Document:

20-F

Exhibit 4.9  

SECURITIES PURCHASE
AGREEMENT 

Dated as of 

December 10, 2007 

SECURITIES PURCHASE AGREEMENT 

        This
SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made and entered into
as of December 10, 2007, by and among B.O.S Better Online Solutions Ltd., an Israeli
company (the “Company”), and the entities listed in Schedule
1 (collectively, the “Investors” and each, an
“Investor”). 

        WHEREAS,
subject to the terms and conditions herein, the Investors desire to acquire from the
Company, and the Company desires to issue to the Investors Ordinary Shares of the Company,
par value NIS 4.00 each (each, a “Share” and collectively the
“Shares”, and when referred to the shares to be purchased by each Investor, such
number of shares as set forth opposite such Investor’s name in the column labeled
“No. of Shares” on Schedule 1 hereto); and 

        WHEREAS,
in connection with the Investors’ purchase of the Shares hereunder, the Company
wishes to issue to the Investors such number of warrants to purchase Shares as set forth
opposite each Investor’s name in the column labeled “No. of Warrants” on
Schedule 1 hereto (reflecting 65% warrant coverage), on the terms and conditions hereof,
and the Investors wish to purchase such number of warrants; 

        NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Investors hereby agree as follows: 

1.     PURCHASE
AND SALE OF SHARES.  

    1.1        Subject
to the satisfaction of the terms and conditions described in this Agreement, at the
Closing (as defined below), the Company agrees to sell to each Investor, and each
Investor, severally and not jointly, agrees to purchase from the Company, such number of
Shares, against such amount, as is set forth opposite each Investor’s name in the
columns labeled “No. of Shares”and “Purchase Amount”, respectively,
on Schedule 1 hereto, and reflecting a price of $2.40 per Ordinary Share (the
“PPS”).  

    1.2        The
parties agree that Schedule 1 hereto may be revised, at the Company’s sole
discretion, to reflect additional investments by additional investors (the “Additional
Investors”) who shall execute the Transaction Documents (as defined below) and
be deemed Investors for the purpose hereof, provided however, that in no event
shall the aggregate number of Shares issued to the Investors and the Additional Investors
(including the Shares issuable under the Warrants) exceed 19.5% of the issued and
outstanding share capital as of the date hereof.  

    1.3        At
the Closing, the Company shall issue and deliver to the Investors a Warrant in the form
attached hereto as Exhibit A (the “Warrant”) to purchase such number of
Shares as is set forth opposite such Investor’s name in the columns labeled “No.
of Warrants”. The Warrant shall be exercisable for a period of four (4) years from
the date of issuance (the “Warrant Issue Date”). The Warrant’s exercise
price shall be $2.76 per Share.  

     2.    
          CLOSING. The execution and delivery of this Agreement shall occur upon
          delivery by facsimile of executed signature pages of this Agreement and all
          other documents, instruments and writings required to be delivered pursuant to
          this Agreement to Amit, Pollak, Matalon & Co., NITSBA Tower, 17 Yitzhak
          Sadeh St., Tel-Aviv 67775 Israel attn: Shlomo Landress, Adv., Fax: (972) 3
          568-9001. The closing of the purchase and sale of the Shares will take place ten
          (10) days after the date hereof (or, if such date is not a business day, on the
          next business day thereafter), on which date the conditions for Closing set
          forth in Sections 5 and 6 herein shall be satisfied in full or waived by the
          appropriate party thereunder, or at such different date as may be mutually
          acceptable to the Investors and the Company (the “Closing”). At
          the Closing, each Investor shall deliver to the Company payment in full (without
          deduction of any fees or taxes) for the Shares to be purchased by such Investor
          in the amount set forth opposite such Investor’s name in the column labeled
          “Purchase Amount” on Schedule 1, via wire transfer of
          immediately available funds or bank or cashier’s check. At the Closing, the
          Company will deliver to each Investor a duly executed share certificate
          reflecting such number of shares set forth opposite such Investor’s name in
          the column labeled “No. of Shares”, and a Warrant validly executed by
          the Company. 

     3.    
          REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company hereby
          represents and warrants to each Investor that: 

    3.1        Corporate
Organization. Each of the Company and its Subsidiaries (as defined below) is (i) a
corporation duly incorporated, validly existing and in good standing (where such concept
is applicable) under the Laws of the jurisdiction of its organization, (ii) has the
corporate power and authority to own, lease and operate its property and to carry on its
business as now being conducted, and (iii) is duly qualified and in good standing to do
business in each jurisdiction in which the nature of the business conducted by it or the
ownership or leasing of its properties makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing would not have a
Material Adverse Effect. As used in this Agreement, “Material Adverse Effect” means
any material adverse effect on the business, properties, assets, operations, prospects,
results of operations or condition (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole. The Company’s shares are traded on the Nasdaq Global
Market and on the Tel-Aviv Stock Exchange (the “Principal Markets”) and
as such it is subject to both US and Israeli Securities Laws. “Subsidiaries” shall
mean BOScom Ltd. and Odem Electronic Technologies Ltd.  

    3.2        Due
Authorization and Valid Issuance. The Company has the corporate power to enter into
this Agreement and the Registration Rights Agreement (the “Transaction Documents”).
The Transaction Documents have been, or will have been, at the time of their respective
execution and delivery, duly executed and delivered by the Company. Prior to the Closing
of this Agreement, the Company shall have acted to complete all corporate action
necessary on its part for the issuance, sale and delivery of the Shares, the Warrant and
the shares issuable upon exercise thereof (the “Warrant Shares”). The
Shares being purchased by the Investors hereunder and the Warrant Shares will, upon
issuance and payment therefore pursuant to the terms hereof, be duly authorized, validly
issued, fully-paid and nonassessable.  

    3.3        Binding
Agreement. The Transaction Documents constitute valid and legally binding obligations
of the Company enforceable against the Company in accordance with their respective terms,
except as (i) such enforceability may be limited by bankruptcy, insolvency,
reorganization, arrangement, moratorium or similar laws relating to or affecting the
rights of creditors and contracting parties generally, (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any proceeding
therefore may be brought, and (iii) rights to indemnity and contribution may be limited
by Israeli or U.S. state or federal securities laws applicable to the Company or by the
public policy underlying such laws.  

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    3.4        Non-Contravention.
Neither the execution and delivery of the Transaction Documents, nor the consummation of
the transactions or the performance of the obligations contemplated hereby and thereby
will result in any violation or breach of Company’s articles of association,
by-laws, board resolutions or shareholders resolutions, or result in a violation of any
law, rule, regulation, order, (including federal and state securities laws and
regulations and the rules and regulations of the Primary Markets) or, to the Company’s
best knowledge, judgment or decree.  

    3.5        No
Consent. To the Company’s best knowledge, and in reliance on the representations
of the Investors given in Section 4 hereof, except for reporting obligations and
approvals required under applicable securities laws and market regulations in Israel and
the United States and for notices to or approvals by the Office of the Chief Scientist
and the Investment Center of the Ministry of Industry, Trade and Labor (if required) no
consent of any governmental body or third party is required to be made or obtained by the
Company in connection with the execution and delivery of the Transaction Documents by the
Company or the consummation by the Company of the transactions or the performance of the
obligations contemplated hereby and thereby by the Company.  

    3.6        Capitalization.
The authorized share capital of the Company consists as of the date hereof: 35,000,000
Ordinary Shares, par value NIS 4.00 per share, of which, as of September 30, 2007,
9,609,911 Ordinary Shares are issued and outstanding, and 2,600,000 Ordinary Shares are
reserved for issuance upon the exercise of warrants and of employee, director and
consultant options already granted by the Company. The Company is currently in
discussions with other investors with respect to additional financings, in which
financings the price per share may be different than the PPS hereunder.  

    3.7        SEC
Documents. Since January 1, 2006, the Company has timely filed all reports,
schedules, forms, statements and other documents required to be filed by it, as a foreign
private issuer, with the Securities and Exchange Commission (“SEC”)
pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended
(the “1934 Act”) (all of the foregoing filed prior to the date hereof or
prior to the date of the Closing, being hereinafter referred to as the “SEC
Documents”). As of their respective dates, but subject to any amendments or
supplements in later filings, the SEC Documents complied in all material respects with
the requirements of the 1934 Act and the rules and regulations of the SEC promulgated
thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time
they were filed with the SEC but subject to any amendment or supplement in later filings,
contained any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.  

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    3.8        Financial
Statements. The audited consolidated financial statements of the Company as of
December 31, 2006 and the related notes thereto, as filed by the Company with the SEC
under Form 6-K on March 27, 2007, and as amended in the Company’s filing on Form
20-F/A made on November 28, 2007 (the “Financial Statements”) fairly
present the financial position of the Company as of their respective dates, and have been
prepared in accordance with the books and records of the Company as at the applicable
dates and for the applicable periods. Such financial statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent basis
throughout the periods therein specified, except as may be disclosed in the notes
to such financial statements, or as may be permitted by the Securities and Exchange
Commission and except as disclosed in the filings the Company made in connection with
such statements, if any.  

    3.9        Indebtedness
and other Contracts. Except as disclosed in the Financial Statements, or in the SEC
Documents and except for the guarantee by the Company of the Subsidiaries bank credit,
neither the Company nor any of its Subsidiaries (i) has any outstanding Indebtedness (as
defined below), (ii) is a party to any contract, agreement or instrument, the violation
of which, or default under which, by the other party(ies) to such contract, agreement or
instrument would result in a Material Adverse Effect, (iii) is in violation of any term
of or in default under any contract, agreement or instrument relating to any
Indebtedness, except where such violations and defaults would not result, individually or
in the aggregate, in a Material Adverse Effect, or (iv) is a party to any contract,
agreement or instrument relating to any Indebtedness, the performance of which, in the
judgment of the Company’s officers, has or is expected to have a Material Adverse
Effect. The Company’s SEC Documents provide a detailed description of the material
terms of any such outstanding Indebtedness . For purposes of this Agreement: (a) “Indebtedness” of
the Company or a Subsidiary means, without duplication, any of the following that
individually exceeds $200,000: (1) all indebtedness for borrowed money, (2) all
obligations issued, undertaken or assumed as the deferred purchase price of property or
services (other than trade payables entered into in the ordinary course of business), (3)
all reimbursement or payment obligations with respect to letters of credit, surety bonds
and other similar instruments, (4) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in connection with
the acquisition of property, assets or businesses, (5) all indebtedness created or
arising under any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to any property or assets acquired with the
proceeds of such indebtedness (even though the rights and remedies of the seller or bank
under such agreement in the event of default are limited to repossession or sale of such
property), (6) all monetary obligations under any leasing or similar arrangement which,
in connection with generally accepted accounting principles, consistently applied for the
periods covered thereby, is classified as a capital lease, (7) all indebtedness referred
to in clauses (1) through (6) above secured by (or for which the holder of such
Indebtedness has an existing right to be secured by) any mortgage, lien, pledge, charge,
security interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by the Company or a Subsidiary, and (8) all
Contingent Obligations in respect of indebtedness or obligations of others of the kinds
referred to in clauses (1) through (7) above; (b) “Contingent Obligation” means,
as to the Company or a Subsidiary, any direct or indirect liability, contingent or
otherwise, with respect to any indebtedness, lease, dividend or other obligation of
another Person if the primary purpose or intent of incurring such liability, or the
primary effect thereof, is to provide assurance to the obligee of such liability that
such liability will be paid or discharged, or that any agreements relating thereto will
be complied with, or that the holders of such liability will be protected (in whole or in
part) against loss with respect thereto; and (c) “Person” means an individual,
a limited liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency thereof.  

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    3.10        Legal
Proceedings. Except as disclosed in the Company’s SEC Documents, there is no
material legal or governmental proceeding pending or, to the knowledge of the Company,
threatened to which the Company is or may be a party.  

    3.11        Insurance.
The Company and its Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as management of the
Company believes to be prudent and customary in the businesses in which the Company and
its Subsidiaries are engaged. The Company and its Subsidiaries have not been refused any
insurance coverage sought or applied for and has no reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect.  

    3.12        Employee
Relations. (i) Neither the Company nor its Subsidiaries has entered into any
collective bargaining agreement with their respective employees. The Company believes
that its and its subsidiaries’ relations with their employees are good. No executive
officer of the Company or its subsidiaries (as defined in Rule 501(f) of the 1933 Act)
has notified the Company or its subsidiaries that such officer intends to leave the
Company or its subsidiaries or otherwise terminate such officer’s employment with
the Company or its subsidiaries. No executive officer of the Company or its subsidiaries
is in violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement, non-competition agreement, or any other
contract or agreement or any restrictive covenant, and the continued employment of each
such executive officer does not subject the Company or its Subsidiaries to any liability
with respect to any of the foregoing matters, except as would not have a Material Adverse
Effect; (ii) Neither the Company nor its Subsidiaries is subject to, nor do any of its
employees benefit from, whether pursuant to applicable employment laws, regulations,
extension orders (Tzavei Harchava) or otherwise, any agreement, arrangement,
understanding or custom applying to all employees in Israel or to all employees in the
Company’s industry with respect to employment (including, without limitation,
termination thereof) other than the minimum benefits and working conditions required by
law to be provided pursuant to rules and regulations of the General Federation of Labor
(Histadrut), the Coordinating Bureau of Economic Organization and the
Industrialists’ Association or extension orders that apply to all employees in
Israel or to all employees in the Company’s industry in Israel. The severance pay
due to the Employees is fully funded or provided for in accordance with generally
accepted accounting principles, consistently applied; (iii) the Company and its
Subsidiaries are in compliance with all applicable laws and regulations respecting
employment and employment practices, terms and conditions of employment and wages and
hours, except where failure to be in compliance would not, either individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.  

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    3.13        Title.
The Company and its Subsidiaries have good and marketable title to all personal property
owned by them which is material to the business of the Company and its Subsidiaries, in
each case either free and clear of all liens, encumbrances and defects or such as do not
materially affect the value of such property and do not interfere with the use made of
such property by the Company and its Subsidiaries. Any real property and facilities held
under lease by the Company and its Subsidiaries are held by them under valid, subsisting
and enforceable leases with such exceptions as are not material and do not interfere with
the use made of such property and buildings by the Company and its Subsidiaries.  

    3.14        Intellectual
Property. (i) The Company, either directly or through its Subsidiaries, owns or
possesses sufficient rights to use all material patents, patent rights, trademarks,
copyrights, licenses, inventions, trade secrets, trade names and know-how (collectively,
“Intellectual Property”) described or referred to in the Company’s public
filings as owned or possessed by it, except where the failure to currently own or
possess would not have a Material Adverse Effect, (ii) to the knowledge of the Company,
the Company is not infringing, nor has it received any notice of, any asserted
infringement of, any rights of a third party with respect to any Intellectual Property
that, individually or in the aggregate, would have a Material Adverse Effect.  

    3.15        Tax
Status. The Company and each of its Subsidiaries (i) have made or filed all required
Israeli tax returns, reports and declarations, (ii) have paid all taxes and other
governmental assessments and charges that are material in amount, shown or determined to
be due on such returns, reports and declarations, except those being contested in good
faith, and (iii) have set aside on their books provision reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material amount claimed to be due
by the taxing authority of any jurisdiction, and the officers of the Company know of no
basis for any such claim.  

    3.16        Internal
Accounting Controls. The Company and each of its Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting principles and to
maintain asset and liability accountability, (iii) access to assets or incurrence of
liabilities is permitted only in accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets and liabilities is compared
with the existing assets and liabilities at reasonable intervals and appropriate action
is taken with respect to any difference. In addition, the Company has established and
maintains disclosure controls and procedures as defined in Rule 13a-14 under the 1934 Act
and in compliance with Rule 13a-15 under the 1934 Act.  

    3.17        No
General Solicitation; Placement Agent’s Fees. Neither the Company, nor any of
its affiliates, and any Person acting on their behalf, has engaged in any form of general
solicitation or general advertising or Directed Selling Efforts (within the meaning of
Regulation D or S, respectively) in connection with the offer or sale of the Securities.
Except for placement fees in the form of cash, ordinary shares or a combination thereof
to certain of the Investors (or their affiliates or related entities), the Company will
not be obligated for any finder’s fee or commission in connection with this
transaction. The Company shall be responsible for the payment of any placement agent’s
fees, financial advisory fees, or brokers’ commissions relating to or arising out of
the transactions contemplated hereby, if such claims shall be contrary to the foregoing
statement. The Company shall pay, and hold each Investor harmless against, any liability,
loss or expense (including, without limitation, attorney’s fees and out-of-pocket
expenses) arising in connection with any such claim, if such claim shall be contrary to
the foregoing statement.  

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    3.18        Dilutive
Effect. The Company acknowledges that its obligation to issue the Warrant Shares upon
exercise of the Warrants in accordance with this Agreement and the Warrants is absolute
and unconditional regardless of the dilutive effect that such issuance may have on the
ownership interests of other shareholders of the Company  

    3.19        Transactions
with Affiliates. Except as set forth in the Company’s SEC Documents, none of the
officers, directors or employees of the Company is presently a party to any transaction
with the Company (other than for ordinary course services as employees, officers or
directors), including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal property to or
from, or otherwise requiring payments to or from any such officer, director or employee
or, to the knowledge of the Company, any corporation, partnership, trust or other entity
in which any such officer, director, or employee has a substantial interest or is an
officer, director, trustee or partner.  

    3.20        Compliance
with Law; Conduct of Business; Regulatory Permits. To the knowledge of the Company,
the business of the Company is conducted in accordance with applicable laws, except to
extent that, individually or in the aggregate, would not cause a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries is in violation of any term of or in
default under their Articles of Association or Memorandum of Association or other
governing documents. Neither the Company nor any of its Subsidiaries is in violation of
any statute, ordinance, rule or regulation, or to the Company’s knowledge, any
judgment, decree or order applicable to the Company or any of its Subsidiaries, and
neither the Company nor any of its Subsidiaries conducts its business in violation of any
of the foregoing, except for possible violations which would not, individually or in the
aggregate, have a Material Adverse Effect. Without limiting the generality of the
foregoing, the Company is not in violation of any of the rules, regulations or
requirements of the Principal Markets and has no knowledge of any facts or circumstances
that would reasonably lead to delisting or suspension of the Ordinary Shares by the
Principal Markets in the foreseeable future. To the Company’s knowledge, the Company
possesses all certificates, authorizations and permits issued by the appropriate
regulatory authorities necessary to conduct its business, except where the failure to
possess such certificate, authorization or permit would not have, individually or in the
aggregate, a Material Adverse Effect, and the Company has not received any notice of
proceedings relating to the revocation or modification of any certificate, authorization
or permit. The Company is in compliance in all material respects with all conditions and
requirements stipulated by the instruments of approval granted to it with respect to the
“Approved Enterprise” status of any of the Company’s facilities by Israeli
laws and regulations relating to such “Approved Enterprise” status and other
tax benefits received by the Company, except for possible violations which would not,
individually or in the aggregate, have a Material Adverse Effect. The Company has not
received any notice of any proceeding or investigation relating to revocation or
modification of any “Approved Enterprise” status granted with respect to any of
the Company’s facilities which the Company believes could reasonably be expected to
result in material liability to the Company, except for possible violations which would
not, individually or in the aggregate, have a Material Adverse Effect, the Company is not
in violation of any condition or requirement stipulated by the instruments of approval
granted to the Company by the Office of Chief Scientist in the Israeli Ministry of
Industry and Trade (the “OCS”) and any applicable laws and regulations
with respect to any research and development grants given to it by such office as to
grants for projects that the OCS has not confirmed as having been closed. The Company has
or by Closing shall have (a) provided notice to the OCS, and (b) obtained approval of the
Investment Center, to the transactions contemplated hereunder. All information supplied
by the Company with respect to such applications was true, correct and complete in all
material respects when supplied to the appropriate authorities. The Company’s
contingent liabilities to the OCS are disclosed in the Company’s SEC Documents.  

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    3.21        No
Undisclosed Events, Liabilities, Developments or Circumstances. No event, liability,
development or circumstance has occurred or exists, or is contemplated to occur (other
than the transactions contemplated hereby), with respect to the Company or any of its
Subsidiaries or their respective business, properties, operations or financial condition,
that would be required to be disclosed by the Company under applicable securities laws in
an immediate report to the SEC or the ISA.  

    3.22        Sarbanes-Oxley
Act. The Company is in compliance with any and all applicable requirements of the
Sarbanes-Oxley Act of 2002 that are applicable to the Company as a foreign private issuer
and as are effective as of the date hereof, and any and all applicable rules and
regulations promulgated by the SEC thereunder that are effective as of the date hereof,
except where such noncompliance would not have a Material Adverse Effect.  

