Document:

EXHIBIT 10.2

                             NOTE PURCHASE AGREEMENT
                             -----------------------

      THIS NOTE PURCHASE AGREEMENT (this "Agreement"), is made as of the 7th day
of August 2006,  by and between Andy Roesch (the  "Seller"),  and Data Systems &
Software, Inc., a Delaware corporation (the "Purchaser").

                                    RECITALS
                                    --------

      WHEREAS,  in connection with that certain Common Stock Purchase Agreement,
dated as of the date hereof (the "Purchase  Agreement"),  between Paketeria GmbH
("Paketeria")  and Purchaser,  and the transactions  contemplated  thereby,  the
parties hereto are entering into this Agreement;

      WHEREAS,  the  Purchase  Agreement  states  that,  as a  condition  to its
effectiveness, the Seller and the Purchaser enter into this Agreement; and

      WHEREAS,  the Seller wishes to sell,  transfer and assign to the Purchaser
all of its  rights,  titles,  interests,  duties and  obligations  in, to and in
connection with, that certain Convertible  Promissory Note, dated as of the date
hereof,  issued by Paketeria to the Seller,  in the  principal  amount of (euro)
210,000 (the  "Note"),  a copy of which is annexed  hereto as Exhibit A, and the
Purchaser,  subject  to the  terms of this  Agreement,  wishes to  purchase  and
receive from the Seller all of the Seller's rights,  titles,  interests,  duties
and  obligations  in,  to and in  connection  with,  the Note on the  terms  and
conditions set forth herein.

      NOW, THEREFORE, the parties hereby agree as follows:

      1. SALE, PURCHASE, ASSIGNMENT AND ASSUMPTION.

            1.1 Sale and Purchase. Subject to Section 1.2, the Seller shall sell
and transfer to the Purchaser and its  successors and assigns  forever,  and the
Purchaser  shall  purchase  and  accept  from  the  Seller  for  itself  and its
successors and assigns forever, all of the Seller's rights, titles and interests
in and to (i) upon the  delivery  by the  Purchaser  of an  Exercise  Notice (as
defined  below) with  respect to the entire  Note,  the Note,  for an  aggregate
purchase price of Two Hundred and Ten Thousand Euros ((euro)  210,000),  or (ii)
upon the delivery by the Purchaser of an Exercise Notice (as defined below) with
respect to a portion of the Note or upon the occurrence of a Milestone Event (as
defined below), a portion of the Note,  including related accrued interest,  for
an amount equal to the portion of the principal of the Note to be purchased plus
accrued  interest as per the date of the event  pursuant to Section 1.2 (in each
case, the "Purchase  Price").  The purchase of the Note may occur in one or more
closings.

            1.2 Condition Precedent.  Purchaser shall not be obligated hereunder
to purchase all or any portion of the Note (and pay the  corresponding  Purchase
Price to the Seller) until such time as:

<PAGE>

                  (a) the  Purchaser  delivers  a written  notice,  at any time,
advising  Seller of its intention to complete the purchase of the Note, in whole
or in part (the "Exercise Notice" together with this Agreement and the Note, the
"Transaction  Documents"),  substantially in the form attached hereto as Exhibit
B;

                  (b) with respect to one-third (1/3) of the principal amount of
the Note, upon Complete  Execution (as defined below) of a licence agreement for
the sixtieth (60th) Paketeria store;

                  (c)  with  respect  to an  additional  one-third  (1/3) of the
principal  amount of the Note,  upon Complete  Execution (as defined below) of a
licence agreement for the seventy-fifth (75th) Paketeria store; and

                  (d) with respect to the final one-third (1/3) of the principal
amount of the Note,  upon  Complete  Execution  (as defined  below) of a licence
agreement for the one-hundred and fifteenth  (115th)  Paketeria store (the event
set forth in this clause (d),  together with the events set forth in clauses (b)
and (c) above, the "Milestone Events" and each a "Milestone Event").

For purposes of this Section 1.2, "Complete  Execution" shall mean, with respect
to each license  agreement  executed by Paketeria,  (i) a fully executed license
agreement  between  Paketeria  and a  licensee,  and (ii)  delivery  of evidence
reasonably  satisfactory to the Company that the licensee has adequate resources
to perform under the license  agreement,  including payment of a license fee and
"build-out"  of the  licensee's  store,  if such  "build-out" is required by the
standard operating procedures of Paketeria.

            1.3 Closing.  Following  the delivery of the Exercise  Notice or the
occurrence  of a Milestone  Event,  a closing of the  transactions  described in
Section 1.1 (a "Closing") shall take place.

