or managing general partner, (c)
                assignments and transfers to any investment fund or trust or
                partnership controlled or managed or advised or promoted by a
                Purchaser and (d) assignment and transfer from the Company to a
                company which has succeeded to substantially all of the business
                and assets of the Company in compliance with this Agreement and
                has assumed in writing its obligations under this Agreement.

                                      -12-
<PAGE>

        13.5.   Entire Agreement; Amendment and Waiver. Subject to Section 13.2,
                --------------------------------------
                this Agreement, the Exhibits hereto, the Share Purchase
                Agreement and the schedules thereto, the Registration Agreement
                and the schedules thereto, the Warrant and the Amended Articles
                constitute the full and entire understanding and agreement
                between the Parties with regard to the subject matters hereof
                and thereof, and as of the date hereof, supersedes all other
                agreements between or among any of the parties with respect to
                the subject matter hereof, including the Previous SRA (but
                excluding the Share Purchase Agreement executed on October 21,
                1999). Any term of this Agreement may be amended, waived or
                discharged (either prospectively or retroactively and either
                generally or in a particular instance), by a written instrument
                signed by all the Parties to this Agreement.

        13.6.   Notices, etc. All notices and other communications required or
                -------------
                permitted hereunder to be given to a party to this Agreement
                shall be in writing and shall be telecopied or mailed by
                registered or certified mail, postage prepaid, or sent by e-mail
                (provided that telephone confirmation of receipt is provided) or
                otherwise delivered by hand or by messenger, addressed to such
                party's address as set forth below or at such other address as
                the party shall have furnished to each other party in writing in
                accordance with this provision:

<TABLE>
<S>                                             <C>
                If to the Company:               StoreAge Networking Technologies Ltd.
                                                 Gutwirth Science Center, Building 640,
                                                 Technion City, Haifa, Israel
                                                 Fax: +972-4-8329040
                                                 Attn: Eli Shapira, CEO
                                                 E-mail:  Eshapira@store-age.com

                With a copy (which will not      Kleinhendler & Halevy
                 constitute notice) to:          30 Kalisher Street
                                                 Tel-Aviv 65257
                                                 Fax:  972-3-5107528
                                                 Attention:  Nitzan Hirsch-Falk
                                                 E-Mail:  nitzan@khlaw.co.il

                If to IIS:                       IIS Intelligent Information Systems
                                                 Investments (1994) Ltd.
                                                 Gutwirth Science Center, Building 640,
                                                 Technion City, Haifa, Israel
                                                 Fax: +972-4-8329040
                                                 Attn: Robi Hartman
                                                 E-mail:  Rhartman@westendgroup.com
                If to Key Employee:              Nelson Nahum
                                                 36a Shimkin Street,
                                                 Haifa, Israel
                                                 Fax: ___________________

</TABLE>

                                      -13-
<PAGE>

<TABLE>
          <S>                                     <C>
              If to Ophir:                          3 Danieal Frish St., 13th Floor
                                                    Tel Aviv, Israel
                                                    Fax: +972-3-6095851
                                                    E-mail: yrmo@netvision.net.il
                                                    Attn: Yirmi Kaplan
              With a copy (which will not           Baratz, Gilat, Bar-Nathan & Co., Law
               constitute notice) to:               Offices
                                                    8 Shaul Hamelech Blvd.
                                                    Tel Aviv 64733 Israel
                                                    Fax: 972-3-696-0986
                                                    E-mail:  lori@bgb-law.co.il
                                                    Attn: Lori Almouli-Confino, Adv.
              If to Koonras:                        21 Ha'arba'ah Street, Tel Aviv, Israel
                                                    Fax:  972-3-6957511
                                                    E-mail:  ashachar@poalim-investments.co.il
                                                    Attn: Avi Shahar
              With a copy (which will not           Baratz, Gilat, Bar-Nathan & Co., Law
               constitute notice) to:               Offices
                                                    8 Shaul Hamelech Blvd.
                                                    Tel Aviv 64733 Israel
                                                    Fax: 972-3-696-0986
                                                    E-mail:  lori@bgb-law.co.il
                                                    Attn: Lori Almouli-Confino, Adv.
              If to Genesis:                        50 Top Tower, Tel Aviv, Israel
                                                    Fax:  972-3-5262696
                                                    E-mail: eyal@genesispartners.co.il
                                                    Attn: Eyal Kishon
              With a copy (which will not           Baratz, Gilat, Bar-Nathan & Co., Law
               constitute notice) to:               Offices
                                                    8 Shaul Hamelech Blvd.
                                                    Tel Aviv 64733 Israel
                                                    Fax: 972-3-696-0986
                                                    E-mail:  lori@bgb-law.co.il
                                                    Attn: Lori Almouli-Confino, Adv.
              If to Morgan Keegan                   Morgan Keegan & Company, Inc.
                                                    50 North Front Street
                                                    Memphis, TN  38103, U.S.A.
                                                    Fax:001-(901)-579-4979
                                                    E-mail: Bill.Ryan@morgankeegan.com
                                                    Attn:  William D. Ryan
</TABLE>