    3.23        Form
F-3 Eligibility. The Company is eligible to register the Ordinary Shares for resale
by the Investors under Form F-3 promulgated under the 1933 Act. The Company qualifies as
a “foreign private issuer” as such term is defined in the 1934 Act.  

    3.24        Disclosure.
The representations and warranties of the Company contained in this Section 3 as of
the date hereof and as of the Closing, do not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements herein, in light
of the circumstances under which they are made, not misleading. The Company acknowledges
and agrees that the Investors have not made any representations or warranties with
respect to the transactions contemplated hereby other than those specifically set forth
in Section 4.  

     4.    
          REPRESENTATIONS OF THE INVESTORS. Each of the Investors, severally
          represents to the Company that: 

    4.1        Enforceability.
If such Investor is a corporation, partnership, limited liability company, trust or other
entity, (i) it is authorized and qualified and has full right and power to become an
investor in the Company, is authorized to purchase the Shares and to perform its
obligations pursuant to the provisions hereof, (ii) the person signing the Transaction
Documents and any other instrument executed and delivered therewith on behalf of such
Investor has been duly authorized by such entity and has full power and authority to do
so, and (iii) such Investor has not been formed for the specific purpose of acquiring an
interest in the Company.  

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    4.2        Restrictions
on Transferability and Hedging.  

		    4.2.1        Such
Investor understands that (i) the Shares have not yet been registered under the
Securities Act of 1933, or under the laws of any other jurisdiction; (ii) such Shares
cannot be sold, transferred or otherwise disposed of unless they are subsequently
registered under the Securities Act and, where required, under the laws of other
jurisdictions or unless an exemption from registration is then available; (iii) there is
now no registration statement on file with the Securities and Exchange Commission with
respect to the Shares to be purchased by the Investor.  

		    4.2.2        Such
Investor acknowledges and agrees that the certificates representing the Shares shall bear
restrictive legends as counsel to the Company may determine are necessary or appropriate,
including without limitation, legends under applicable securities laws similar to the
following:  

	 	
“The
shares represented by this certificate have not been registered under the Securities Act
of 1933. The shares have been acquired for investment and may not be sold, transferred,
assigned or otherwise disposed of in the absence of an effective registration statement
with respect to the shares evidenced by this certificate, filed and made effective under
the Securities Act of 1933, or an opinion of the Company’s counsel that registration
under such Act is not required.” 

		    4.2.3        The
Company will not register any transfer of Shares not made pursuant to registration under
the Securities Act, or pursuant to an available exemption from registration.  

		    4.2.4        Each
of the Investors agrees not to engage in hedging transactions with regard to the Shares
sold pursuant to this Agreement.  

    4.3        Offshore
Transaction. Such Investor is not a “U.S. Person”, as such term is defined
in Regulation S under the Securities Act of 1933 (“Reg. S”), its principal
address is outside the United States and it has present intention of becoming a resident
of (or moving its principal place of business to) the United States. Such Investor was
located outside the United States at the time any offer to sell and any other action in
connection with such offer and sale was made to such Investor and at the time that the
buy order was originated by the Investor. The Shares are being acquired solely for such
Investor’s own account, and in no event and without derogating from the foregoing,
for the account or the benefit of a U.S. person. The Investor shall comply with the
applicable distribution compliance periods pursuant to Reg. S.  

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

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    4.5        Information
and Advice. Without derogating from the Investor’s right to rely on the
representations and warranties of the Company set forth in Section 3 above:  

		    4.5.1        Such
Investor has carefully reviewed and understands the risks of a purchase of the Shares. In
connection with such Investor’s investment in the Company, it has obtained the
advice of its own investment advisors, counsel and accountants (the “Advisors”).
The Investor and its Advisors have reviewed the Company’s public filings and have
been furnished with all materials relating to the Company or the offering of the Shares
(the “Offering”) that they have requested. The Investor and its Advisors
have been afforded the opportunity to ask questions of the Company concerning the
financial and other affairs of the Company and the conditions of the Offering and to
obtain any additional information necessary to verify the accuracy of any representations
or information set forth with respect to the Shares.  

		    4.5.2        The
Company has answered all reasonable inquiries that such Investor and its Advisors have
made concerning the Company or any other matters relating to the creation and operations
of the Company and the terms and conditions of the Offering.  

    4.6        Sophistication
and Risk.  

		    4.6.1        It
has such knowledge and experience in financial and business matters, that it is capable
of evaluating, and has evaluated the merits and risks of the Offering. By reason of its
business or financial experience, it has the capacity to protect its interests in
connection with an investment in the Company.  

		    4.6.2        It
understands that no Israeli or U.S. federal or state agency has passed upon the Shares or
made any finding or determination as to the fairness of the transactions contemplated in
the Transaction Documents.  

		    4.6.3        It
understands that the Shares are speculative investments, which involve a high degree of
risk, including the risk that such Investor might lose its entire amount invested in the
Company.  

		    4.6.4        It
understands that any tax benefits that may be available to such Investor may be lost
through adoption of new laws, amendments to existing laws or regulations, or changes in
the interpretation of existing laws and regulations.  

		    4.6.5        It
has the financial ability to bear the economic risk of its investment in the Company and
has adequate net worth and means of providing for the Investor’s current needs and
contingencies to sustain a complete loss of the Investor’s investment and has no
need for liquidity in the Investor’s investment in the Company.  

		    4.6.6        It
is an “Accredited Investor,” as such term is defined in Rule 501 of Regulation
D under the Securities Act of 1933.  

    4.7        No
solicitation. At no time was such Investor presented with or solicited by any
leaflet, public promotional meeting, newspaper or magazine article, radio or television
advertisement or any other form of general advertising or general solicitation concerning
the Offering.  

11

    4.8        Broker-Dealer.
The Investor is not a broker-dealer, nor is it an affiliate of any broker-dealer.  

    4.9        Further
Indebtedness. Such Investor acknowledges that no provision of the Transaction
Documents executed and delivered by the Company restricts, or shall be construed to
restrict, in any way the ability of the Company to incur indebtedness or to issue share
capital or other equity securities (or securities convertible into equity securities) of
the Company or to grant liens on its property and assets.  

    4.10        Voting
and/or Investment Control over the Investors. Each Investor has made available to the
Company a list of individuals who have or share voting and/or investment control over
such Investor. The Investor shall update such list as reasonably requested by the Company
to comply with request for such information from any regulatory body.  

    4.11        Independent
Investment. No Investor has agreed to act with any other Person for the purpose of
acquiring, holding, voting or disposing of the Shares purchased hereunder, and each
Investor is acting independently with respect to its investment in the Shares. The
obligations of each Investor under any Transaction Document are several and not joint
with the obligations of any other Investor, and no Investor shall be responsible in any
way for the performance of the obligations of any other Investor under any Transaction
Document. Nothing contained herein or in any Transaction Document, and no action taken by
any Investor pursuant thereto, shall be deemed to constitute the Investors, or any of
them, as a partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Investors, or any of them, are in any way acting in concert
or as a group with respect to such obligations or the transactions contemplated by the
Transaction Documents.  

    4.12        Holdings.
Schedule 1 attached hereto reflects the holdings of the Company’s shares by
each Investor and its affiliates as of the date hereof, and as of the Closing.  

    4.13        Availability
of Exemptions. Each Investor understands that the Shares are being offered and sold
in reliance on a transactional exemption or exemptions from the registration requirements
of Israeli and U.S. Federal and state securities laws and the Company is relying upon the
truth and accuracy of the representations, warranties, agreements, acknowledgments and
understandings of such Investor set forth herein in order to determine the applicability
of such exemptions and the suitability of such Investor to acquire the Shares.  

    4.14        Disclosure.
The representations and warranties of each Investor contained in this Section 4 as
of the date hereof and as of the Closing, do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated herein or necessary
to make the statements herein, in light of the circumstances under which they are made,
not misleading. Each Investor understands and confirms that the Company will rely on the
foregoing representations in effecting the transaction contemplated in the Transaction
Documents and other transactions in securities of the Company.  

5.    CONDITIONS
OF EACH INVESTOR’S OBLIGATION AT THE CLOSING. The           obligation of each
Investor to purchase its respective Shares is subject to the           fulfillment or
waiver by such Investor prior to or on the date of the Closing of           the
conditions set forth in this Section 5. In the event that any such condition           is
not satisfied to the satisfaction of an Investor, then such non satisfied
          Investor shall not be obligated to proceed with the purchase of such
securities.  

12

    5.1        Representations
and Warranties. The representations and warranties of the Company under this
Agreement shall be true in all material respects as of the Closing, with the same effect
as though made on and as of such date.  

    5.2        Compliance
with Agreements. The Company shall have performed and complied in all material
respects with all agreements or conditions required by this Agreement to be performed and
complied with by it prior to or as of the Closing.  

    5.3        Warrants.
As of the Closing, the Warrants shall have been executed and delivered by the Company and
each Investor.  

    5.4        Issuance
of Shares. As of the Closing, the Shares purchased by the Investors shall have been
duly issued to the Investors.  

    5.5        Registration
Rights Agreement. As of the Closing, the Registration Rights Agreement in the form
attached hereto as Exhibit A (the “Registration Rights Agreement”) shall
have been executed and delivered by the Company and each Investor.  

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

     6.    
          CONDITIONS OF THE COMPANY’S OBLIGATION AT THE CLOSING. The
          obligation of the Company to issue the Shares to the Investors at the Closing is
          subject to the fulfillment or waiver by the Company prior to or on the Closing
          of the conditions set forth in this Section 6. In the event that any such
          condition is not satisfied to the satisfaction of the Company, then the Company
          shall not be obligated to proceed with the sale of the securities under this
          Agreement. 

    6.1        Representations
and Warranties. The representations and warranties of all the Investors under this
Agreement shall be true in all material respects as of the Closing, with the same effect
as though made on and as of such date.  

    6.2        Compliance
with Agreements. All Investors shall have performed and complied in all respects with
all agreements or conditions required by this Agreement to be performed and complied with
by it prior to or as of the Closing.  

    6.3        Registration
Rights Agreement. As of the Closing, the Registration Rights Agreement shall have
been executed and delivered by all of the Investors.  

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

13

    6.5        Delivery
of Purchase Amount. Each of the Investors shall have delivered to the Company its
respective Purchase Amount for the Shares at the Closing Date.  

    6.6        Government
Approvals. The Company shall have received all necessary governmental approvals with
respect to the transactions contemplated hereby. The Investor shall have executed any
confirmations required by the Office of Chief Scientist.  

    6.7        Notices
to Nasdaq and the TASE. The Company shall have made all required filings of notices
with Nasdaq and the Tel Aviv Stock Exchange. The Company shall use its best efforts to
complete such filings.  

     7.    
          CONFIDENTIALITY. Any information disclosed to each of the Investors or
          their respective Advisors, which have not previously been made available to the
          general public by the Company, if any, shall be considered Confidential
          Information. Each Investor acknowledges the confidential nature of the
          Confidential Information it may have received, and agrees that the Confidential
          Information is the valuable property of the Company. Each Investor agrees that
          it and its Advisors shall not reproduce any of the Confidential Information
          without the prior written consent of the Company, nor shall they use any
          Confidential Information for any purpose except as permitted by and in the
          performance of this Agreement, or divulge all or any part of the Confidential
          Information to any third party. The confidentiality obligations undertaken by
          the Investors hereunder will remain in full force and effect regardless of the
          execution and consummation or termination of this Agreement. 

8.     MISCELLANEOUS.  

    8.1        Expenses.
At the Closing, the Company shall reimburse the Investors for reasonable legal expenses
of one counsel (Yigal Arnon & Co.) incurred in connection with the preparation of the
Transaction Documents in an amount to be agreed to between the parties.  

    8.2        Amendments. This
Agreement may be modified, supplemented or amended only by a written instrument executed
by the parties to this Agreement.  

    8.3        Notices.
Any notice that is required or provided to be given under this Agreement shall be deemed
to have been sufficiently given and received for all purposes, (i) when delivered in
writing by hand, upon delivery; (ii) if sent via facsimile, upon transmission and
electronic confirmation of receipt (and if transmitted and received on a non-business
day, on the first business day following transmission and electronic confirmation of
receipt), (iii) seven (7) business days (and fourteen (14) business days for
international mail) after being sent by certified or registered mail, postage and charges
prepaid, return receipt requested, or (iv) three (3) business days after being sent by
internationally overnight delivery providing receipt of delivery, to the following
addresses:  

14

	 	
if
to the Company, B.O.S Better Online Solutions Ltd., 20 Freiman Street, Rishon Lezion,
75101 Israel Attn: Mr. Eyal Cohen, CFO, facsimile: (972) 3 954-1003, with a copy to Amit,
Pollak Matalon & Co., NITSBA Tower, 17 Yitzhak Sadeh St., Tel-Aviv 67775 Israel attn:
Shlomo Landress, Adv. Fax: (972) 3 568-9001; or at any other address designated by the
Company to the Investors in writing;  

	 	
if
to an Investor, to 2 Kaufman St., 9th Floor, Tel Aviv, Israel 68012, Fax: +972
3 516 with a copy (which shall not constitute notice) to Yigal Arnon & Co., 1 Azrieli
Center, Tel Aviv 67021 Israel attn: Peter Sugarman, Adv. Fax (972) 3 608-7714 or at any
other address designated by the Investors to the Company in writing.  

    8.4        Survival
of Representations and Warranties. All representations and warranties contained
herein or in any Transaction Document or in any other certificate delivered hereunder or
thereunder shall survive after the execution and delivery of this Agreement or such
certificate or document, as the case may be, for a period of 24 months from the date
hereof. All covenants and agreements in any Transaction Documents shall survive in
accordance with their terms. This Section shall survive the termination of this Agreement
for any reason.  

    8.5        Delays
or Omissions; Waiver. Except as expressly provided herein, no delay or omission to
exercise any right, power or remedy accruing to any party under this Agreement shall
impair any such right, power or remedy of such party nor shall it be construed to be a
waiver of any breach or default, or an acquiescence thereto, or of a similar breach or
default thereafter occurring; nor shall any waiver of any single breach or default 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
hereto 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.  

    8.6        Other
Remedies. Any and all remedies herein expressly conferred upon a party shall be
deemed cumulative with, and not exclusive of, any other remedy conferred hereby or by law
on such party, and the exercise of any one remedy shall not preclude the exercise of any
other.  

    8.7        Entire
Agreement. This Agreement and the exhibits and schedules hereto, constitute the
entire understanding and agreement of the parties hereto with respect to the subject
matter hereof and thereof and supersede all prior and contemporaneous agreements or
understandings, inducements or conditions, express or implied, written or oral, between
the parties with respect hereto and thereto.  

    8.8        Headings. All
section headings herein are inserted for convenience only and shall not modify or affect
the construction or interpretation of any provision of this Agreement.  

    8.9        Severability.
Should any one or more of the provisions of this Agreement (including its exhibits and
schedules) or of any agreement entered into pursuant to this Agreement be determined to
be illegal or unenforceable, all other provisions of this Agreement and of each other
agreement entered into pursuant to this Agreement, shall be given effect separately from
the provision or provisions determined to be illegal or unenforceable and shall not be
affected thereby. The parties further agree to replace such void or unenforceable
provision of this Agreement with a valid and enforceable provision, which will achieve,
to the extent possible, the economic, business and other purposes of the void or
unenforceable provision.  

15

    8.10        Assignment.
This Agreement may not be assigned in whole or in part by any Investor without the prior
written consent of the Company.  

    8.11        Governing
Law and Venue. This Agreement shall be construed in accordance with and governed by
the internal laws of the State of Israel, without regard to conflict of laws provisions.
Any dispute arising under or in relation to this Agreement shall be adjudicated in the
competent court of Tel Aviv-Jaffa district only, and each of the parties hereby submits
irrevocably to the exclusive jurisdiction of such court.  

    8.12        Counterparts.
This Agreement may be executed concurrently in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and the same
instrument.  

    8.13        Further
Actions. At any time and from time to time, each party agrees, without further
consideration, to take such actions and to execute and deliver such documents as may be
reasonably necessary to effectuate the purposes of this Agreement.  

(Remainder of page intentionally
left blank.)  

16

IN WITNESS WHEREOF, the undersigned
have executed and delivered this Agreement as of the date first set forth above.  

		
	B.O.S BETTER ON LINE SOLUTIONS LTD.
	 
	By:	____________________________
	 
	Name:	____________________________
	 
	Title:	____________________________
	 
	____________________________
	[Name of Investor]
	 
	By:	____________________________
	 
	Name:	____________________________
	 
	Title:	____________________________

17

Schedule 1  

	INVESTOR’S NAME

AND ADDRESS
	PURCHASE

AMOUNT
	NO. OF SHARES

PURCHASED
	NO. OF

WARRANTS
	PRE-CLOSING HOLDINGS
	POST-CLOSING HOLDINGS

	Amount
	Percent
	Amount
	Percent

	 							
								
								
	K.G.M. 	 	 	 		 	 		 	 		 	 		 	 		 	 		 	 		 
	Provident	 	 
	Fund	 	 
	Address: 	 	 
	2 Kaufman St.,	 	 
	Tel Aviv 68012 	 	 	$	   455,952	 	 	189,980	 	 	123,487	 	 	-	 	 	0.00	 	 	189,980	 	 	1.76	%
	 	 	 
	Yuvalim	 	 
	Provident &	 	 
	Hishtalmu Fund	 	 
	Address: 	 	 
	2 Kaufman St.,	 	 
	Tel Aviv 68012	 	 	$	   264,096	 	 	110,040	 	 	71,526	 	 	97,239	 	 	0.97	%	 	207,279	 	 	1.92	%
	 	 	 
	Yuvalim Pension	 	 
	Fund	 	 
	Address: 	 	 
	2 Kaufman St.,	 	 
	Tel Aviv 68012	 	 	$	   280,224	 	 	116,760	 	 	75,894	 	 	247,144	 	 	2.48	%	 	363,904	 	 	3.37	%
	 	 	 
	Catalyst Fund LP	 	 
	Address: 	 	 
	3 Daniel Frish	 	 
	Street	 	 
	Tel Aviv 64731	 	 	$	 1,000,272	 	 	416,780	 	 	270,907	 	 	1,675,465	 	 	16.79	%	 	2,092,245	 	 	19.35	%
	 	 	 
	Additional 	 	 
	Investors 	 	 

18

EXHIBIT A

REGISTRATION RIGHTS
AGREEMENT 

19

REGISTRATION RIGHTS
AGREEMENT 

        This
Registration Rights Agreement is made and entered into as of December 10, 2007 by and
among B.O.S. Better Online Solutions Ltd., an Israeli company (the
“Company”), and the entities listed in Schedule 1 (collectively, the “Investors” and each, an
“Investor”). 

        WHEREAS,
pursuant to that certain Securities Purchase Agreement (the “Purchase
Agreement”) between the Company and the Investors dated as of December 10, 2007,
Buyer issued to each Investor ordinary shares, each with a nominal value of NIS 4.00 per
share, of the Company (“Ordinary Shares”) and Warrants (the
“Warrants”) for the purchase of Ordinary Shares of the Company; and 

        WHEREAS,
the parties desire to set forth certain matters regarding ownership of the shares of the
Company, as more fully set forth herein. 

        NOW,
THEREFORE, the parties hereto agree as follows: 

1. DEFINITIONS. 

        For
purposes of this Agreement, the following terms shall have the meanings set forth below: 

	 	1.1 	“Holders” means
any Investor, transferee or assignee to whom any of the Investors assigns its rights, in
whole or in part, and any transferee or assignee thereof to whom a transferee or assignee
assigns its rights, in accordance with Section 9. 

	 	1.2 	“ISA” means
the Israel Securities Authority or any similar or successor agency of Israel
administering the Israel Securities Law. 

	 	1.3 	“Israel
Securities Law” means the Israel Securities Law, 5728-1968 (including the
regulations promulgated thereunder), as amended. 

	 	1.4 	"1933
Act" means the U.S. Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute. 

	 	1.5 	"1934
Act" means the U.S. Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder, or any similar successor statute. 

	 	1.6 	“Person” means
an individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any department
or agency thereof. 

20

	 	1.7 	“Register”,
“registered”, and “registration” refer to a
registration effected by preparing and filing a registration statement in compliance with
the 1933 Act and the effectiveness of such registration statement in accordance with the
1933 Act or the equivalent actions under the laws of another jurisdiction. 

	 	1.8 	“Registrable
Securities” means any Shares held by any Investor and any other securities
issued by the Company to any Investor by means of exchange, reclassification, dividend,
distribution, split-up, combination, subdivision, recapitalization, merger, spin-off,
reorganization, contractual obligation or otherwise, prior to the date the Registration
Statement was filed with the SEC. 

	 	1.9 	“Registration
Statement” means a registration statement or registration statements of the
Company covering Registrable Securities filed with (a) the SEC under the 1933 Act, and
(b) the ISA under the Israel Securities Law, to the extent required under the Israel
Securities Law, so as to allow the Holder to freely resell the Registrable Securities in
Israel, including on the TASE. 

	 	1.10 	“SEC” means
the United States Securities and Exchange Commission or any similar or successor agency
of the United States administering the 1933 Act. 

	 	1.11 	“Shares” means
the Ordinary Shares issued to the Investors under the Purchase Agreement and any Warrant
Shares purchased by the Investors under the terms of the Warrant. 

	 	1.12 	"Warrant
Shares" means Ordinary Shares purchased by the Investors pursuant to the
exercise of the Warrant. 

	2. 	 LISTING
& REGISTRATION OF THE SHARES 

	 	2.1 	The
Company shall prepare, and, as soon as practicable but in no event later than 150 days
after the date of this Agreement (the “Deadline”) file with the SEC (and
make the required corresponding filings with the ISA) a Registration Statement on Form
F-3 covering the resale of all of the then Registrable Securities that are not already
registered. The Company shall use commercially reasonable efforts to have the
Registration Statement declared effective by the SEC as soon as possible after such
filing with the SEC. 

	 	2.2 	In
the event that Form F-3 shall not be available for the registration of the resale of
Registrable Securities hereunder, the Company shall register the resale of the
Registrable Securities on another appropriate form in accordance with its undertakings
hereunder. 

21

	 	2.3 	The
Company represents and warrants to the Investors that the Company is not a party to any
agreement that conflicts in any manner with the Investors’ rights to cause the
Company to register Registrable Shares pursuant to this Agreement. The Investors
acknowledges that the Company had entered into a Registration Rights Agreement with S.G.
Private Banking (Suisse) S.A. providing such investor with incidental registration
rights. 

	3.  	RELATED
OBLIGATIONS. 

	 	3.1 	Following
the filing and effectiveness of each Registration Statement with the SEC pursuant to
Section 2.1, the Company shall use commercially reasonable efforts to keep the
Registration Statement effective pursuant to Rule 415 of the 1933 Act at all times until
the earlier of (i) the date as of which all of the Registrable Securities covered by such
Registration Statement may be sold without restriction pursuant to Rule 144(k) under the
1933 Act (ii) the date on which the Holders shall have sold all the Registrable
Securities covered by such Registration Statement; or (iii) the fifth anniversary of the
date hereof (the “Registration Period”). The Company shall ensure that
such Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein, or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, subject to Section 3.5 below. 

	 	3.2 	The
Company shall prepare and file with the SEC and the ISA (to the extent required) such
amendments (including post-effective amendments) and supplements to each Registration
Statement and the prospectus used in connection with such Registration Statement, as may
be necessary to keep such Registration Statement effective at all times during the
Registration Period, and, during such period, comply with the provisions of the 1933 Act
and the Israel Securities Law with respect to the disposition of all Registrable
Securities of the Company covered by such Registration Statement. In the case of
amendments and supplements to a Registration Statement which are required to be filed
pursuant to the Agreement (including pursuant to this Section 3.2 by reason of the
Company filing a report on Form 20-F, Form 6-K or any analogous report under the 1934
Act), the Company shall have incorporated such report by reference into the Registration
Statement, if applicable, or shall file such amendments or supplements with the SEC (and
the ISA) as may be required to maintain the Registration Statement effective during the
Registration Period. 

22

	 	3.3 	The
Company shall furnish each Holder whose Registrable Securities are included in any
Registration Statement, without charge, (i) promptly after the same is prepared and filed
with the SEC, at least three (3) copies of such Registration Statement and any
amendment(s) thereto, including financial statements and schedules, all documents
incorporated therein by reference, all exhibits and each preliminary prospectus (or such
other number of copies as such Holder may reasonably request), (ii) upon the
effectiveness of any Registration Statement, at least ten (10) copies of the prospectus
included in such Registration Statement and all amendments and supplements thereto (or
such other number of copies as such Holder may reasonably request) and (iii) such other
documents, including copies of any preliminary or final prospectus and of any
Registration Statements and prospectuses filed with the ISA, as such Holder may
reasonably request from time to time in order to facilitate the disposition of the
Registrable Securities owned by such Holder. 

	 	3.4 	The
Company shall use its commercially reasonable efforts to (i) register and qualify, unless
an exemption from registration and qualification applies, the resale by the Holders of
the Registrable Securities covered by a Registration Statement under such other
securities or “blue sky” laws of all the states of the United States, (ii)
prepare and file in those jurisdictions, such amendments (including post-effective
amendments) and supplements to such registrations and qualifications as may be necessary
to maintain the effectiveness thereof during the Registration Period, (iii) take such
other actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other actions
reasonably necessary or advisable to qualify the Registrable Securities for sale in such
jurisdictions; provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (x) qualify to do business in any jurisdiction
where it would not otherwise be required to qualify but for this Section 3.4, or (y) file
a general consent to service of process in any such jurisdiction. The Company shall
promptly notify each Holder who holds Registrable Securities of the receipt by the
Company of any notification with respect to the suspension of the registration or
qualification of any of the Registrable Securities for sale under the securities or “blue
sky” laws of any jurisdiction in the United States or its receipt of actual notice of
the initiation or threatening of any proceeding for such purpose. 

23

	 	3.5 	The
Company shall notify each Holder in writing of the happening of any event, (a “Discontinuation
Event”) as promptly as practicable after becoming aware of such event, as a result
of which the prospectus included in a Registration Statement, as then in effect, includes
an untrue statement of a material fact or an omission to state a material fact required
to be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company shall use its
commercially reasonable efforts to minimize the period of time during which a
Registration Statement includes an untrue statement of a material fact or omission to
state a material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading. The
Company shall promptly notify each Holder in writing (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed so that the Registration
Statement does not include an untrue statement of a material fact or an omission to state
a material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading, and
when a Registration Statement or any post-effective amendment has become effective, (ii)
of any request by the SEC or the ISA for amendments or supplements to a Registration
Statement or related prospectus or related information, and (iii) of the Company’s
reasonable determination that a post-effective amendment to a Registration Statement
would be appropriate. 

	 	3.6 	The
Company shall use its commercially reasonable efforts to prevent the issuance of any stop
order or other suspension of effectiveness of a Registration Statement, or the suspension
of the qualification of any of the Registrable Securities for sale in any jurisdiction
and, if such an order or suspension is issued, to obtain the withdrawal of such order or
suspension at the earliest possible moment and to notify each Holder who holds
Registrable Securities being sold of the issuance of such order and the resolution
thereof or its receipt of actual notice of the initiation or threat of any proceeding for
such purpose. 

	 	3.7 	The
Company shall use its commercially reasonable efforts to cause all the Registrable
Securities covered by a Registration Statement to be listed on each securities exchange
on which securities of the same class or series issued by the Company are then listed,
including the NASDAQ and the TASE and the Company shall, not later than the effective
date of a Registration Statement, deliver to the Holders a copy of the approval of the
TASE (and/or any other exchange, if applicable) to the listing of the Registrable
Securities covered by such Registration Statement on such exchange. 

24

	 	3.8 	The
Company shall cooperate with the Holders who hold Registrable Securities being offered
and, to the extent applicable, facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legend) representing the Registrable Securities
to be offered pursuant to a Registration Statement and enable such certificates to be in
such denominations or amounts, as the case may be, as the Holders may reasonably request
and registered in such names as the Holders may request. 

	 	3.9 	The
Company shall provide a transfer agent and registrar of all Registrable Securities and a
CUSIP number not later than the effective date of the applicable Registration Statement. 

	 	3.10 	If
requested by a Holder, the Company shall, to the extent necessary for compliance with the
Securities Act of 1933: (i) as soon as practicable incorporate in a prospectus supplement
or post-effective amendment such information as a Holder requests to be included therein,
information with respect to the number of Registrable Securities being offered or sold,
the purchase price being paid therefor and any other terms of the offering of the
Registrable Securities to be sold in such offering; (ii) as soon as practicable make all
required filings of such prospectus supplement or post-effective amendment after being
notified of the matters to be incorporated in such prospectus supplement or
post-effective amendment; and (iii) as soon as practicable, supplement or make amendments
to any Registration Statement if reasonably requested by a Holder of such Registrable
Securities. 

	 	3.11 	The
Company shall comply with all applicable securities laws and rules and regulations of the
SEC and the ISA. 

	4. 	OBLIGATIONS
OF THE HOLDERS. 

	  	9.       
Each
Holder agrees that, upon receipt of any notice from the Company of the
          happening of any event of the kind described in the first sentence of Section
          3.5 or in Section 3.6, such Holder will immediately discontinue disposition of
          Registrable Securities pursuant to any Registration Statement(s) covering such
          Registrable Securities until such Holder’s receipt of the copies of the
          supplemented or amended prospectus contemplated by Section 3.5 or receipt of
          notice that no supplement or amendment is required.  

	5. 	EXPENSES
OF REGISTRATION. 

	  	10.        
All
expenses, other than: (i) underwriting discounts and commissions and (ii) if
          applicable, counsel(s) to Holders, incurred in connection with registrations,
          filings or qualifications pursuant to Sections 2 and 3, including, without
          limitation, all registration, listing and qualifications fees, printers and
          accounting fees, fees and disbursements of counsel to the Companyshall
          be paid by the Company.  

25

	6. 	INDEMNIFICATION. 

	11. 	In
the event any Registrable Securities are included in a Registration Statement
          under this Agreement: 

	 	6.1 	To
the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold
harmless and defend each Holder, the directors, officers, partners, employees, agents,
representatives of, and each Person, if any, who controls any Holder within the meaning
of the 1933 Act or 1934 Act (each, an “Indemnified Person”), against any
losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs,
reasonable attorneys’ fees, amounts paid in settlement or expenses, joint or
several, (collectively, “Claims”) incurred in defending any action,
claim, suit, inquiry, proceeding, investigation by or before any court or governmental,
administrative or other regulatory agency, body or the SEC or the ISA, whether pending or
threatened, whether or not a Person to be indemnified is or may be a party thereto (“Indemnified
Damages”), to which any of them may become subject insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon: (i) any untrue statement or alleged untrue statement of a material
fact in a Registration Statement, preliminary prospectus, final prospectus or “free
writing prospectus” (as such term is defined in Rule 405 under the 1933 Act) or any
post-effective amendment thereto or in any filing made in connection with the
qualification of the offering under the securities or other “blue sky” laws of
any jurisdiction in which Registrable Securities are offered (“Blue Sky Filing”),
or the omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or (ii) any violation
by the Company of the 1933 Act, the 1934 Act, the Israel Securities Law or other federal
or state or Israeli securities law applicable to the Company and relating to any action
or inaction required of the Company in connection with such registration (“Violations”).
Subject to Section 6.3, the Company shall reimburse the Indemnified Persons promptly as
such expenses are incurred and are due and payable, for any legal fees or other
reasonable expenses incurred by them in connection with investigating or defending any
such Claim. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6.1: shall not apply: (i) to a Claim
by an Indemnified Person arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the Company by
such Indemnified Person expressly for inclusion in any such Registration Statement,
preliminary prospectus, final prospectus or free writing prospectus or any such amendment
thereof or supplement thereto; (ii) to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the Company, which consent
shall not be unreasonably withheld; and (iii) to the use of the Registration Statement or
the related Prospectus following a Discontinuation Event, provided the Indemnified Person
received prior notice of such Discontinuation Event; or (iv) if the Indemnified Person
fails to deliver a prospectus, as then amended or supplemented, provided that the Company
shall have delivered to the Indemnified Person such prospectus. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on behalf of
the Indemnified Person and shall survive the transfer of the Registrable Securities by
the Holders pursuant to Section 9. 

26

	 	6.2 	In
connection with any Registration Statement in which a Holder is participating, each such
Holder agrees, severally and not jointly, to indemnify, hold harmless and defend, to the
same extent and in the same manner as is set forth in Section 6.1, the Company, each of
its directors, each of its officers who signs the Registration Statement, each Person, if
any, who controls the Company within the meaning of the 1933 Act or the 1934 Act (each an
“Indemnified Party”), against any Claim or Indemnified Damages to which
any of them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as
such Claim or Indemnified Damages arise out of or are based upon any Violation, in each
case to the extent, and only to the extent, that such Violation occurs in reliance upon
and in conformity with written information furnished to the Company by such Holder
expressly for inclusion in Registration Statement, preliminary prospectus, final
prospectus or free writing prospectus and, subject to Section 6.3, such Holder will
reimburse any legal or other expenses reasonably incurred by an Indemnified Party in
connection with investigating or defending any such Claim; provided, however, that the
indemnity agreement contained in this Section 6.2 and the agreement with respect to
contribution contained in Section 7 shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of such Holder;
provided, further, however, that the Holder shall be liable under this Section 6 for only
that amount of a Claim or Indemnified Damages as does not exceed the higher of: (i) the
net proceeds to such Holder as a result of the sale of Registrable Securities pursuant to
such Registration Statement and (ii) the Purchase Amount (as defined in the Purchase
Agreement) and the Exercise Price (as defined in the Warrant) paid by the applicable
Holder for the Ordinary Shares and the Warrant Shares. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the Registrable Securities by the
Holders pursuant to Section 9. 

27

	 	6.3 	Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section 6 of
notice of the commencement of any action or proceeding (including any governmental action
or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if
a Claim in respect thereof is to be made against any indemnifying party under this
Section 6, deliver to the indemnifying party a written notice of the commencement
thereof, and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel mutually
satisfactory to the indemnifying party and the Indemnified Person or the Indemnified
Party, as the case may be; provided, however, that an Indemnified Person or Indemnified
Party shall have the right to retain its own counsel with the fees and expenses of not
more than one counsel for such Indemnified Person or Indemnified Party to be paid by the
indemnifying party, if, the representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified Person or Indemnified Party and
any other party represented by such counsel in such proceeding. In the case of an
Indemnified Person, legal counsel referred to in the immediately preceding sentence shall
be selected by the Holders holding a majority in interest of the Registrable Securities
included in the Registration Statement to which the Claim relates. The Indemnified Party
or Indemnified Person shall cooperate with the indemnifying party in connection with any
negotiation or defense of any such action or Claim by the indemnifying party and shall
furnish to the indemnifying party all information reasonably available to the Indemnified
Party or Indemnified Person which relates to such action or Claim. The failure to deliver
written notice to the indemnifying party within a reasonable time of the commencement of
any such action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the extent that
the indemnifying party is prejudiced in its ability to defend such action, but the
omission to so notify the indemnifying party will not relieve such indemnifying party of
any liability that it may have to any Indemnified Person or Party otherwise than under
this Section 6.3, including under Section 6.5. 

	 	6.4 	The
indemnification required by this Section 6 shall be made by periodic payments of the
amount thereof during the course of the investigation or defense, as and when bills are
received or Indemnified Damages are incurred. 

28

	 	6.5 	The
indemnity agreements contained herein shall be in addition to (i) any cause of action or
similar right of the Indemnified Party or Indemnified Person against the indemnifying
party or others, and (ii) any liabilities the indemnifying party may be subject to
pursuant to the law. 

	7. 	CONTRIBUTION. 

	  	12.        
To
the extent any indemnification by an indemnifying party is prohibited or
          limited by law or insufficient to hold an Indemnified Person or an Indemnified
          Party, as the case may be, harmless, then the indemnifying party, in lieu of
          indemnifying such Indemnified Person or Indemnified Party hereunder, shall
          contribute to the amount paid or payable by such Indemnified Person or
          Indemnified Party as a result of such Claims and Indemnified Damages (each as
          defined in Section 6.1 above) in such proportion as is appropriate to reflect
          the relative fault of the indemnifying party on the one hand and of the
          Indemnified Person or Indemnified Party, as the case may be, on the other in
          connection with the statements or omissions that resulted in such loss,
          liability, claim, damage, or expense as well as any other relevant equitable
          considerations. The relative fault of the indemnifying party and of the
          Indemnified Person or Indemnified Party, as the case may be, shall be
determined           by reference to, among other things, whether the untrue or alleged
untrue           statement of a material fact or the omission to state a material fact
relates to           information supplied by the indemnifying party or by the Indemnified
Person or           Indemnified Party, as the case may be, and the parties’ relative
intent,           knowledge, access to information, and opportunity to correct or prevent
such           statement or omission.  

	  	13.        
Notwithstanding
the foregoing, (i) no Person involved in the sale of Registrable           Securities,
which Person is guilty of fraudulent misrepresentation (within the           meaning of
Section 11(f) of the 1933 Act) in connection with such sale, shall be           entitled
to contribution from any Person involved in such sale of Registrable           Securities
who was not guilty of fraudulent misrepresentation; and (ii)           contribution by
any seller of Registrable Securities shall be limited in amount           to the net
amount of proceeds received by such seller from the sale of such           Registrable
Securities pursuant to such Registration Statement.  

	8. 	REPORTS
UNDER THE 1934 ACT. 

	 	
With
a view to making available to the Holders the benefits of Rule 144 promulgated under the
1933 Act or any other similar rule or regulation of the SEC that may at any time permit
the Holders to sell securities of the Company to the public without registration (“Rule
144”), the Company agrees to:  

	 	8.1 	make
and keep public information available, as those terms are understood and defined in Rule
144;

	 	8.2 	file
with the SEC in a timely manner all reports and other documents required by the Company
under the 1993 Act and the 1934 Act so long as the Company remains subject to such
requirements and the filing of such reports and other documents is required for the
applicable provisions of Rule 144; and 

29

	 	8.3 	furnish
to each Holder so long as such Holder owns Registrable Securities, promptly upon request,
(i) a written statement by the Company that it has complied with the reporting
requirements of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents so filed
by the Company, and (iii) such other information as may be reasonably requested to permit
the Holders to sell such securities pursuant to any rule or regulation of the SEC
allowing the Holder to sell any securities without registration. 

	9.  	ASSIGNMENT
OF REGISTRATION RIGHTS. 

	 	
Subject
to the prior approval of the Company, not to be unreasonably withheld, at any time prior
to the time the Registration Statement was filed with the SEC, the rights under this
Agreement shall be assignable by each Investor to any transferee of all or any portion of
such Investor’s Registrable Securities or the Warrant if: (i) the Investor agrees in
writing with the transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Company within a reasonable time after such assignment;
(ii) the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such transferee or assignee,
and (b) the securities with respect to which such registration rights are being
transferred or assigned; (iii) immediately following such transfer or assignment the
further disposition of such securities by the transferee or assignee is restricted under
the 1933 Act and applicable state securities laws; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence the transferee
or assignee agrees in writing with the Company to be bound by all of the provisions
contained herein; and (v) such transfer shall have been made in accordance with the
applicable requirements of the Purchase Agreement and applicable securities laws.  

	10.  	MISCELLANEOUS 

	 	10.1 	Amendments;
 Waivers.  This  Agreement  may not be amended,  changed,  supplemented,  waived or
 otherwise                   modified or  terminated,  except upon the  execution  and
delivery of a written                   agreement executed by the Company and the
Investors.

	 	10.2 	Entire
Agreement. This Agreement constitutes the entire agreement between the parties hereto
pertaining to its subject matter, and supersedes and replaces all prior agreements and
understandings of the parties in connection with such subject matter. 

30

	 	10.3 	Notices.
All notices and other communications required or permitted hereunder to be given to a
party to this Agreement shall be in writing and shall be faxed or mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or by messenger in
accordance with the provisions of the Purchase Agreement. 

	 	10.4 	Governing
Law; Jurisdiction. This Agreement shall be governed by and construed according to the
internal laws of the State of Israel without regard to the provisions relating to
conflicts of law. Any dispute arising under or in relation to this Agreement shall be
resolved exclusively by the competent courts of Tel-Aviv Jaffa district, and the parties
hereto irrevocably submit to the exclusive jurisdiction of such court for such purposes. 

	 	10.5 	Successors
and Assigns. Except as otherwise expressly limited herein, the provisions of this
Agreement shall inure to the benefit of, and shall be binding upon, the successors and
permitted assigns of the parties hereto. This Agreement may not be assigned by any party
without the prior written consent of the other party hereto. 