                                      -14-
<PAGE>

<TABLE>
<S>                                     <C>
        If to Cisco Systems, Inc.               170 West Tasman Drive
                                                San Jose, California, 95134-17066
                                                U.S.A.
                                                Attn: Senior Vice President, Legal and
                                                Government Affairs
                                                Fax: 001-(408)-5265925
        With a copy (which will not             Zellermayer, Pelossof and Co., Adv.
         constitute notice) to:                 Rubinstein House, 20 Lincoln St.
                                                Tel Aviv, Israel
                                                Attn: Guy Even Ezra, Adv.
                                                Fax: 972-3-6255500

        If to the Other Investors               To their respective addresses set forth in
                                                Annex 1
</TABLE>

        or such other address with respect to a party as such party shall notify
        each other party in writing as above provided. Any notice sent in
        accordance with this Section shall be effective (i) if mailed, five (5)
        business days after mailing, (ii) if sent by messenger, upon delivery,
        and (iii) if sent via telecopier, upon transmission and electronic
        confirmation of receipt or (if transmitted and received on a
        non-business day) on the first business day following transmission and
        electronic confirmation of receipt.

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

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

                                      -15-
<PAGE>

13.9.   Construction. All capitalized terms not defined herein shall have the
        ------------
        meaning ascribed to such term in the Share Purchase Agreement.

13.10.  Counterparts. This Agreement may be executed in any number of
        ------------
        counterparts, each of which shall be deemed an original and enforceable
        against the Parties actually executing such counterpart, and all of
        which together shall constitute one and the same instrument. Signatures
        appearing on a faxed page shall be deemed original signatures and shall
        be enforceable against the Parties transmitting such signature pages by
        facsimile.

13.11.  Titles, Subtitles, Preamble and Schedules. The titles and subtitles used
        -----------------------------------------
        in this Agreement are used for convenience only and are not to be
        considered in construing or interpreting this Agreement. The preamble
        and Schedules form an integral and inseparable part of this Agreement.

                  [REMAINING OF PAGE INTENTIONALLY LEFT BLANK]

                                      -16-
<PAGE>

IN WITNESS WHEREOF, this Agreement has been duly executed on the date herein
above set forth:

_________________________            ____________________
STOREAGE NETWORKING                     OPHIRTECH LTD.
TECHNOLOGIES LTD.

______________________________       ______________________________
IIS INTELLIGENT INFORMATION                  KOONRAS TECHNOLOGIES LTD.
SYSTEMS LTD.

_________________________________    ___________________________
GENESIS PARTNERS II L.D.C                    CISCO SYSTEMS, INC.

_________________________________    _______________________
GENESIS PARTNERS II (ISRAEL) L.P.            NELSON NAHUM

__________________________________    _______________________________
MORGAN KEEGAN & COMPANY, INC.          MORGAN KEEGAN OPPORTUNITY
                                         FUND, L.P.

___________________________________________________
MORGAN KEEGAN EMPLOYEE INVESTMENT FUND, LP

___________________________________     ___________________________
THE CHALLENGE FUND-ETGAR II L.P.

                                      -17-

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