	 	10.6 	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. 

	 	10.7 	No
Waiver. The failure of any party hereto to exercise any right, power or remedy
provided under this Agreement or otherwise available in respect hereof at law or in
equity, or to insist upon compliance by any other party hereto with its obligations
hereunder, and any custom or practice of the parties at variance with the terms hereof,
shall not constitute a waiver by such party of its right to exercise any such or other
right, power or remedy or to demand such compliance. 

31

	 	10.8 	Headings.
The section and paragraph headings in this Agreement are for convenience of reference
only and are not intended to be a part of this Agreement or to affect the meaning or
interpretation of this Agreement. 

	 	10.9 	Counterparts.
This Agreement may be executed in one or more counterparts (including facsimile
counterparts), all of which taken together shall constitute one agreement. 

	 	10.10 	Equitable
Relief. The parties hereto agree that legal remedies may be inadequate to enforce the
provisions of this Agreement and that equitable relief, including specific performance
and injunctive relief, may be used to enforce the provisions of this Agreement. 

[REMAINDER OF PAGE INTENTIONALLY
LEFT BLANK]  

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        IN
WITNESS WHEREOF, the parties hereto have executed this Registration Rights Agreement as of
the date first set forth above. 

		
	B.O.S BETTER ON LINE SOLUTIONS LTD.
	 
	By:	____________________________
	 
	Name:	____________________________
	 
	Title:	____________________________
	 
	 
	 ____________________________
	 
	By:	____________________________
	 
	Name:	____________________________
	 
	Title:	____________________________
	 
	 
	 ____________________________
	 
	By:	____________________________
	 
	Name:	____________________________
	 
	Title:	____________________________

[SIGNATURE PAGE OF
REGISTRATION RIGHTS AGREEMENT] 

33

	 	
THIS
WARRANT AND THE ORDINARY SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.
THIS WARRANT AND THE ORDINARY SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO B.O.S. BETTER ONLINE
SOLUTIONS LTD. THAT SUCH REGISTRATION IS NOT REQUIRED.  

Right to Purchase up to
________ Ordinary Shares of
 B.O.S. Better Online
Solutions Ltd.
(subject to adjustment
as provided herein)  

ORDINARY SHARES
PURCHASE WARRANT 

		
	No. _________________	Issue Date: December 31, 2007 

        B.O.S.
          BETTER ONLINE SOLUTIONS LTD. a company incorporated under the laws of the State
          of Israel hereby certifies that, for value received, ___________, or assigns
          (the “Holder”), is entitled, subject to the terms set forth below, to
          purchase from the Company (as defined herein) from and after the Issue Date of
          this Warrant and at any time or from time to time before 5:00 p.m., New York
          time, through the close of business December 31, 2011 (the “Expiration
          Date”), up to _________ fully paid and nonassessable Ordinary Shares (as
          hereinafter defined), NIS 4.00 nominal value per share, at the exercise price
of           $2.76 per Ordinary Share (the “Exercise Price”). The number and
          character of such Ordinary Shares and the Exercise Price per share are subject
          to adjustment as provided herein.  

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

		    (a)        The
term “Company” shall include B.O.S. Better Online Solutions Ltd.
               and any corporation which shall succeed, or assume the obligations of,
B.O.S.                Better Online Solutions Ltd. hereunder.  

		    (b)        The
term “Other Securities” refers to any securities of the Company or
               any other person (corporate or otherwise) which the Holder of the Warrant
at any                time shall be entitled to receive, or shall have received, on the
exercise of                the Warrant, in lieu of or in addition to Ordinary Shares, or
which at any time                shall be issuable or shall have been issued in exchange
for or in replacement of                Ordinary Shares or Other Securities pursuant to
Section 3 or otherwise.  

34

        Capitalized
terms used herein without definition shall have the meanings ascribed to such terms in
that Securities Purchase Agreement dated as of the date hereof by and among the Company
and the Investor (as defined therein). 

	14.  	Exercise
of Warrant. 

    14.1        Number
of Shares Issuable upon Exercise. From and after the date hereof through and
including the Expiration Date, the Holder shall be entitled to receive, upon exercise of
this Warrant in whole or in part, by delivery of an original or fax copy of an exercise
notice in the form attached hereto as Exhibit A (the “Exercise Notice”)
and payment in accordance with Section 2.2 below, Ordinary Shares of the Company (the
“Warrant Shares”), subject to adjustment pursuant to Section 4.  

    14.2        Company
Acknowledgment. The Company will, at the time of the partial exercise of the Warrant,
upon the request of the Holder hereof acknowledge in writing its continuing obligation to
afford to such Holder any rights to which such Holder shall continue to be entitled after
such partial exercise in accordance with the provisions of this Warrant. If the Holder
shall fail to make any such request, such failure shall not affect the continuing
obligation of the Company to afford to such Holder any such rights.  

	15.  	Procedure
for Exercise. 

    15.1        Delivery
of Share Certificates, Etc., on Exercise. The Company agrees that the Warrant Shares
purchased upon exercise of this Warrant shall be deemed to be issued to the Holder as the
record owner of such shares as of the close of business on the date on which this Warrant
shall have been surrendered and payment made for such shares in accordance herewith. As
soon as practicable after the exercise of this Warrant in full or in part, and in any
event within three (3) business days thereafter, the Company at its expense (including
the payment by it of any applicable issue taxes) will cause to be issued in the name of
and delivered to the Holder, or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may direct in compliance with applicable securities laws, a
certificate or certificates for the number of duly and validly issued, fully paid and
nonassessable Warrant Shares (or Other Securities) to which the Holder shall be entitled
on such exercise.  

    15.2        Exercise.  

		    15.2.1        Payment
shall be made in cash, by wire transfer to a bank account the details of which shall have
been provided by the Company to the Holder in writing or by certified or official bank
check payable to the order of the Company, of the amount equal to the applicable
aggregate Exercise Price for the number of Ordinary Shares specified in the Exercise
Notice (as such exercise number shall be adjusted to reflect any adjustment in the total
number of Warrant Shares issuable to the Holder per the terms of this Warrant) and the
Holder shall thereupon be entitled to receive the applicable number of duly authorized,
validly issued, fully-paid and non-assessable Warrant Shares (or Other Securities)
determined as provided herein.  

35

    15.3        Fractional
Shares. This Warrant may not be exercised for fractional shares. In lieu of
fractional shares the Company shall make a cash payment therefor based upon the Exercise
Price then in effect.  

	16. 	    Effect
of Reorganization, Etc.; Adjustment of Exercise Price. 

    16.1        Reorganization,
Consolidation, Merger, Etc. In case at any time or from time to time, the Company
shall (a) effect a reorganization, (b) consolidate with or merge into any other person,
including the sale of substantially all of the Company’s outstanding share capital
to a corporate third party, in consideration for such third party’s securities, or
(c) transfer all or substantially all of its properties or assets to any other person
under any plan or arrangement contemplating the dissolution of the Company, then, in each
such case, as a condition to the consummation of such a transaction, proper and adequate
provision shall be made by the Company whereby the Holder of this Warrant, on the
exercise hereof as provided in Sections 1 and 2 at any time after the consummation of
such reorganization, consolidation or merger or the effective date of such dissolution,
as the case may be, shall receive, in lieu of the Ordinary Shares issuable on such
exercise prior to such consummation or such effective date, the shares and Other
Securities and property (including cash) to which such Holder would have been entitled
upon such consummation or in connection with such dissolution, as the case may be, if
such Holder had so exercised this Warrant, immediately prior thereto, all subject to
further adjustment thereafter as provided in Section 4.  

    16.2        Extraordinary
Events Regarding Ordinary Shares. In the event that the Company shall (a) issue
additional Ordinary Shares as a dividend or other distribution on outstanding Ordinary
Shares, (b) subdivide its outstanding Ordinary Shares, or (c) combine its outstanding
Ordinary Shares into a smaller number of Ordinary Shares, then, in each such event, the
Exercise Price shall, simultaneously with the happening of such event, be adjusted by
multiplying the then Exercise Price by a fraction, the numerator of which shall be the
number of Ordinary Shares outstanding immediately prior to such event and the denominator
of which shall be the number of Ordinary Shares outstanding immediately after such event,
and the product so obtained shall thereafter be the Exercise Price then in effect. The
Exercise Price, as so adjusted, shall be readjusted in the same manner upon the happening
of any successive event or events described herein in this Section 3.2. The number of
Ordinary Shares that the Holder of this Warrant shall thereafter, on the exercise hereof
be entitled to receive shall be increased or decreased, as the case may be, to a number
determined by multiplying the number of Ordinary Shares that would otherwise (but for the
provisions of this Section 3.2) be issuable on such exercise by a fraction of which (a)
the numerator is the Exercise Price that would otherwise (but for the provisions of this
Section 3.2) be in effect, and (b) the denominator is the Exercise Price in effect on the
date of such exercise.  

    16.3        Good
Faith. All determinations with respect to adjustments by the Company hereunder shall
be made by the Board of Directors in good faith.  

36

        17.    Certificate
as to Adjustments. In each case of any adjustment or           readjustment in the
Ordinary Shares (or Other Securities) issuable on the           exercise of the Warrant,
the Company at its expense will promptly cause its           Chief Financial Officer or
other appropriate designee to compute such adjustment           or readjustment in
accordance with the terms of the Warrant and prepare a           certificate setting
forth such adjustment or readjustment and showing in detail           the facts upon
which such adjustment or readjustment is based.  

        18.    Reservation
of Shares, Etc., Issuable on Exercise of Warrant. The Company           will at all
times reserve and keep available, solely for issuance and delivery           on the
exercise of the Warrant, Ordinary Shares (or Other Securities) from time           to
time issuable on the exercise of the Warrant.  

        19.    Representations
of the Company. The Company represents that (i) all           corporate actions on
the part of the Company, its officers, directors and           shareholders necessary for
the sale and issuance of the Warrant Shares pursuant           hereto and the performance
of the Company’s obligations hereunder were           taken prior to and are
effective as of the issue date of this Warrant; (ii) the           Warrant Shares are
duly authorized and reserved for issuance by the Company and,           when issued in
accordance with the terms hereof, will be validly issued, fully           paid and
nonassessable and not subject to any preemptive rights, and (iii) the           execution
and delivery of this Warrant are not, and the issuance of the Warrant           Shares
upon exercise of this Warrant in accordance with the terms hereof will           not be,
inconsistent with the Company’s Articles of Association, do not and           will
not contravene any law, governmental rule or regulation, or, to the           Company’s
knowledge, any judgment or order applicable to the Company, and,           except for
consents that have already been obtained by the Company or except as           would not
have a Material Adverse Effect, do not and will not conflict with or           contravene
any provision of, or constitute a default under, any indenture,           mortgage,
contract or other instrument of which the Company is a party or by           which it is
bound, or require the consent or approval of, the giving of notice           to, the
registration with or the taking of any action in respect of or by any
          government authority or agency or other person.. as used herein, “Material
          Adverse Effect” means any material adverse effect on the business,
          properties, assets, operations, prospects, results of operations or condition
          (financial or otherwise) of the Company and its subsidiaries, taken as a whole.  

        20.    Representations
and Warranties by the Holder. The Holder represents and           warrants to the
Company as follows:  

		    20.1        Holder
understands that the Warrant is being offered and sold pursuant to an exemption or
exemptions from registration requirements of Israeli and US Federal and state securities
laws and that the Company is relying upon the truth and accuracy of Holder’s
representations contained in that Securities Purchase Agreement of even date herewith,
including, without limitation, that the Holder is an “Accredited Investor” within
the meaning of Regulation D under the Securities Act of 1933.  

		    20.2        Holder
has substantial experience in evaluating and investing in private placement transactions
of securities in companies similar to the Company so that it is capable of evaluating the
merits and risks of its investment in the Company and has the capacity to protect its own
interests. Holder is able to bear the economic risk of this investment.  

37

		    20.3        Holder
is acquiring the Warrant and the Ordinary Shares issuable upon exercise of the Warrant
for its own account for investment only, and not as a nominee or agent and not with a
view towards or for resale in connection with their distribution.  

    21.        Assignment;
Exchange of Warrant. Subject to compliance with applicable           securities laws,
this Warrant, and the rights evidenced hereby, may be           transferred in whole by
any registered Holder hereof (a “Transferor”)           in whole or in part. On
the surrender for exchange of this Warrant, with the           Transferor’s
endorsement in the form of Exhibit B attached hereto           (the “Transferor
Endorsement Form”) and together with evidence           reasonably satisfactory to
the Company demonstrating compliance with applicable           securities laws, which
shall include, without limitation, a legal opinion from           the Transferor’s
counsel that such transfer is exempt from the registration           requirements of
applicable securities laws, the Company at its expense (but with           payment by the
Transferor of any applicable transfer taxes) will issue and           deliver a new
Warrant of like tenor, in the name of the transferee specified in           such
Transferor Endorsement Form (each a “Transferee”), calling in the
          aggregate on the face thereof for the number of Ordinary Shares called for on
          the face of the Warrant so surrendered by the Transferor. Notwithstanding the
          foregoing, no opinion of counsel or “no-action” letter shall be
          necessary for a transfer without consideration by a Holder to any other entity
          which controls, is controlled by or is under common control with the Holder.  

    22.        Replacement
of Warrant. On receipt of evidence reasonably satisfactory to           the Company
of the loss, theft, destruction or mutilation of this Warrant and,           in the case
of any such loss, theft or destruction of this Warrant, on delivery           of an
indemnity agreement or security reasonably satisfactory in form and amount           to
the Company or, in the case of any such mutilation, on surrender and
          cancellation of this Warrant, the Company at its expense will execute and
          deliver, in lieu thereof, a new Warrant of like tenor.  

    23.        Registration
Rights. The Holder of this Warrant has been granted certain           registration
rights by the Company. These registration rights are set forth in a
          Registration Rights Agreement entered into by the Company and the Holder dated
          as of even date of this Warrant.  

    24.        Rights
of Shareholders. No Holder shall be entitled, in its capacity as a           Warrant
holder only, to vote or receive dividends or be deemed the holder of the
          Ordinary Shares or any Other Securities of the Company, which may at any time
be           issuable upon the exercise of this Warrant for any purpose, nor shall
anything           contained herein be construed to confer upon the Holder, as such, any
of the           rights of a shareholder of the Company or any right to vote for the
election of           directors or upon any other matter submitted to shareholders at any
meeting           thereof, or to give or withhold consent to any corporate action
(whether upon           any recapitalization, issuance of shares, reclassification of
shares, change of           nominal value, consolidation, merger, conveyance, or
otherwise) or to receive           notice of meetings, or to receive dividends or
subscription rights or otherwise           until the Warrant shall have been exercised
and the Ordinary Shares issuable           upon the exercise hereof shall have become
deliverable, as provided herein.  

    25.        Transfer
on the Company’s Books. Until this Warrant is transferred           on the books
of the Company, the Company may treat the registered holder hereof           as the
absolute owner hereof for all purposes, notwithstanding any notice to the
          contrary.  

38

    26.        Notices,
Etc. All notices and other communications from the Company to           the Holder of
this Warrant shall be deemed to have been sufficiently given and           received for
all purposes, (i) when delivered in writing by hand, upon delivery;           (ii) if
sent via facsimile, upon transmission and electronic confirmation of           receipt
(and if transmitted and received on a non-business day, on the first           business
day following transmission and electronic confirmation of receipt),           (iii) seven
(7) business days (and fourteen (14) business days for international           mail)
after being sent by certified or registered mail, postage and charges           prepaid,
return receipt requested, or (iv) three (3) business days after being           sent by
internationally overnight delivery providing receipt of delivery, to the
          address as may have been furnished to the Company in writing by such Holder or,
          until any such Holder furnishes to the Company an address, then to, and at the
          address of, the last Holder of this Warrant who has so furnished an address to
          the Company.  

    27.        Miscellaneous.
This Warrant and any term hereof may be changed, waived,           discharged or
terminated only by an instrument in writing signed by the party           against which
enforcement of such change, waiver, discharge or termination is           sought. This
Warrant shall be governed by and construed in accordance with the           laws of the
State of Israel without regard to principles of conflicts of laws.           Any dispute
arising under or in relation to this Agreement shall be adjudicated           in the
competent court of Tel Aviv-Jaffa district only, and each of the parties           hereby
submits irrevocably to the exclusive jurisdiction of such court. In the           event
that any provision of this Warrant is invalid or unenforceable under any
          applicable statute or rule of law, then such provision shall be deemed
          inoperative to the extent that it may conflict therewith and shall be deemed
          modified to conform with such statute or rule of law. Any such provision, which
          may prove invalid or unenforceable under any law shall not affect the validity
          or enforceability of any other provision of this Warrant. The headings in this
          Warrant are for purposes of reference only, and shall not limit or otherwise
          affect any of the terms hereof. The invalidity or unenforceability of any
          provision hereof shall in no way affect the validity or enforceability of any
          other provision.  

[BALANCE OF PAGE
INTENTIONALLY LEFT BLANK;
SIGNATURE PAGE FOLLOWS] 

39

        IN
WITNESS WHEREOF, this Warrant is executed as of the date first written above. 

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

		
	By:  _______________________ 	By:  _______________________  

		
	Name:  _______________________ 	Name:  _______________________  

		
	Title:  _______________________ 	Title::  _______________________  

40

EXHIBIT A 

FORM OF SUBSCRIPTION 
(To Be Signed Only On
Exercise Of Warrant)  

	 	
To:  
     B.O.S. Better Online Solutions Ltd. 

	 	
Attention:  
       Chief Financial Officer 

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

________                                                   ________
 Ordinary Shares covered by such Warrant; 

o
    The undersigned herewith makes
payment of the full Exercise Price for such shares at the price per share provided for in
such Warrant, which is $___________. Such payment takes the form of (check applicable box
or boxes): 

	 		
	 	o
 	$__________
by wire transfer of lawful money of the United States; and/or 

	 		
	 	o
 	$__________
by  certified  or  official  bank  check  payable to the order of the
                          Company 

        The
 undersigned  requests that the certificate for such shares be issued in the name of, and
delivered to ______________________________________________                   whose
                 address                  is
__________________________________________________________________________________________________________.  

        The
undersigned represents and warrants that all offers and sales by the undersigned of the
securities issuable upon exercise of the within Warrant shall be made pursuant to
registration of the Ordinary Shares under the Securities Act of 1933, as amended (the
“Securities Act”) or pursuant to an exemption from registration under the
Securities Act.  

    

			
		Dated:  __________________	____________________________________________________________________ 

 (Signature
must conform to name of 
 Holder as specified on the face of the Warrant)
			

	 	
Address:  _______________________________

                   _______________________________

A - 1

EXHIBIT B  

FORM OF TRANSFEROR
ENDORSEMENT 
(To Be Signed Only on
Transfer of Warrant) 

For value received, the undersigned
hereby sells, assigns, and transfers unto the person named below under the heading
“Transferee” the right represented by the within Warrant to purchase the number
of Ordinary Shares of B.O.S Better Online Solutions Ltd. into which the within Warrant
relates and appoints each such person attorney-at-fact to transfer its respective right on
the books of B.O.S. Better Online Solutions Ltd. with full power of substitution. 

		
	NAME OF TRANSFEREE  	ADDRESS  

			
	DATED: 	__________________________	____________________________________________________
(SIGNATURE MUST CONFORM TO NAME
 OF HOLDER AS SPECIFIED ON THE FACE
OF THE WARRANT) 
			

	 	
ADDRESS:  

	 	
__________________________  

	 	
__________________________  

	 	
ACCEPTED
AND AGREED:

          [TRANSFEREE] 

	 	
By:    ____________________________  

	 	
Name:    ____________________________  

	 	
Title:    ____________________________  

B - 120-F

Exhibit 4.10  

ASSET PURCHASE
AGREEMENT  

        THIS
ASSET PURCHASE AGREEMENT is dated as of the 29th day of January, 2008
by and among, Dimex Systems (1988) Ltd., an Israeli company No. 51-128854-0,
having its address at 3 Tvuot Ha’aretz Street, Tel Aviv 69546, Israel (Hereinafter
“DS”), and Dimex Hagalil Ltd., an Israeli company No.
51-388460-1, having its address at 3 Tvuot Ha’aretz Street, Tel Aviv 69546, , Israel
(hereinafter: “DHG”), (DS and DHG, each a Seller and shall be referred
herein together as the “Sellers”) and B.O.S Better Online Solutions
Ltd., an Israeli company No. 52-004256-5, having its address at 20 Freiman Street
Rishon Lezion POB 198 75101, Israel, (the “Buyer”).  

        WHEREAS,
DS, an Israeli private company incorporated in 1988, is, together with its subsidiary DHG,
a leading Israeli integrator of data collections solutions based on RFID and Barcode
technology, and as such is providing in the Israeli market full solution that includes
peripheral equipment, software application, integration and support (the
“Business”); and 

        WHEREAS,
the Buyer desires to purchase, as of January 1, 2008 (hereinafter: the
“Cut-Off Date”), from Sellers, for the Buyer or on behalf and for its
subsidiary BOScom Ltd. an Israeli company No. 51-223643-1, (hereinafter:
“BOScom”) and for its subsidiary Dimex Hagalil Projects (2008) Ltd, an
Israeli Company No. 51-408384-9 (“DHP”), all of Sellers’ activity,
assets and rights, tangible and intangible, relating to, or used in connection with, the
Business, and certain obligations in connection with the Business, as more fully detailed
in Section 1 below, all on the terms and conditions, and for the consideration, set forth
herein. 

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

        1.
          PURCHASE AND SALE.  

    1.1.        Acquired
Assets. Subject to the terms and conditions set forth in this           Agreement, as
of the Cut-Off Date (subject to the occurrence of the Closing           referred to in
Section 4 hereof), the Sellers shall sell, assign or procure the           assignment,
transfer and deliver to the Buyer or to its order, and the Buyer,           for itself or
for or on behalf and for BOScom and DHP shall purchase, acquire           and take
assignment and delivery of, all of the assets and rights of the Sellers
          relating to, or used in connection with, the Business, together with those
          related obligations specifically detailed herein (all of which assets, rights
          and certain obligations are hereinafter referred to collectively as the
          “Acquired Assets”), including, without
          limitation, the following assets, rights and obligations:  

		     (a)        Any
and all fixtures, machinery, installations, equipment (including, without
          limitation, all production equipment), hardware, software, furniture, tools,
          spare parts, supplies, materials, product lines, fixed assets, and other
          personal property relating to, or used in connection with, the Sellers’          Business
and/or the Sellers’ conduct of the Business, as described on Schedule 1.1(a),
and those certain related obligations           thereto specified and detailed in said
Schedule and all related rights thereto           (the “Equipment”);  

		       (b)        All
of Sellers’ rights under the purchase orders, service and support
          agreements and any other or additional contracts and agreements described on Schedule
1.1(b) hereto (which each Seller represents to           constitute all of
the purchase orders, service and support agreements of the           Sellers related to
the Business and their Business activity), and those certain           related
obligations under the contracts and agreements in Schedule 1.1(b), all           of which
are in force and effect as of the Cut-Off Date, and all rights and           obligations
under all other agreements, of the Sellers entered into in the           ordinary course
of business following the Cut-Off Date but prior to the Closing,           consistent
with the Sellers’ obligations under Section 8 hereof (the           purchase orders,
service and support agreements, and other contracts and           agreements shall be
referred to in this Agreement collectively as the           “Assumed Contracts”). 

As to the open purchase orders
specified and identified as such on Schedule 1.1(b) it has been agreed as follows: 

	 	—	All
Sellers’ rights and obligations under open customers’ purchase orders for
product, services or software which have not been supplied to customers shall be
transferred in full to Buyer together with any deposit or advanced payments received by
Sellers, in accordance with the provisions of Sections 3.7 and 3.8 below; 

	 	—	All
Sellers’ rights and obligations under open purchase orders from Sellers’suppliers
for products or software which have not been supplied yet to Seller shall be transferred
in full to Buyer which shall be obligated to pay for such purchase order upon receipt of
the products so ordered, in accordance with the provisions of Sections 3.7 and 3.8 below.
Any deposit or advanced payment made by Sellers on account of such orders shall be paid
to Sellers by Buyer in accordance with Sections 3.7 and 3.8 below; 

It is being emphasized that
notwithstanding anything to the contrary, Buyer does not purchase any obligation not
specifically detailed in this Agreement, including any of Sellers’ obligations under
any of the Assumed Contracts, that was due before the Cut-Off Date and does not and will
not assume or receive any obligation or liability resulting from any breach by Sellers, or
any of them, of any of the Assumed Contracts, or from any omission under any of the
Assumed Contracts, that occurred or accrued prior to the Cut-Off Date (hereinafter:
“Non-assumed Liabilities”); 

		    (c)                All
of Sellers’ standard warranty obligations with respect to any products
          sold by Sellers, as fully described in Schedule 1.1(c)          hereto
attached (“Warranty Obligation(s)”), provided however           that for
those Warranty Obligations for which Sellers do not have a back-to-back
          obligation from the respective seller, manufacturer or distributor of such
          product, Buyer shall provide the Warranty Obligation at the expense of Seller,
          that will reimburse Buyer for the cost of the product replaced and any
          out-of-pocket expenses born by Buyer in connection therewith, which
          reimbursement shall be made in accordance with the provisions of Section 3.8
          below;  

2

		    (f)        All
of the Sellers’ trademarks, trade names (including the “Dimex” trade
name), logos, trade secrets, domain names and sites, copyrights, designs,
patents (all whether registered or not) and applications with respect to the
foregoing, all to the extent such exist, production records, any records
pertaining to know how, softwares, technical information, manufacturing
know-how, trade secrets, inventions, product processes and techniques, research
and development information, copyrightable works, mask works, financial,
marketing and business data, pricing and cost information, business and
marketing plans and customer and supplier lists, Sellers’ goodwill
associated with the Business, and all other Sellers’ intangible assets of
any kind, all to the extent that they relate to, enable and/or secure and/or
facilitate the performance of, or are used in connection with, the Business,
including, without limitation, those described on Schedule 1.1(f) hereto
(the “Intangibles”);  

		    (g)                All
of DS’s shares, rights and interests in Dimex Logic Systems Ltd. (DLS)           and
under the Agreement with Galuly the details of which are specified in Schedule
1.1(g);  

		    (h)               All
of Sellers’ Inventory (as described in Section 1.2 hereinafter, and all
          Seller’s Accounts Receivables (as described in Section 1.3 hereinafter).  

    1.2.        Acquired
Inventory. Subject to the terms and conditions set forth in this Agreement, at
the Closing referred to in Section 4 hereof, Sellers undertake to sell and
assign to the Buyer, and the Buyer undertakes to purchase and acquire, the
Inventory (as defined below) of the Sellers relating to, or used in connection
with the Business as existed at the Cut-off Date. Inventory shall mean the
Sellers’ inventory specified (together with its book value) in Schedule 1.2 hereto,
and subject to adjustments under Section 3.7 herein.  

The Inventory shall not include any
inventory designated on Schedule 1.2 as obsolete, although transferred to Buyer, provided
that a part of the proceeds from a sale of such designated obsolete inventory during the
18-month period beginning on the Closing Date, shall be delivered to DS, all in accordance
with the provisions of Section 3.8 below. 

A part of the proceeds received by
Sellers from a sale of any item of the Inventory after the Cut-Off Date is the property of
Buyer and shall be transferred to Buyer, all in accordance with the provisions of Section
3.8 below, except for such proceeds of obsolete inventory which belong to Sellers. 

    1.3.        Accounts
Receivables. Subject to the terms and conditions set forth in           this
Agreement, at the Closing referred to in Section 4 hereof) Sellers shall           sell
and assign to the Buyer, and the Buyer shall purchase and acquire, the           Accounts
Receivables (as defined below) of the Sellers relating to, or payable           in
connection with the Business, as existed on the Cut-Off Date. Accounts
          Receivables shall mean the Sellers’ accounts receivables as of the Cut-Off
          Date as specified in Schedule 1.3 hereto, subject to
          adjustments under Section 3.7 herein.  

3

Accounts Receivables shall not
include any debt designated on Schedule 1.3 as “bad debt”, provided that any
payment on account of such bad debt received by Buyer during the 18-month period beginning
on the Closing Date, shall be delivered to DS in accordance with the provisions of Section
3.8 below. 

Any payment of any Account Receivable
received by Sellers from any customer after the Cut-Off Date, that is not on account of a
bad debt, is the property of Buyer and shall be transferred to Buyer in accordance with
the provisions of Section 3.8 below. 

    1.4        ASSIGNMENT
OF CONTRACTS. Without derogating from Section 4.2.1(i) below, and subject to the
foregoing, it is the intention of the parties that the Sellers shall assign (or procure
the assignment of) the Assumed Contracts to the Buyer and the Buyer shall accept such
assignment and assume all of the rights and obligations of the Sellers under the Assumed
Contracts (except for the Non-assumed Liabilities) and all of Sellers’obligations in
connection with the Warranty Obligations as set forth in Sections 1.1 (b) & (c)
above.  

		     (a)        Notwithstanding
the foregoing, upon the occurrence of the Closing (i) whether or                not the
Seller has assigned (or procured the assignment of) each of the Assumed
               Contracts to the Buyer, the provisions of all the Assumed Contracts and
all of                Seller’s Warranty Obligations (with the exception of the
Non-assumed                Liabilities and the non-assumed Sellers’ Warranty
obligations (to be paid                to Buyer) as detailed in Sections 1.1(b) & (c)
above); shall apply to the                Buyer, as if the Buyer was party to the Assumed
Contracts. The parties shall                cooperate to determine which of the
aforementioned contracts and obligations                should be formally assigned to
Buyer, and the parties shall cooperate to receive                such assignments to the
extent possible, provided that the provisions hereof                shall not be altered
as a result of any non-receipt of a any such formal                assignment, or in the
event a party to such contracts shall decide not to                continue its
relationship with Buyer.  

		     (b)        Without
derogating from the generality of the foregoing, the Buyer will put in
               place the necessary support and infrastructure to enable it to fulfill its
               assumed obligations under the Assumed Contracts and Warranty Obligations,
               including with respect to warranties, service and support;  

		     (c)        With
respect to each of the Assumed Contracts, and until such time as the
               assignment thereof is effected (or procured), the parties shall fully
cooperate                with the each other in all matters relating to the transfer of
the Assumed                Contracts and Warranty Obligations to Buyer (as well as any
contracts relating                to the Business which are not designated to be assumed
by the Buyer, if so                agreed by the parties). Without derogating from the
aforesaid, for a period of                18 month from the Closing Date, Sellers shall
take any action reasonably                requested by the Buyer in connection with the
exercise or enforcement of rights                in connection with the Assumed
Contracts, provided Buyer is aware of the fact                that as of the Cut-Off date
all of Sellers’ relevant personnel are working                – until hired by
Buyer, as Sellers’ employees mainly under the advance                notice period,
for Buyer and thereafter as Buyer employees, thereby limiting                Sellers’ ability
to actively provide any such assistance requiring the                utilization of such
personnel. The Buyer will reimburse the Sellers for any                reasonably
incurred costs approved in advance by the Buyer in this regard, and                shall
make available to Sellers the necessary workforce required to provide such
               assistance if applicable. Following such 18 month period such obligation
of                Sellers to assist Buyer shall lapse.  

4

		     (d)       The
Buyer shall indemnify the Sellers against every liability which the Sellers
               may incur to any other person whatsoever and against all claims, damages,
costs                and expenses made against or incurred by the Sellers by reason of
any breach by                the Buyer of any of the Assumed Contracts and/or any of the
assumed Warranty                Obligations after the Cut-Off Date, except to the extent
that such breach                results from Sellers’ non-compliance with a
provision set forth herein.  

		     (e)        In
the event that the Sellers receives any payment under the Assumed Contracts
               where such payments relate to deliveries or services provided following
Cut-Off                Date or that otherwise belongs to Buyer under the provisions of
this Agreement,                the Sellers shall transfer such funds to the Buyer in
accordance with the                provisions of Section 3.8 below. The same provision
shall apply, mutatis                mutandis, to any payment received by Buyer that
belongs to Seller pursuant to                the provisions hereof.  

		     (f)        In
case the assignment of any Assumed Contract shall require the replacement of
               the Sellers’ guarantees with a new guarantee issued by Buyer, as
specified                in Schedule 1.1(b), the parties shall cooperate in accordance
with the                provisions of said Schedule, provided however that Buyer shall
indemnify Seller                for any realization of a guarantee issued by Seller as a
result of any act or                omission by Buyer.  

        2.
 EXCLUDED ASSETS AND NO ASSUMPTION OF OBLIGATIONS  

    2.1.        Excluded
Assets. Notwithstanding the foregoing, the Sellers shall not                sell and
the Buyer shall not purchase, pursuant to this Agreement, and the term
               “Acquired Assets” shall not include, the following assets
(the                “Excluded Assets”):  

	 	(a) 	the
consideration received by the Sellers pursuant to this Agreement and the
               rights of the Sellers under this Agreement. 

	 	(b) 	Sellers’ rights,
obligations and undertakings with respect to Sellers’               employees. 

	 	(c) 	Sellers’ rights
and obligations whatsoever which are not related to the                Business; 

	 	(d) 	Sellers’ debts,
warranties, guaranties or obligations to any financial                institution or
government authority including their banks, the customs,                insurance
companies etc., excluding those Business related guarantees specified                in
Schedule 1.1(b) hereto as being assumed by Buyer; 

	 	(e) 	Sellers’ debts,
warranties, guaranties or obligations to third parties or                for any third
party, other than those assumed in connection with the provisions                of
Section 1.1(c) to this Agreement; 

	 	(f) 	Any
warranty obligation of Sellers for which Sellers do not have a back-to-back
               obligation from the respective seller, manufacturer or distributor of such
               product, provided however that Buyer shall handle such warranty at Sellers’               expense
in accordance with the provision of Section 1.1(c). 

5

    2.2.        Excluded
Liabilities Except for the liabilities and obligations assumed                by
Buyer pursuant to the provisions of this Agreement, the Buyer shall not
               assume, and shall not be deemed to have assumed; (i) any liability or
obligation                of any of the Sellers or any liabilities for acts or omissions
of Sellers prior                to the Cut-Off Date, (ii) any liabilities or obligations
of Sellers for                Indebtedness or under guaranties, (ii) any liabilities or
obligations of Sellers                for Taxes including, without limitations, any tax
liability of Sellers which may                be accrued or levied as a result of the
transactions contemplated hereunder                (whether in conjunction with the
Merger between Dimex Systems (1988) Ltd. and                Intermec (Dimex Group) Ltd.
or not), (iii) any liabilities or obligations                relating to any of the
Sellers’ employees, including any liability of                Sellers to those of
Sellers’ employees hired by the Buyer .after the                termination of the
employment of said Sellers’ employees with the Sellers;                and (iv)
Non-assumed Liabilities.  

        3.
               PURCHASE PRICE.  

    3.1        In
consideration for the sale, assignment, transfer and delivery of all of the Acquired
Assets, at the Closing referred to in Section 4 hereof, the Buyer will pay to Sellers an
aggregate amount of NIS 44,380,000 (the “Purchase Price”) out of which
NIS 17587,000 shall be paid for the Sellers’ goodwill and other intangible assets
detailed in Schedule 3.1 herein (the “Intangible PP”)
and NIS 26,793,000, subject to adjustments, shall be paid for Sellers’Inventory,
Accounts receivables, fixed assets and other tangible assets detailed in Schedule
3.1 herein (the “Tangible PP”). Other than an amount of
NIS 3,829,000 out of the Intangible PP which shall be paid, on the Closing, by issuing of
500,224 newly issued, fully paid, Ordinary Shares of Buyer, nominal value NIS 4.00 each,
(which amount was determined by dividing the sum of NIS 3,829,000 by the average of the
closing price of the shares of Buyer on the NASDAQ, over the period commencing on
December 1, 2007 and ending 3 days prior to the date hereof), all in accordance with the
terms and conditions specified hereinafter (the “Consideration Shares”),
the balance of the Purchase Price shall be paid in cash (the “Cash Payment”)
by 5 installments as follows:  

	 	(i) 	an
amount of NIS 15,500,000 will be made on the Closing Date (the                “1st Installment”); 

	 	(ii) 	an
amount of NIS 15,000,000 will be made 6 month after the Closing Date (the
               “2nd  Installment”) ; 

	 	(iii) 	an
amount of NIS 3,500,000 will be made 12 month after the Closing Date (the
               “3rd  Installment”); 

	 	(iv) 	an
amount of NIS 3,500,000 will be made 18 month after the Closing Date (the
               “4th  Installment”); and 

	 	(v) 	an
amount of NIS 3,051,000 will be made 24 month after the Closing Date (the
               “5th  Installment”); 

6

    3.2        The
Purchase Price will be allocated between the Sellers, and paid to each of them
respectively in accordance with DS’s instructions specified in Schedule 3.1B.  

The 2nd, 3rd, 4th & 5th
Installments shall be subject only to the following adjustments and deductions
(“Allowed Deductions”): (i) Buyer’s set-off right under Section 12.4
hereinafter; (ii) the adjustments provided under Section 3.7 below; (iii) Buyer’s
right to deduct withholding tax in accordance with the provisions of Section 3.5 below and
(iv) Buyer’s obligations or duty to withhold such payments pursuant to a judicial
order of a competent court. Other than such specifically allowed deductions and
adjustments, no deduction, adjustment, right of retention and/or set-off of any kind shall
be made from the consideration due to Sellers hereunder. 

Notwithstanding and without
derogating from any right or remedy available to Sellers hereunder or pursuant to
applicable law, upon an “Event of Default” (as defined below), without notice by
Sellers to, or demand by Sellers of, Buyer, all of the Purchase Price which has not been
yet paid to Seller (other than any un-paid amount as a result of an Allowed Deduction in
accordance with this agreement) shall automatically become immediately due and payable by
Buyer to Sellers. 

An “Event of Default” shall
mean: (i) Buyer shall fail to pay any payment on account of the Purchase Price (including
any applicable VAT) in accordance with the provisions of this Agreement, and such failure
continues for thirty (30) days or more following receipt by Buyer of notice of same from
Sellers; and (ii) Buyer shall commence any insolvency or bankruptcy proceeding with
respect to itself; an involuntary insolvency or bankruptcy proceeding shall be filed
against Buyer, or a custodian, receiver, trustee, assignee for the benefit of creditors,
or other similar official, shall be appointed to take possession, custody or control of
all, or substantially all, of the assets of Buyer, and such proceedings, petition or
appointment is acquiesced to by Buyer or is not dismissed within forty five (45) days, or
Buyer shall take any corporate action for the purpose of effecting, approving, or
consenting to any of the foregoing. For the removal of doubt it is hereby clarified that
non-payment of any Allowed Deductions in accordance with the terms hereof, shall not be
considered or deemed as an Event of Default. 

        Without
derogating from the forgoing, or from any right or remedy available to a party hereunder
or pursuant to applicable law, any payment hereunder not paid when due shall bear interest
at the rate of Prime + 2% per annum. 

    3.3        The
Consideration Shares. At the Closing referred to in Section 4 hereof, the Buyer will
issue to Sellers a share certificate/s – in accordance with Sellers’instructions
specified in Schedule 3.3 herein – representing theConsideration
Shares free and clear from any claims, liens, charges, pledges, security interests,
encumbrances and any third party rights.  

7

        The
Consideration Shares shall not be registered for resale under the applicable U.S. laws and
regulations and therefore may not be sold, transferred, assigned, offered for sale,
pledged, hypothecated or otherwise disposed of for at least 6 months from the date of
issuance. Thereafter, such shares may be sold in compliance with Rule 144 or pursuant to
another applicable exemption under the U.S. Securities Act of 1933, as amended (the
“Securities Act”). The Buyer represents, warrants and covenants that it
has filed, and will continue to file, on a timely basis, at least for the first 12 months
following the date of issuance of the Consideration Shares all reports required to be
filed by the Buyer with the U.S. Securities and Exchange Commission (the
“SEC”) under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), to the extent required for the sale of the Consideration
Shares under Rule 144. Buyer has no obligation whatsoever to register the Consideration
Shares under the Securities Act or other applicable securities laws or regulations.
Notwithstanding the above and subject to any applicable law, Seller will be entitled to
transfer the Consideration Shares or any part thereof to any of Seller’s currently
existing shareholders provided that such transfer is permitted under any applicable law
and that each transferee of said Consideration Shares shall be subject to abovementioned
restrictions and shall confirm in writing that he undertakes to comply with such
restrictions for as long as such restrictions shall be valid. 

    3.4        The
Cash Payment and the issuance of the Consideration Shares to the Sellers shall be the
sole consideration, monetary or otherwise, to be paid by the Buyer and/or to which the
Sellers may be entitled in connection with the transactions contemplated in this
Agreement.  

    3.5        Any
tax liability, payment or demand sustained or incurred by the Sellers as a result of or
in connection with the payment of the Purchase Price in accordance with this Agreement
shall be the sole responsibility of the Sellers. Without derogating from the above and
from the Sellers’ sole responsibility and liability for any tax payment or demand,
the Buyer shall deduct, from each payment, and withhold any tax to be deducted under any
applicable Israeli law and regulation and the Buyer shall pay said withheld amount in
accordance with all applicable Israeli laws, unless, with respect to the taxes to be
withheld, Sellers shall prior to the time of such payment provide Buyer with an approval
from the Israeli Tax Authorities to act otherwise.  

The Purchase Price shall bear VAT at
the prevailing rates, which will be born and paid by Buyer to Sellers. Such VAT, for the
entire amount of the Purchase Price, shall be paid to Sellers on the 13th day
of the calendar month following the Closing against receipt of a valid VAT invoice, unless
prior to the Closing, Buyer shall provide Sellers with an approval from the Israeli VAT
Authorities to act otherwise. 

    3.6        Upon
the consummation of the Closing, the Sellers shall have, as of the Cut-Off Date, no
rights, of any nature, relating to or in connection with the Business and/or the Buyer,
other than their holdings of the Consideration Shares and the rights attached to the
Consideration Shares, as set out in the Buyer corporate documents, and those other rights
as set forth herein.  

        Without
derogating from the generality of the above, Sellers undertake that following the
consummation of the Closing and pursuant to the request of Buyer the Sellers, DH and Dimex
Ltd shall not use in their name, or in any other name, form or business the name
“Dimex”, and any of such entities that the word “Dimex” is currently
part of its name shall change its name at Buyer’s first request and will issue a
written confirmation to the Buyer in which it waives its/their right with respect to the
name Dimex and transfer all its rights to such name to the Buyer. Buyer acknowledges that
Sellers informed Buyer that currently Sellers has no capability to enforce this paragraph
on Dimex Visual Systems (1996) Ltd. Seller in coordination with Buyer and at its request
shall attempt to receive Dimex Visual System’s consent to the aforesaid, provided
however that bona fide failure shall not be considered as breach of this Agreement. 

8

        Notwithstanding
the above, Sellers shall be granted at the Closing, free of any charge, license to
continue use the name “Dimex” for the exclusive purpose of fulfilling its
obligation under this Agreement and/or assisting the Buyer, in each case as per
Buyer’s request and approval in advance. Such license shall lapse upon written notice
of Buyer, following which Sellers shall promptly take any action required to change their
corporate name as aforesaid. 

    3.7        The
parties agree that the Purchase Price is subject to those specific adjustments detailed
in Schedule 3.7 hereto attached. The parties shall determine the adjustments required
within 45 days following the Closing, or within any such other period agreed upon by the
parties. Following determination of the adjustment amount, the payments on account of the
Purchase Price shall be adjusted in accordance with the principles specified in Schedule
3.7 herein.  

    3.8        Within
30 days following the Closing the parties shall determine the amounts owed to each of
them in connection with the operation of the Business between the Cut-Off Date and the
Closing Date in accordance with the terms of this Agreement and in light of the
understanding that any revenues, expenditures, receivables and payables in connection
with the operation of Business during such intermediate period shall belong to Buyer. For
the avoidance of doubt, Buyer shall invoice Sellers for liabilities accrued with respect
to the Hired Personnel starting from the Recruiting Date (each term, as defined below)
and until the Closing Date, and Sellers shall pay such invoice within 48 hours from the
time such payments were actually made by Buyer. Such charges so invoiced shall be deemed
part of the aforementioned expenditures.  

        Payment
of the respective amounts shall be made no later than 45 days following           the
Closing. Thereafter, in case a Party (the “Receiving Party”) shall
          receive a payment which upon receipt it is clear, to the Receiving Party, that
          under the terms of this Agreement said payment belongs to the other party, the
          Receiving Party shall transfer such amount to the other Party within 14 days.
          Once a month and not later than the 5th day of each calendar month
          the parties shall determine the amounts owed to each of them in accordance with
          the provisions of this agreement, and any unpaid balance shall be paid to the
          relevant Party within 7 days from such monthly determination. For the purpose
of           the monthly determination and for a period of 18 months from the Closing
Date,           each Party shall provide the other Party with a report, no later than the
          5th day of each calendar month, detailing the amounts received and
          owed in connection with this Agreement.  

        4.
          CLOSING.  

    4.1.        Time
and Place. The closing of the transactions contemplated by this           Agreement
(the “Closing”) shall be held at the           offices of
Amit, Pollak, Matalon & Co., NITZBA Tower, 19th Floor,           17
Yitzhak Sadeh Street, Tel Aviv, 67775, Israel, at 11:00 a.m. local time on
          February 28th, 2008 or on such other date and time mutually
          acceptable to all Parties (the “Closing Date”).  

9

    4.2        Delivery
of Documents at Closing. At the Closing, the following Documents shall be delivered,
and no document shall be deemed to have been delivered until all such required documents
have been delivered:  

	 	
4.2.1
The Sellers shall deliver, or procure the delivery, to the Buyer of the following
documents: 

	 	a. 	A
true and correct copy of resolutions of Sellers’ Board of Directors,
               approving this Agreement and the Transactions contemplated hereby;  

	 	b. 	A
certificate, duly executed by an executive officer of each Seller, dated as of
               the date of the Closing, confirming that the representations and
warranties made                in Section 5 were true and correct in all material
respects when made and are                true and correct in all material respects on
and as of the Cut Off Date and                Closing Date, as though made on these
Dates, and that each Seller has performed                in all material respects all
obligations required under this Agreement to be                performed by it on or
before the Closing;  

	 	c. 	Signed
opinion of Shibolet & Co., Advocates, counsel to the Seller in the
               form to be attached hereto as Exhibits 4.2.1(c),
dated as                of the date of the Closing and addressed to the Buyer.  

	 	d. 	A
duly executed confidentiality and non-compete agreement between the Buyer,
               each Seller, Gabi Jacobs, Dimex Ltd. and Dimex Holdings (1998) Ltd., to be
               attached hereto as Exhibit 4.2.1(d).  

	 	e. 	The
consent of Bank Hapoalim, and the First International Bank to the sale of
               the Acquired Assets contemplated hereunder and to release their charges
from the                Acquired Assets and the consent of the State of Israel (The
Investment Center)                to the sale of the Acquired Assets by DHG; such lien
discharges shall be in a                form reasonably acceptable to the Buyer and its
counsel;  

	 	f. 	A
certificate duly executed by each employee of the Sellers, which Buyer intends
               to hire as its employee, confirming, among other issues that she/he has no
               claims whatsoever regarding his/her work with Seller and the receipt of
all                salary, payment in lieu of advance notice, severance and social
payments and                benefits up to the date of termination of such employees’ employment
with                Seller substantially in the form to be attached as Exhibit 4.2.1(f).  

	 	g. 	Such
certificates of title or other instruments of assignment and transfer with
               respect to the Acquired Assets as the Buyer may reasonably request and as
may be                necessary to vest in the Buyer good and marketable title to all and
ownership on                all of the Acquired Assets, in each case not subject to any
Encumbrance (as                defined in Section 5.9).  

10

	 	h. 	Those
third party consents and assignments detailed in Exhibit 4.2.1(h), in a
               form to be agreed by the parties.  

	 	i. 	Notices
from the Sellers, Dimex Holdings (1998) Ltd, an Israeli company No.
               51-268566-0 (“DH”), and Dimex Ltd. to the Registrar of
               Companies informing the registrar about their respective resolutions to
change                their respective names to different names which do not include the
word Dimex in                a form to be agreed between the parties.  

	 	j. 	Confirmations
from the Tax Authorities specifying the withholding tax rate, or                the
exemption from same, applicable to each Seller with respect to the Purchase
               Price to be paid by the Buyer under this Agreement, a copy of which
attached as                Exhibit 4.2.1(j);  

	 	k. 	Invoice
for VAT purposes on the entire Purchase Price including for the
               Consideration Shares, unless waived pursuant to the provisions of Section
3.5.  

	 	l. 	The
Sellers’ Audited Financial Statements for the fiscal year 2006 and
               reviewed financial statements for the 9 month period ending as of
September 30,                2007, in both cases, in NIS, in English, in accordance with
Israeli GAAP with                notes including a note of reconciliation to US GAAP.  

	 	
4.2.2
The Buyer shall deliver, or procure the delivery, to the Seller of the following
documents:  

	 	a. 	A
true and correct copy of resolutions of Buyer’s Board of Directors,
          approving this Agreement, the Transactions contemplated hereby and the issuance
          of the Consideration Shares pursuant to this Agreement;  

	 	b. 	Buyer
shall pay Sellers the 1st Installment by way of a           banker’s
check or as evidenced by a copy of a wire transfer in the amount           of NIS
15,500,000. Wire transfers shall be made to the bank accounts details of           which
shall be provided by Sellers in writing prior to the Closing.  

	 	c. 	Buyer
shall issue the Consideration Shares to DS and shall provide Sellers with           a
share certificate (or a copy of same as received by Buyer from its Transfer
          Agent) in DS’ name representing the Consideration Shares issued to DS, and
          a copy of the Shareholder Register of Buyer, dully signed by an executive
          officer of the Buyer, recording the Consideration Shares issued to DS
hereunder.  

11

	 	d. 	Signed
opinion of Amit Pollak Matalon & Co., Advocates, counsel to the           Buyer in
the form to be attached hereto as Exhibits           4.2.2(d), dated
as of the date of the Closing and addressed to           the Sellers.  

	 	e. 	A
certificate, duly executed by an executive officer of the Buyer, dated as of
          the date of the Closing, confirming that the representations and warranties of
          Buyer made in Section 6 were true and correct in all material respects when
made           and are true and correct in all material respects on and as of the Cut Off
Date           and Closing Date, as though made on these Dates, and that the Buyer has
          performed in all material respects all obligations required under this
Agreement           to be performed by it on or before the Closing.  

    4.3.        Transactions
as of Cut Off Date. At Closing, by delivery of all documents           specified in
Section 4.2 hereinabove, the sale, transfer and delivery to the           Buyer of title
to all and ownership on all of the Acquired Assets, in each case           not subject to
any Encumbrance (as defined in Section 5.9), shall be deemed to           take place as
of the Cut-Off Date.  

        5.
 REPRESENTATIONS AND WARRANTIES OF THE SELLER. Acknowledging that the Buyer is
          relying on the representations and warranties set forth in this Section 5, each
          Seller hereby represents and warrants to the Buyer as follows:  

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

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

     5.3.        Non-Contravention.
The execution and delivery by each Seller of the           Transaction Documents to which
it is a party and the consummation by each Seller           of the transactions
contemplated hereby and thereby will not (a) violate or           conflict with any
provision of the Memorandum and Articles of Association of the           relevant Seller,
each as amended to date; or, to the Seller’s knowledge,           except as set
forth in Schedule 5.3 hereto (b) constitute a           violation
of, or be in conflict with, or constitute or create a default under,           or, unless
otherwise stipulated in Schedule 5.3, result in           the
creation or imposition of, any Encumbrance upon any of the Acquired Assets
          pursuant to (i) any agreement or instrument to which the Seller is a party or
by           which the Sellers or any of its/their properties (including any of the
Acquired           Assets) is bound or to which the Seller or any of such properties
(including any           of the Acquired Assets) is subject, or (ii) any statute,
judgment, decree,           order, regulation, ruling or rule of any court or
governmental or regulatory           authority, except with respect to (a) and (b) above,
such violation which would           not have a material adverse effect on the Seller or
on the transactions           contemplated herein.  

12

         5.4.       
          Governmental Consents. Except as set forth on Schedule 5.4,
          no consent, approval or authorization of, or registration, qualification or
          filing with, any governmental agency or authority is required for the execution
          and delivery by each Seller of the Transaction Documents to which it is a party
          or for the consummation by each Seller of the transactions contemplated hereby
          or thereby. Each Seller has and maintains, the permits listed on Schedule 5.4
          hereto which include, all material licenses, permits and other material
          authorizations from all governmental authorities as to the best knowledge of the
          Sellers, are necessary for the conduct of the Business and/or in connection with
          the ownership or use of the Acquired Assets. 

         5.5.       
          Financial Statements. The Sellers have delivered the following financial
          statements (the “Financial Statements”) to the
          Buyer, and they are attached as Schedule 5.5 hereto. The
          Financial Statements sets forth a true, correct and complete copy of the audited
          financial statement of the Sellers and for the fiscal year ended December 31,
          2006 and of reviewed financial statements as of September 30, 2007
          (collectively, the “Seller Financial Statements”). The Seller
          Financial Statements have been prepared in conformity with the Israeli generally
          accepted accounting principles (“GAAP”), applied on a
          consistent basis throughout the periods indicated therein. The Seller Financial
          Statements are consistent in all material respects with the books and records of
          the Seller and fairly present the financial position of the Seller as of the
          dates thereof and the results of operations and cash flows of the Seller for the
          periods shown therein, all as required under GAAP, subject, in the case of the
          unaudited financial statements only, to normal and recurring year end
          adjustments. No information has come to the attention of each Seller since such
          respective dates that would indicate that such financial statements are not true
          and correct in all material respects as of the dates thereof. 

         5.6.       
          Absence of Certain Changes. Except as set forth on Schedule
          5.6, since October 1st, 2007, the Sellers have carried
          on their business only in the ordinary course, and there has not been (a) any
          material adverse change in the assets, liabilities, sales, income or business of
          each Seller or in its relationships with suppliers, customers or lessors, other
          than changes which were both in the ordinary course of business and have not
          been, either in any case or in the aggregate, adverse; (b) any
          acquisition or disposition by the Seller of any asset or property other than
          sales of inventory in the ordinary course of business; (c) any damage,
          destruction or loss, whether or not covered by insurance, materially and
          adversely affecting, either in any case or in the aggregate, the Business or any
          of the Acquired Assets; (d) any mortgage, pledge (fixed or floating), lien,
          lease, security interest or other charge or encumbrance on any of the Acquired
          Assets; (e) any write-off of any right related to, or, in connection with the
          Business (f) any entry by the Seller into any material transaction in connection
          with the Business (except as set on Schedule 5.6), (g) any discharge or
          satisfaction of any lien or encumbrance related to or in connection with the
          Business or the Acquired Assets, except in the ordinary course of business. 

13

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

         5.8.       
          Conformity to Law. Except as set forth on Schedule
          5.8, to the best of their knowledge, the Seller has complied
          with, and is in compliance with all laws, statutes, governmental regulations
          applicable to the Business or the Acquired Assets and all judicial or
          administrative tribunal orders, judgments, writs, injunctions, decrees or
          similar commands applicable to the Seller and which pertain to the Business or
          any of the Acquired Assets (including any labor, environmental, occupational
          health, zoning or other law, regulation or ordinance) and Seller has not
          received any notice whereby any party or government agency claims Seller is not
          in compliance with any of the above except as would not have a material adverse
          effect on the Sellers, the Buyer, the Acquired Assets or on the transactions
          contemplated hereby. Except as set forth in Schedule 5.8 hereto, the
          Seller has not committed, been charged with, or, to their knowledge, been under
          investigation with respect to, nor does there exist, any violation of any
          provision of any applicable law or administrative regulation in respect of the
          Business or any of the Acquired Assets, except as would not have a material
          adverse effect on the Sellers, the Buyer, the Acquired Assets or on the
          transactions contemplated hereby. 

         5.9.       
          Title to Acquired Assets. Each Seller is the lawful sole owner of and
          possesses all other rights in, and has good and valid record and marketable
          title to, all of the Acquired Assets, and to its knowledge, other than as
          described in Schedule 5.9. Each Seller has the full right to sell, convey,
          transfer, assign and deliver the Acquired Assets, without the need to obtain the
          consent or approval of any other party, other than the consents and approvals
          listed on Schedule 5.9. Except for liens described on Schedule
          5.9 hereto which secure Indebtedness, all of the Acquired Assets
          (provided however that with respect to Assumed Contracts – only
          Sellers’ rights pursuant to such contracts) are entirely free and clear of
          any security interests, liens, attachments, claims (including claims of the
          Israeli government or any agency thereof), charges, options, mortgages, debts,
          leases (or subleases), conditional sales agreements, title retention agreements,
          encumbrances of any kind, defects as to title or restrictions against the
          transfer or assignment thereof (collectively,
          “Encumbrances”). Except as set forth in Schedule
          5.9, all of the Equipment and Inventory are in good condition and repair
          (reasonable wear and tear excepted) and are adequate and sufficient to carry on
          the Business as presently conducted. At Closing and as of the Cut Off Date, the
          Sellers will convey the Acquired Assets to the Buyer by deeds, bills of sale,
          certificates of title and other instruments of assignment and transfer effective
          in each case to vest in the Buyer, and the Buyer will have, good and valid
          record and marketable title to all of the Acquired Assets (provided however that
          with respect to Assumed Contracts – only Sellers’ rights pursuant to
          such contracts), free and clear of all Encumbrances. 

14

         5.10.       
          Real Property; Safety, Zoning and Environmental Matters. 

		     (a)        The
Sellers own no real property. DS leases its premises at 3 Tvuot           Ha’aretz
Street, Tel Aviv 69546, Israel, and DHG leases its premises at           Kibutz Dafna
(the “Real Property”) from Kibutz Dafna Aguda           Haklahit Ltd.,
and Kvuzat Habealim Haresumim Shel Habinyan (Beit Mor), by proxy           to Nischsei
H.N. Ariel Nemanuyut Lemashkiey Hutz Ltd., respectively (the           “Lessor(s)”)
pursuant to a lease agreements dated January 1, 2007, and           August 28, 2003 a
true and correct copies of which has been provided to the           Buyer (the “Lease
Agreements”). The Lease Agreements together           with the property
management agreements relating thereto (detailed in Schedule           1.1(b) above)
constitute the full and entire agreements relating to the           Sellers’ lease
of the Real Property. DS and DHG have fully complied with           all of their material
obligations, covenants and undertakings set forth in the           Lease Agreements, and
the Sellers reasonably believe that each of the Lessors           has fully complied with
all of its material obligations, covenants and           undertakings set forth in the
Lease Agreement. The Sellers have not received any           notice that either the whole
or any portion of the Real Property is to be           condemned, requisitioned or
otherwise taken by public authority. The Buyer shall           be entitled to use the
Real Property until the termination of each of the Lease           Agreements, all
subject to the terms and conditions of such Agreements, and           further subject to
the receipt of the consents required pursuant to Section           4.2.1(h).  

		     (b)        Except
as set forth on Schedule 5.10:  

		    (i)        Each
Seller is not in violation or alleged violation of any judgment, decree,           order,
law, license, rule, regulation or ordinance pertaining to health, safety           or the
environment in respect of the Business or relating to, or in connection           with,
any of the Acquired Assets, except as would not have a material adverse           effect
on the Sellers, Buyer, Acquired Assets or on any of the transactions
          contemplated hereunder (hereinafter “Environmental Laws”);  

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

         5.11.       
          Equipment. Schedule 1.1(a) hereto sets forth a complete and accurate list
          of all of the Equipment excluding items having a book or market value
          individually of less than $1,000, and includes all equipment and property owned
          by the Sellers used in the Business, with the exception of such excluded items. 

15

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

         5.13.       
          Insurance. Schedule 5.13 hereto lists all policies
          of fire, liability, workmen’s compensation, life, property and casualty and
          other insurance owned or held by the Sellers relating to, or connected with the
          Acquired Assets. Such policies of insurance are maintained with financially
          sound and reputable insurance companies, funds or underwriters and are of the
          kinds and cover such risks and are in such amounts and with such deductibles and
          exclusions as are consistent with customary business practice. All such policies
          (a) are in full force and effect, (b) are sufficient for compliance by the
          Seller with all agreements to which the Seller is a party in relation thereto,
          (c) provide that they will remain in full force and effect through the
          respective dates set forth in such Schedule. The Sellers is not in default in
          any material respects with respect to its obligations under any of such
          insurance policies and has not received any notification of cancellation of any
          such insurance policies. 

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

16

        5.15.
Employment Matters.  

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

		    (b)        To
the Sellers’ knowledge, with respect to the employees listed on Schedule
          5.15 hereto, individually and in the aggregate, no event has occurred and no
          condition or set of circumstances exists in connection with which the Sellers
          could be subject to any liability that could have an adverse effect on the
          Business or Acquired Assets, provided however that Buyer is aware that one of
          Seller’s employees is currently on maternity leave and can only be
          dismissed in accordance with applicable law.  

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

17

         5.16.       
          Trademarks, Patents, Etc. Schedule 5.16 (1) hereto sets forth a complete
          and accurate list of all of the Sellers’ (i) trademarks, trade names,
          designs and patents; and (ii) the Software products of Sellers (except to the
          extent that they are third party’s off-the-shelf software), which are
          necessary for the operation of the Businesses as currently conducted
          (hereinafter collectively: “Seller’s I.P”). Except to the
          extent set forth in Schedule 5.16 (1), the Sellers own or have the sole,
          exclusive, unlimited and perpetual (subject to applicable law) right to use all
          Seller’s I.P., and have the right, without restrictions, to use all
          Seller’s I.P., used, and/or necessary for conducting the Business as
          presently conducted, and the consummation of the transactions contemplated
          hereby will not alter or impair any such right. Except as set forth in
          Schedule 5.16 (2), to their knowledge and without
          conducting any patent search, Sellers have not misappropriated any intellectual
          property of any third party, no claims have been asserted, and no claims are
          pending, by any person regarding the use of any Seller’s I.P. or
          challenging or questioning the validity or effectiveness of the Seller’s
          I.P. or any part thereof, and, to the knowledge of the Sellers (without
          conducting any patent search), there is no basis for such claim. The use of the
          Seller’s I.P. by the Sellers (and after the Cut-Off Date by the Buyer) in
          the ordinary course of the Business (as currently conducted) does not, and will
          not, to their best knowledge (without conducting any patent search), infringe on
          the rights of any person or third party. With respect to each item of
          Seller’s I.P. that the Sellers uses pursuant to a license, sublicense,
          franchise, agreement, or permission: (i) the license, sublicense, agreement, or
          permission covering the item is legal, valid, binding, enforceable, and in full
          force and effect; (ii) the license, sublicense, agreement, or permission will
          continue to be legal, valid, binding, enforceable, and in full force and effect
          on identical terms following the Closing, all subject to assignment thereof
          pursuant to the provisions of this Agreement; (iii) to Sellers’ knowledge,
          no party to the license, sublicense, agreement, or permission is in material
          breach or default, and no event has occurred which with notice or lapse of time
          would constitute a material breach or default or permit termination,
          modification, or acceleration thereunder; (iv) no party to the license,
          sublicense, agreement, or permission has repudiated any provision thereof; (v)
          the underlying item of Seller’s I.P. is not subject to any outstanding
          injunction, judgment, order, decree, ruling, or charge against the Sellers; and
          (vi) no action, suit, proceeding, hearing, investigation, charge, complaint,
          claim, or demand is pending or, to the knowledge of Sellers is threatened which
          challenges the legality, validity, or enforceability of the underlying item of
          Seller’s I.P. The Sellers did not grant any sublicense or similar right
          with respect to any such license, sublicense, agreement, or permission, other
          than in the ordinary course of business. 

         5.17.       
          Suppliers and Customers. Schedule 5.17 hereto sets
          forth the suppliers and customers of the Business as of the date hereof. Except
          as set forth on Schedule 5.17, during the last twelve (12)
          months no Material Supplier, as detailed in Schedule 5.17
          or Customer of Material Importance to the Business (i.e. any customer whose
          business with Sellers in 2006 or in 2007 amounted to no less than NIS 500,000,
          excluding VAT) has cancelled or otherwise terminated, or threatened to cancel,
          decrease or otherwise to terminate, its relationship with the Sellers.
          Schedule 5.17 sets forth the volume of sales to each
          Customer of Material Importance in 2006 and 2007. The Sellers have no knowledge
          that any such Material Supplier or Customer of Material Importance intends to
          cancel or otherwise substantially modify its relationship with the Sellers or to
          decrease materially or limit its services, supplies or materials supplied to the
          Sellers, or its usage or purchase of the Sellers’ services or products, and
          the Sellers have not received any formal notice that the consummation of the
          transactions contemplated hereby will adversely affect the relationship with any
          such Customer of Material Importance. 

         5.18.       
          Acquired Assets Complete. Except as set forth in Schedule
          5.18, the Acquired Assets, when utilized with a labor force
          substantially similar to that currently employed by the Sellers who are engaged
          in the Business, are adequate and sufficient to conduct the Business as
          currently conducted by Sellers. 

18

        The
Acquired Assets, constitute, collectively, in all material respects, all of the assets and
rights used by the Sellers in the conduct of the Business, as well as all of the material
rights and assets needed in order to conduct the Business in the manner conducted to date. 

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

         5.20.       
          Taxes. The Sellers have duly filed with the appropriate government
          agencies all of the income, sales, use, employment and other Tax returns and
          reports required to be filed by them, to the extent that they are connected with
          the Business or any of the Acquired Assets. No waiver of any statute of
          limitations relating to Taxes relating to, or in connection with, the Business
          or any of the Acquired Assets has been executed or given by the Sellers. All
          Taxes, assessments, fees and other governmental charges upon any of the Acquired
          Assets, revenues, income and franchises in relation thereto with respect to any
          period ending on or before the Cut-Off Date have been paid, other than those
          currently payable without penalty or interest, except where failure to do so,
          would have a material adverse effect on the Sellers. The Sellers have withheld
          and paid all Taxes required to be withheld or paid in relation to, or connection
          with, the Business and/or the Acquired Assets, except where failure to do so,
          would not have a material adverse effect on the Sellers. To the Sellers’
          knowledge, neither the Income Tax Authority of the State of Israel nor any other
          taxing authority is now asserting or threatening to assert against the Sellers
          any deficiency or claim for additional Taxes or interest thereon or penalties in
          relation thereto, or in connection therewith, or any adjustment that would have
          an adverse effect on the Business. 

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

         5.22.       
          Potential Conflicts of Interest. To the Sellers’ knowledge, no
          officer, director or shareholder of each Seller or of DH (a) engage, anywhere in
          the world, in any business organization that is engaged or becomes engaged in
          activities which are directly competitive with the Business or is an officer,
          director, employee or consultant of any Person which is a competitor, lessor,
          lessee, customer or supplier of the Seller; (b) owns, directly or indirectly, in
          whole or in part, any tangible or intangible property which the Sellers are
          using or the use of which is necessary for the Business; or (c) has any cause of
          action or other claim whatsoever against, or owes any amount to, the Sellers. 

         5.23.
          and 5.24 intentionally reserved. 

19

         5.25.       
          Disclosure. No representation or warranty by the Sellers in this
          Agreement or in any exhibit, schedule, written statement, certificate or other
          document delivered or to be delivered to the Buyer pursuant hereto or in
          connection with the consummation of the transactions contemplated hereby
          contains or will contain any untrue statement of a material fact or omits to
          state a material fact required to be stated therein or necessary to make the
          statements contained therein, not misleading or necessary in order to provide
          the Buyer with proper and complete information as to the identity and usability
          of the Acquired Assets. The Sellers have provided the Buyer with all material
          information requested by the Buyer and true and complete answers to those
          questions and inquiries raised by the Buyer. 

         5.26.       
          Government Grant Programs. Subject to the provisions of Section 11.4
          below and other than as set forth in Schedule 5.26, the
          Buyer does not purchase and does not assume any liability whatsoever, if any,
          which each Seller has, or shall have as a result of the implementation of the
          Transactions hereunder, including those due to any pending or outstanding
          grants, tax benefits, incentives and subsidies from the Government of the State
          of Israel or any agency thereof related or not, or connected or not with, the
          Business or the Acquired Assets. 

    5.27        Schedules. The
parties agree that any and all schedules called for under this Agreement and not provided
on the date of execution hereof shall be provided until the Closing Date, which schedules
shall reflect substantially the same information previously provided to the Buyer, with
the required updates resulting from the ordinary course of business.  

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

         6.1.       
          Organization of Buyer; Authority. The Buyer is a corporation duly
          incorporated and validly existing under the laws of the State of Israel. The
          Buyer has all requisite power and authority to execute and deliver the
          Transaction Documents to which it is a party and to carry out all of the actions
          required of it pursuant to the terms of such Transaction Documents. 

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

         6.3.       
          Non-Contravention. The execution and delivery by the Buyer of the
          Transaction Documents to which it is a party and the consummation by the Buyer
          of the transactions contemplated hereby and thereby will not (a) violate or
          conflict with any provisions of the Memorandum and Articles of Association of
          the Buyer, each as amended to date; or to the Buyer’s knowledge (b)
          constitute a material violation of, or be in conflict with, constitute or create
          a default under, or result in the creation or imposition of any lien upon any
          property of the Buyer pursuant to (i) any material agreement or instrument to
          which the Buyer is a party or by which the Buyer or any of its properties is
          bound or to which the Buyer or any of its properties is subject, or (ii) to its
          knowledge, any statute, judgment, decree, order, regulation or rule of any court
          or governmental authority to which the Buyer is subject, other than any such
          violations, conflicts, defaults or rights that individually or in the aggregate
          have not had and would not be expected to prevents the parties from consummating
          the transaction under this Agreement. 

20

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

         6.5.       
          Broker. The Buyer has retained a broker, agent, finder or other
          intermediary in relation to, or in connection with, the negotiation or
          consummation of the transactions contemplated by this Agreement. Buyer shall pay
          said Broker’s fees at Buyer’s sole responsibility and expense. 

    6.6        Information
and Experience. Buyer confirms that it has reviewed and inspected such data provided
to it by the Sellers regarding the Sellers as it deemed appropriate, and has been
afforded the opportunity to ask questions and receive answers, information, documents and
data regarding the Sellers and their business and is acquiring the Acquired Assets
following such inspection. In addition, Buyer confirms that it has such knowledge and
experience in financial and business matters that it is capable of evaluating the merits
and risks of the purchase of the Acquired Assets contemplated hereunder. The foregoing,
however, does not derogate from the representations and warranties made under Section 5
to this Agreement.  

    6.7        Disclosure. No
representation or warranty by the Buyer in this Agreement or in any exhibit, schedule,
written statement, certificate or other document delivered or to be delivered to the
Sellers by Buyer pursuant hereto or in connection with the consummation of the
transactions contemplated hereby contains or will contain any untrue statement of a
material fact or omits to state a material fact required to be stated therein and
necessary to make the statements contained therein not misleading.  

    6.8        SEC
Reports. Since January 1, 2006, the Buyer has filed all reports, schedules, forms,
statements and other documents required to be filed by the Buyer as a foreign private
issuer under the Securities Act and the Exchange Act (the foregoing materials, including
the exhibits thereto and documents incorporated by reference therein, being collectively
referred to herein as the “SEC Reports”) on a timely basis. As of their
respective dates, and subject to any amendments or supplements in later filings, the SEC
Reports complied in all material respects with the requirements of the Securities Act and
the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any
untrue statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The audited consolidated
financial statements of the Buyer included in the SEC Reports as amended fairly present
in all material respects the financial position of the Buyer and its consolidated
subsidiaries as of and for the dates thereof and for the periods then ended.  

21

    6.9        Securities
Act Exemption. Assuming the accuracy of Sellers’ representations and warranties
herein, the offer and sale of the Consideration Shares are exempt from registration under
the Securities Act and other applicable securities laws.  

        7.
          REPRESENTATIONS AND UNDERTAKINGS REGARDING THE CONSIDERATION SHARES  

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

    7.2        Availability
of Exemptions. The Buyer hereby represents to the Sellers that the Consideration
Shares are being offered pursuant to an exemption or exemptions from registration
requirements of Israeli and U.S. Federal and state securities laws. The Sellers
understand that the Buyer is relying upon the truth and accuracy of each Seller’s
representations, warranties, agreements, acknowledgments and understandings set forth
herein in order to determine the applicability of such exemptions and the suitability of
such Seller to receive the Shares.  

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

	 	
“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THESE SHARES UNDER THE SECURITIES ACT
OF 1933 OR PURSUANT TO ANY OTHER AVAILABLE EXCEPTION FROM SUCH REGISTRATION UNDER SAID
ACT. IN ADDITION, THESE SHARES ARE SUBJECT TO A NO SALE COMMITMENT AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF, BEFORE [6 months following the Closing Date] WITHOUT THE PRIOR
WRITTEN CONSENT OF B.O.S. BETTER ON-LINE SOLUTIONS LTD. ANY PURPORTED SALE OR
DISPOSITION IN CONTRIVANCE OF THE ABOVE SHALL BE DEEMED VOID AND HAVE NO EFFECT
“  

22

    7.4        Restrictions
on Transferability and Hedging.  

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

		    7.4.2        Each
Seller acknowledges that the Buyer will not register any transfer of Consideration Shares
not made pursuant to registration under the Securities Act, or pursuant to an available
exemption from registration.  

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

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

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

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

    7.10        Broker-Dealer.
The Seller is not a broker-dealer, nor is it an affiliate of any broker-dealer.  

    7.11        Disclosure.
The representations and warranties of the Sellers contained in this Section 7 as of the
date hereof and as of the Closing, do not contain any untrue statement of a material fact
or omit to state a material fact required to be stated herein or necessary to make the
statements herein, not misleading. Each Seller understands and confirms that the Buyer
will rely on the foregoing representations in effecting the issuance of the Consideration
Shares hereunder.  

23

        8.
          CONDUCT OF BUSINESS AFTER CUT OFF DATE.  

        Commencing
on the Cut Off Date Buyer shall conduct the Business acquired hereunder. Therefore Seller
covenants and agrees that from the Cut Off Date, except as otherwise specifically
consented to or approved by the Buyer in writing: 

         8.1.       
          Full Access. The Buyer shall have full access to all properties, books,
          records, licenses and sub-licenses, research and development agreements, vendor
          contracts and consulting agreements, contracts and documents of the Sellers
          relating to, or in connection with, the Business and/or the Acquired Assets, and
          the Sellers shall furnish or cause to be furnished to the Buyer and its
          authorized representatives all assistance and information with respect to the
          Acquired Assets and/or the Business as may be reasonably requested. 

         8.2.       
          Carry on in Regular Course. From the Cut-Off Date and until the Closing
          Date each Seller shall assist Buyer to operate the Business and to carry on the
          Business diligently and substantially in the same manner as heretofore, in the
          ordinary course consistent with past practice and to maintain the Acquired
          Assets and Inventory in good operating condition and repair, and make all
          necessary renewals, additions and replacements thereto. The aforesaid does not
          derogate from the provisions of Section 1.4(c) above. Buyer shall bear all costs
          and expenses related to the Business and shall receive all payments (including
          accounts receivables accrued prior to Cut-Off Date) to the account specified in
          Schedule 8.2 herein, and shall be entitled to hold those amounts which
          belong to Buyer in accordance with the provisions of Section 1.1. Buyer shall be
          entitled to use any of Sellers’ trade names (including Dimex) as shall be
          determined between the parties. Upon Buyer’s request each Seller shall give
          its consent and approval to any Authority or Registrar in order to enable Buyer
          to register a company, or trade name, as the case may be, using the name Dimex
          or any similar name. 

    8.3        Employees. 

        Schedule
8.3 states the period of the advance notice that each of Sellers’
employees is entitled to receive pursuant to their employment terms with the relevant
Seller. Seller represents that on Cut-Off Date Seller gave all their employees an advance
notice notifying them that their employment with the Sellers shall terminate at the end of
each employee’s respective advanced notice period and instructing them to work and to
fulfill all their duties and obligations as Sellers’ employees during the advance
notice period at the disposal and under supervision of Buyer. 

        Buyer
hereby represents that it is interested in employing the employees listed on
Schedule 8.3A; those who have accepted its offer for employment
engagement are referred to herein as the “Hired Personnel”. Buyer may elect to
engage the consultant listed on Schedule 5.15. 

24

        Each
Seller undertakes to retain all Hired Personnel until the lapse of each Hired
Personnel’s advance notice period (the “Recruiting Date”), on which
date such Hired Personnel employment with Sellers shall be terminated by the respective
Seller and begin to be employed or retained by Buyer on terms to be agreed (but not less
than similar to the terms enjoyed by such persons prior to the Cut Off Date (except with
respect to options to purchase shares of the Buyer which, unless provided otherwise in the
employment agreements of the particular Hired Personnel, shall not bind the Buyer and
shall not be issued). Notwithstanding, Buyer is aware that one of Sellers’ employees
is currently on maternity leave and can only be dismissed in accordance with applicable
law. 

        It
is expressly agreed that the Sellers, jointly and severally, alone shall be liable for and
shall pay to each of their respective Hired Personnel, on or before the Recruiting Date,
any and all payments due to them with respect to the period up to the Recruiting Date
(including, without limitation, payment of salary or consultancy fees, any advance notice
payment (if applicable under the law or by any agreement), redemption of unused vacation
days, any commission or bonus payments and any other liability, existing or contingent, to
the extent applicable to such employee or consultant). The Sellers, jointly and severally
shall fully indemnify and hold Buyer harmless, from and against any demand or claim
brought against Buyer by any employee (including the Hired Personnel) with respect to its
engagement by any Seller prior to the Recruiting Date, including by way of claiming for
accumulation of rights based on alleged continuation of employment of any of the Hired
Personnel by Buyer and Sellers together; provided, however, that Sellers’ liability
under this Section 8.3 shall be limited in any case to such rights or amounts arising in
connection with or as a result of such Hired Personnel’s employment with the Sellers
on or prior to the Recruiting Date. Sellers shall notify the Hired Personnel of the
transfer of the Acquired Assets to the Buyer and reasonably cooperate with Buyer in all
respects relating to any actions to be taken pursuant to this section and in achieving an
orderly transition. 

The Buyer shall fully indemnify and
hold Sellers harmless, from and against any demand or claim brought against any Seller by
any Hired Personnel with respect to its engagement by Buyer after the Recruiting Date,
including by way of claiming for accumulation of rights based on alleged continuation of
employment of any of the Hired Personnel by Buyer and Seller together; provided, however,
that Buyer’s liability under this Section 8.3 shall be limited in any case to such
rights or amounts arising in connection with or as a result of such Hired Personnel’s
employment with the Buyer after the Recruiting Date. 

Seller will not take any action that
is intended to interfere with Buyer’s efforts to retain any of the Hired Personnel. 

During the 36-months period following
the Closing, neither Seller, DH nor any affiliate controlled by or under the control of
any of them (“First Party”), shall directly or indirectly solicit or encourage
or employ any officer, employee or consultant of Buyer (including Hired Personnel) or any
of its Affiliates or subsidiaries (“Second Party”) to leave its
employment/engagement for employment/engagement by or with such First Party or any
competitor of the Second Party. 

        Sellers
shall not, at any time during the three -year period immediately following the Cut-Off
Date, directly or indirectly, own, manage, control or participate in the ownership,
management or control of, any business which competes with the Buyer’s business as
conducted as of Closing. 

25

         8.4.       
          Insurance. With respect to the Acquired Assets and Real Property and
          until the Closing Date the Sellers shall not terminate the insurance policies
          described on Schedule 5.13. 

         8.5.       
          No Default. The Parties shall not do any act or omit to do any act, or
          permit any act or omission to act, which will cause a material breach of any
          contract, commitment or obligation of the Sellers or Buyer with respect to the
          Acquired Assets, or otherwise related to, or in connection with, the Business
          and the Sellers shall use their best commercial efforts to assist Buyer with the
          assignment of all the Assumed Contracts from Sellers to Buyer, in accordance
          with the provisions of Section 1. 

         8.6.       
          Consents of Third Parties. The Sellers will employ their best commercial
          efforts to secure the consents, in form and substance reasonably satisfactory to
          the Buyer to the consummation of the transactions contemplated by this Agreement
          by each party to any of the Assumed Contracts and any governmental authority
          described in Schedule 5.4. Sellers shall not be liable for failure to obtain
          such consents and approvals by the Closing, provided they have complied with
          their obligation in this Section 8.6. 

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

         9.1.       
          Representations and Warranties True at Cut-Off Date and Closing. The
          representations and warranties made by the Seller in or pursuant to this
          Agreement shall be true and correct at and as of the Cut-Off Date and Closing
          Date (subject to normal adjustments as a result of conducting the ordinary
          course of business until the Closing) with the same effect as though such
          representations and warranties had been made or given at and as of the Cut-Off
          Date and the Closing Date. 

         9.2.       
          Compliance with Agreement. The Sellers shall have performed and complied
          with all of their obligations and covenants under this Agreement to be performed
          or complied with by each on or prior to the Closing Date. 

         9.3.       
          Approvals. Buyer’s Board of Directors has approved the number of the
          Consideration Shares contemplated hereunder (in excess of the number of
          Consideration Shares previously approved by the Board) and Buyer has obtained
          all applicable regulatory approvals in connection with the issuance of the
          Consideration Shares (including, without any limitations, Tel-Aviv Stock
          Exchange, NASDAQ and Investment Center). Buyer undertakes to use best commercial
          efforts to obtain such required regulatory approvals by the Closing Date. 

26

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

         9.4.       
          No Litigation. No restraining order or injunction shall prevent the
          transactions contemplated by this Agreement and no action, suit or proceeding
          shall be pending or threatened before any court or administrative body: (a) in
          which it will be or is sought to restrain or prohibit or obtain damages or other
          relief relating to, or in connection with, this Agreement or the consummation of
          the transactions contemplated hereby or (b) relating to, or in connection with,
          any claim for damages against the Sellers which would have a material adverse
          implications on the transactions contemplated hereby. 

    9.5        Consents
of Third Parties. The Seller shall have obtained the consent, in form and substance
satisfactory to the Buyer and the Buyer’s counsel, as required under Section
4.2.1(e) and (h) hereto.  

         9.6.       
          Proceedings and Documents Satisfactory. All proceedings relating to, or
          in connection with, the transactions contemplated by this Agreement and all
          certificates and documents delivered to the Buyer which relate to, or are in
          connection with, the transactions contemplated by this Agreement shall be to the
          reasonable satisfaction in all respects to the Buyer and the Buyer’s
          counsel, and the Buyer shall have received the originals or certified or other
          copies of all such records and documents as the Buyer may reasonably request. 

    9.7        Employment
Agreement with Yuval Viner. Buyer shall enter into an employment agreement with Yuval
Viner in a form to Buyer’s reasonable satisfaction.  

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

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

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

27

    10.3        Proceedings
and Documents Satisfactory. All proceedings relating to, or in connection with, the
transactions contemplated by this Agreement and all certificates and documents delivered
to the Sellers which relate to, or are in connection with, the transactions contemplated
by this Agreement shall be to the reasonable satisfaction in all respects to the Sellers
and the Sellers’ counsel, and the Sellers shall have received the originals or
certified or other copies of all such records and documents as the Sellers may reasonably
request.  

         10.4.       
          No Litigation. No restraining order or injunction shall prevent the
          transactions contemplated by this Agreement and no action, suit or proceeding
          shall be pending or threatened before any court or administrative body: (a) in
          which it will be or is sought to restrain or prohibit or obtain damages or other
          relief relating to, or in connection with, this Agreement or the consummation of
          the transactions contemplated hereby or (b) relating to, or in connection with,
          any claim for damages against the Buyer which would have a material adverse
          implications on the transactions contemplated hereby. 

        11.
          CERTAIN COVENANTS AND ARRANGEMENTS.  

         11.1.       
          Confidential Information. Subject to the occurrence of the Closing, each
          Seller and each of their respective officers, directors and shareholders hereby
          agree to keep in strict confidence any and all information of a confidential
          nature which is related to, or connected with, the Business and/or any of the
          Acquired Assets (“Confidential Information”), including,
          without limitation, financial information, customers, suppliers, sales
          representatives. Each Seller agrees and covenants not to use any Confidential
          Information for any purpose whatsoever, and not to disclose any Confidential
          Information to any third party, other than to the extent that such use or
          disclose are necessary in order to comply with the provisions of this Agreement.
          Notwithstanding the aforesaid, no provision of this Agreement shall be construed
          to preclude such disclosure of Confidential Information as may be required by
          court order or applicable law, provided that: (i) prior notice of such
          contemplated disclosure (including reasonable details relating thereto) is
          provided to the Buyer as early as practicably possible; and (ii) such disclosure
          is effected only to the minimum extent required. To the extent the Closing has
          not occurred, the above obligations regarding confidentiality shall apply,
          mutatis mutandis, to Buyer and to Sellers with respect to Buyer’s
          confidential information. 

         11.2.       
          Non-Competition. Each Seller shall not: (i) engage, anywhere in the
          world, in any business organization that is engaged or becomes engaged in
          activities which are directly competitive with the Business, or (ii) divert to
          any competitor of the Buyer, BOScom or a subsidiary thereof any customer of the
          Buyer BOScom or a subsidiary thereof. This Section 11.2 shall apply during the
          period commencing upon the Closing Date and terminating upon the expiration of
          60 months from the Closing Date. 

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

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

28

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

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

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

    11.4        Investment
Center. DHG hereby warrants that it is an “Approved Enterprise” under the
Law for Encouragement of Capital Investments, 1959, with respect to the following
approved investment plans and corresponding certificate of approval: investment plan no.
99-1506-0-10553, and is in material compliance with the terms and provisions of such
plan. As the Buyer is interested in assuming the rights and obligations of DHG under this
plan as part of the transactions contemplated under this Agreement, the parties shall
cooperate in order to receive any approvals required to be received from the Investment
Center of the Israeli Ministry of Trade & Industry (“Investment Center”)
for such transfer and assignment, to the extent possible (“Investment Center
Approval”). Sellers shall bear all costs and expenses related to the assignment
of its Approved Enterprise to the Buyer. Notwithstanding the aforesaid, DS and/or DHG
shall be responsible for any breach by them of the terms and conditions of the
aforementioned plan, including as a result of the transactions contemplated hereunder. It
is hereby clarified that failure to obtain such approval shall not be deemed as a breach
of this Agreement by DHG or by any Seller and shall not entitle Buyer to any remedies
whatsoever.  

        12. INDEMNIFICATION
AND SET OFF RIGHTS. 

         12.1.       
          Indemnity by the Sellers. Without derogating from any section herein
          imposing upon Seller a specific duty to indemnify Buyer which indemnity shall be
          subject to the provisions of this Section 12, the Sellers, jointly and
          severally, hereby agree to indemnify and hold the Buyer harmless from and with
          respect to any and all claims, liabilities, losses, damages, costs and expenses,
          including the reasonable fees and disbursements of counsel (collectively, the
          “Losses”), resulting from or arising out of any of the
          following: 

	 	 (a) 	any
breach by the Sellers, or any of them, of this Agreement (including the
               Schedules and Exhibits hereto); 

29

	 	(b) 	any
claim, liability, obligation or damage to Buyer with respect to the Excluded
               Liabilities. 

	 	(c) 	any
falsity or inaccuracy of any of the representations and warranties of the
               Sellers, or any of them, contained in this Agreement, or in any of the
               Transaction Documents. 

	 	(d) 	any
third party’s claim against Buyer of any nature whatsoever with respect
               to the Acquired Assets that occurred or accrued prior to the Cut-Off Date; 

	 	(e) 	any
claim by a former employee of Sellers, or any of them, related to its
               employment with Sellers, or any of them. 

Indemnity by the Buyer.
Without derogating from any section herein imposing upon Buyer a specific duty to
indemnify Sellers which indemnity shall be subject to the provisions of this Section 12,
the Buyer hereby agrees to indemnify and hold the Sellers harmless from and with respect
to any and all Losses, resulting from or arising out of any of the following: 

	 	 (a) 	any
breach by the Buyer of this Agreement (including the Schedules and Exhibits
          hereto); 

	 	 (b) 	any
claim, liability, obligation or damage to Sellers with respect to the           Acquired
Assets; 

	 	(c) 	any
falsity or inaccuracy of any of the representations and warranties of the
               Buyer contained in this Agreement, or in any of the Transaction Documents; 

	 	(d) 	any
claim by a former employee of Sellers, or any of them, related to its
               employment with Buyer or any of its subsidiaries. 

    12.2.        Claims.  

		    (a)        Notice.
A party seeking indemnification from the other party hereunder (the           “Indemnified
Party”) shall promptly notify the other party in writing           (the “Indemnifying
Party”) of any action, suit, proceeding,           demand or breach (a “Claim”)
with respect to which the           Indemnified Party claims indemnification hereunder,
provided that failure           of the Indemnified Party to give such notice shall
not relieve the Indemnifying           Party of its obligations under this Section 12
except to the extent, if at all,           that such Indemnifying Party shall have been
prejudiced thereby.  

		    (b)        Third
Party Claims. If such Claim relates to, or is in connection with,           any
action, suit, proceeding or demand instituted against the Indemnified Party           by
a third party (a “Third Party Claim”), the Indemnifying           Party
shall be entitled to participate in the defense of such Third Party Claim.
          Within thirty (30) days after receipt of notice of a particular matter from the
          Indemnified Party, the Indemnifying Party may elect to assume the defense of
          such Third Party Claim, in which case only the Indemnifying Party shall have
the           authority to negotiate, compromise and settle such Third Party Claim, if
and           only if the following conditions are satisfied:  

30

		    (i)        there
exist no conflict of interest which makes separate representation by the
               Indemnified Party’s own counsel advisable; and  

		    (ii)        such
Third Party Claim does not seek an injunction or other similar equitable
               relief against the Indemnified Party that if granted would adversely
affect the                Indemnified Party or any of its Affiliates.  

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

		    (d)        Where
the Indemnifying Party has assumed the defense of the claim in accordance           with
the above, the Indemnified Party shall not be entitled to settle or           compromise
such claim without the consent of the Indemnifying Party.  

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

    12.3        Limitation
of Liability  

		    (a)        Notwithstanding
anything to the contrary herein and except for fraud or                intentional
misrepresentation: (i) all representations and warranties of the                Sellers
hereunder and under any Transaction Document, shall remain in full force
               and effect for a period of eighteen (18) months from the Closing Date,
whereupon                such representations and warranties and the Sellers’ liabilities
with                respect thereto, under this Agreement and any law, whether in
contracts, torts,                restitution or otherwise, shall expire and be of no
further force and effect;                and (ii) the aggregate liability of the Sellers
, jointly and severally, towards                Buyer, or otherwise in connection with
this Agreement and/or under any law,                whether in contracts, torts,
restitution or otherwise, in connection with a                breach of any
representation or warranty hereunder and under any Transaction                Documents:
(x) shall arise only for sums which exceed US $50,000, at which point
               claims may be made back to the first dollar of Losses; and (y) shall not
exceed,                in the aggregate, the Purchase Price paid, or to be paid to the
Sellers                hereunder; and (iii) in no event shall the Sellers, or the Buyer
be liable for                any punitive, indirect or consequential damages regardless
of the form of action                through which such damages are sought.  

31

          		    (b)       
               To the extent applicable, the provisions of this Section 12.3 shall also be
               deemed to constitute a separate written legally binding agreement among the
               parties for the purpose of Section 19 of the Israeli Limitation Law 5718-1958. 

               

          		    (c)       
               (i) All representations and warranties of the Buyer pursuant to Sections 6.7 and
               6.8 above , shall remain in full force and effect for a period of eighteen (18)
               months from the Closing Date, whereupon such representations and warranties and
               the Buyer’s liabilities with respect thereto, under this Agreement and any
               law, whether in contracts, torts, restitution or otherwise, shall expire and be
               of no further force and effect; (ii) the aggregate liability of the Buyer
               towards Seller, or otherwise in connection with this Agreement and/or under any
               law, whether in contracts, torts, restitution or otherwise in connection with a
               breach of any representation or warranty hereunder and under any Transaction
               Documents: (x) shall arise only for sums which exceed US $50,000, at which point
               claims may be made back to the first dollar of Losses; and (y) shall not exceed,
               in the aggregate, the Purchase Price paid, or to be paid to the Sellers
               hereunder, provided however that with respect to any Losses in connection with
               the Consideration Shares such amount shall not exceed the amount of NIS
               3,829,000. 

               

    12.4       Set
Off  

		    (a)        The
obligation of the Buyer to pay the Instalment payments on account of the
               Purchase Price shall not be subject to set-off, other than specifically
provided                in this Section 12.4.  

		    (b)        Without
derogating from the aforesaid, subject to the limitations set forth in
               Section 12.3 and only in accordance with the procedure set forth in this
Section                12.4, if the Buyer is entitled to claim Losses or is otherwise
entitled to any                amounts from Sellers hereunder, it shall be entitled to
reduce such amounts and                Losses from the last Instalment, but not more than
NIS 3,000,000, which amount                shall be held in accordance with the
provisions hereof, provided that such                amount reduced shall in no event be
more than the aggregate amounts for which                indemnification may be sought
hereunder. The aforementioned set-off limitation                shall not be deemed to
limit the Buyer’s right to indemnity hereunder.  

		    (c)        If
the Buyer desires to reduce the last Instalment by the amount of any amounts
               or Losses as provided above, Buyer shall so notify the Seller in writing
to this                effect, stating in such notice its claims for Losses, the basis
for such claim                and the amount it desires to reduce and shall pay the
balance of the respective                Instalment to the Seller.  

32

		    (d)        Buyer
will have to pay to Sellers the amount so reduced, only upon reaching an
               agreement with Sellers to both parties satisfaction or upon final decision
of                any competent court (and subject to such decision).  

    12.5        Notwithstanding
anything to the contrary hereunder, all remedies whatsoever sought by an Indemnified
Party against an Indemnifying Party under this Agreement (whether under this Section 12
or under any other section herein), any Transaction Document and under any law, whether
in contracts, torts, restitution or otherwise, shall be subject to the limitations in
this Section 12, from and after the Closing, provided however that the Indemnified Party
shall be entitled (i) to seek injunctive relief to enjoin the breach, or threatened
breach, of any provision of this Agreement and (ii) to seek specific performance of the
provisions of this Agreement.  

        13.
          The Seller and the Buyer will use their reasonable best efforts to effect the
          Closing and to receive all consents and approvals required therefor.  

Unless otherwise agreed in writing by
the parties, this Agreement may be terminated if one or more of the conditions required to
effect the Closing hereunder is not met by March 31st, 2008, or any other later
date to be agreed by the parties, provided that a party that caused the closing condition
not to be met shall not be entitled to effect such termination. 

        14.
          (Left blank intentionally)  

        15.
          GENERAL.  

    15.1        Whenever
a representation is made “to the Seller’s knowledge” or is
qualified by any similar expression, reference is made to the knowledge of the Seller,
and the following Officers of Seller: Gabi Jacobs, Yuval Viner, Uzi Prizat, Oded Engel
and Oshrit Dinor and each of them shall be deemed: to have made due and careful inquiries
about the facts stated in such Representation, with the assistance (as the case may be)
of any knowledgeable person within the Seller, before making such a representation.  

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

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

         15.3.       
          Notices. All notices, demands and other communications hereunder shall be
          in writing or by written telecommunication, and shall be deemed to have been
          duly given if delivered personally or if mailed by certified or registered mail,
          return receipt requested, postage prepaid, or if sent by overnight courier, or
          sent by written telecommunication, as follows:If to the Buyer, to: 

33

B.O.S. Better Online Solutions Ltd.
20 Freiman Street
Rishon Lezion POB 198 75101, Israel 

Attention: Chief Financial Officer
Facsimile:    (972) 3 954-1000 

with a copy to:  

Amit, Pollak, Matalon & Co.
 NITSBA Tower, 17 Yitzhak Sadeh Street,
19th Floor
Tel Aviv 67775 
Attention: Shlomo Landress, Adv. 

Facsimile: (972) 3 568-9001 

If to the Seller, to: 

Dimex Systems (1998)  Ltd
 Ha'kidma
63, Hertzliya
 Facsimile:     (972) 9-9571714 
 Attn: Gabi Jacobs 

With a copy to:
 Gabi Jacobs
 Ha'kidma
63, Hertzliya
 Facsimile:    (972) 9-9571714  

and to; 

Shibolet & Co.
 Museum Tower, 4
Berkowitz St.
 Tel-Aviv, 64238 Israel
 T:  +972-3- 777-8290
 F:  +972-3- 777-8444
 Attention:
Ofer Manor, Adv. 

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

34

         15.4.       
          Entire Agreement. This Agreement contains the entire understanding of the
          parties, supersedes all prior agreements and understandings relating to the
          subject matter hereof and shall not be amended except by a written instrument
          hereafter signed by both of the parties hereto. 

         15.5.       
          Governing Law. The validity and construction of this Agreement shall be
          governed by and construed in accordance with the laws of the State of Israel.
          Any dispute arising under or in relation to this Agreement shall be resolved in
          the competent court of Tel Aviv-Jaffa district only, and each of the parties
          hereby submits irrevocably to the exclusive jurisdiction of such court. 

         15.6.       
          Sections and Section Headings. The headings of sections and subsections
          are for reference only and shall not limit or control the meaning thereof. 

         15.7.       
          Assigns. This Agreement shall be binding upon and inure to the benefit of
          the parties hereto and their respective heirs, successors and permitted assigns.
          Neither this Agreement nor the obligations of any party hereunder shall be
          assignable or transferable by such party without the prior written consent of
          the other party hereto; provided, however, that nothing contained in this
          Section 15.7 shall prevent the Buyer, without the consent of the Sellers from:
          (i) transferring any of the Acquired Assets held by it, or by any of its
          subsidiaries, to an Affiliate of the Buyer, as long as such Affiliate undertakes
          towards Sellers in writing to guarantee Buyer’s obligations hereunder; and
          (ii) assigning all of its rights and liabilities hereunder in the framework of a
          merger or a transaction for the sale of all or substantially all of Buyer’s
          assets, provided that the surviving or purchasing entity assumes in writing all
          of Buyer’s obligations hereunder and provides Sellers with reasonably
          sufficient assurances for the payment of the outstanding Purchase Price to
          Sellers. 

         15.8.       
          Severability. In the event that any covenant, condition, or other
          provision herein contained is held to be invalid, void, or illegal by any court
          of competent jurisdiction, the same shall be deemed to be severable from the
          remainder of this Agreement and shall in no way affect, impair, or invalidate
          any other covenant, condition, or other provision contained herein. 

         15.9.       
          Further Assurances. The parties agree, without any additional
          consideration, to take such reasonable steps and execute such other and further
          documents as may be necessary or appropriate to cause the terms and conditions
          contained herein to be carried into effect. 

         15.10.       
          Counterparts. This Agreement may be executed in multiple counterparts,
          each of which shall be deemed an original, but all of which together shall
          constitute one and the same instrument. 

         15.11.       
          Best efforts to Satisfy Closing Conditions. The Seller and the Buyer will
          use their best efforts to effect the Closing, as set forth herein. In no event
          will either party bear any liability whatsoever (whether vis-à-vis the
          other party or any third parties) in the event that it will elect not to
          consummate the transactions contemplated herein if one or more of the conditions
          to effect the Closing hereunder is not fully satisfied in a timely manner. 

35

         15.12.       
          Publicity. Except as is necessary for governmental notification
          purposes or to comply with applicable laws and regulations or to enforce its
          rights under this Agreement, and except as otherwise agreed to by the parties
          hereto in writing, the Sellers shall (a) keep the material terms of this
          Agreement confidential and (b) until the Closing the parties will coordinate
          together any public announcement relating to the transactions contemplated by
          this Agreement, including the text and the exact timing of any such
          announcement. 

        The
Sellers acknowledges that the Buyer is a public company traded on NASDAQ and on the TASE
and is subject to strict reporting requirements. On request, Seller shall fully and timely
provide the Buyer (in addition to the financial statements specified in Section 4.2.1(l))
with all information in their possession or control required by the Buyer to meet all
reporting requirements, including without limitation any and all financial information and
financial statements. 

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

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

36

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

	B.O.S BETTER ONLINE SOLUTIONS LTD.

By: 
——————————————

Name:
Title:	DIMEX SYSTEMS (1988) LTD.

By: 
——————————————

Name:
Title:

	 	DIMEX HAGALIL LTD.

By: 
——————————————

Name:
Title:

Intermec (Dimex Group) Ltd.
hereby represents that pursuant to a merger agreement with DS, all of its rights, assets
and activities in connection with the Business or the Acquired Assets have been
transferred to DS, and hereby agrees to guarantee all of Sellers’ undertakings and
obligations hereunder, and to the extent required to take any action in order to allow
Sellers to comply with their obligations herein and effect the aforementioned
transactions. 

	——————————————

By:   ____________ 
Title: ____________  

BOScom Ltd. and Dimex Hagalil
Projects (2008) Ltd. (jointly and severally) agree to guarantee all of Buyer’s
undertakings and obligations hereunder, and to the extent required to take any action in
order to allow Buyer to comply with its obligations herein and effect the aforementioned
transactions. 

	——————————————

By:   ____________ 
Title: ____________  

	——————————————

By:   ____________ 
Title: ____________  

37

Dimex Holdings (1998) Ltd
agrees to guarantee all of Sellers’ undertakings and obligations hereunder up to 87%
of the Purchase Price actually received by the Sellers under this Agreement. 

	——————————————

By:   ____________ 
Title: ____________  

38

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