                  (i) Subject to the immediately following sentence, the Closing
shall take place at the offices of Reitler  Brown &  Rosenblatt,  LLC, 800 Third
Avenue,  21st Floor,  New York,  New York at such time or at such other place as
the Seller and the Purchaser may mutually agree,  but in any event no later than
forty-five  (45) calendar days after the Exercise  Notice has been  delivered or
the Milestone Event has taken place.

                  (ii)  If  the  Purchaser  has in the  Exercise  Notice,  or by
separate written notice,  announced its intention to exercise, in respect of the
Note or the partial  amount of the Note to be  acquired,  its  conversion  right
fully or with regard to a permitted partial amount, the closing shall take place
at such time as the parties  shall  mutally  agree,  before a German Notary upon
whom the parties shall mutually agree, but in any event no later than forty-five
(45) calendar days after the Exercise Notice containing such announcement or the
separate written notice has been delivered to the Seller.

                                      -2-
<PAGE>

            1.4 Closing Deliveries. At each Closing:

                  (a) the Purchaser shall pay to the Seller or its designee,  by
wire transfer to an account designated in writing by the Seller at least two (2)
business days prior to such Closing, the Purchase Price in immediately available
funds;

                  (b) the Seller  shall  deliver to the  Purchaser  the Note (or
cause  Paketeria to issue a new  promissory  note  evidencing the portion of the
Note so transferred), free and clear of all liens, claims or encumbrances (other
than any liens, claims or encumbrances in favor of the Purchaser) together with,
confirmation  that title to the Note (or such  portion as is to be  transferred)
has irrevocably  transferred to the Purchaser in a form reasonably  satisfactory
to the Purchaser; and

                  (c)  each  of the  parties  shall  have  delivered  all  other
documents,  instruments and writing  required by the other party to be delivered
to them pursuant to this Agreement,  in form and substance  satisfactory to such
party.

                  (d) In the  event  the  Closing  takes  place  before a German
notary public pursuant to Section 1.3(ii) above:  (i) the Seller shall take care
that all such  documentation  necessary to effect entry,  in due course,  of the
capital  increase  for  the  conversion  in the  commercial  register  including
(without  limitation) a unanimous  notarized  shareholders'  resolution  and the
filing by the Company of such capital  increase to the commercial  register,  is
duly executed at such Closing and (ii) the Purchaser  shall  subscribe the share
to be issued in such capital  increase and shall arrange for payment of the cash
contribution  by check  payable to the  Company,  or by wire  transfer to a bank
account designated by the Company

            1.5 Assignment and Transfer.

                  The Seller hereby assigns and transfers all of his present and
future  rights and  obligations  under the Note to the  Purchaser as of the date
hereof. The assignment and transfer shall become valid if (condition precedent):

                    (i) the Note is delivered by the Seller to the Purchaser, in
which case the transfer and assignment becomes immediately effective in relation
to all of the rights represented by the Note; or

                    (ii)  a new  promissory  note  issued  by  the  Company  and
evidencing  a portion of the Note is  delivered  by the Seller or the Company to
the  Purchaser,  in which case the transfer and assignment  becomes  immediately
effective in relation to such portion of the Note along with related interest as
evidenced by the new promissory note.

The Purchaser hereby accepts such transfer and assignment as of the date hereof.

                                      -3-
<PAGE>

      2. REPRESENTATIONS AND WARRANTIES.

            2.1 Construction.  For purposes of this Section 2, a person shall be
deemed to have "knowledge" of a particular fact or other matter if the person is
actually  aware,  or should in the exercise of reasonable  judgment be aware, of
such fact or other matter. A person that is a corporation,  partnership or other
business  entity shall be deemed to have  "knowledge"  of a  particular  fact or
other matter if any officer,  director,  manager,  managing member or partner of
such person has knowledge (as described in the preceding  sentence) of such fact
or other matter.

            2.2  Seller's  Representations  and  Warranties.  The Seller  hereby
represents  and  warrants  to the  Purchaser  as of the date of the  Closing  as
follows:

                  (a) Authorization; Valid and Binding Agreement. Except for any
notices  required to be delivered to Purchaser in  connection  therewith and any
consent required to be obtained from the Purchaser, the Seller has all requisite
power and authority to execute and deliver this Agreement, to perform all of its
obligations and  undertakings  hereunder and  thereunder,  and to consummate the
transactions  contemplated hereby and thereby. The execution and delivery by the
Seller of this  Agreement,  the performance by the Seller of its obligations and
undertakings  hereunder and the  consummation by the Seller of the  transactions
contemplated  hereby,  have been duly and validly  authorized  by all  necessary
action of the  Seller  and no other  proceedings  on the part of the  Seller are
necessary  to  authorize  the  execution  or  delivery  by the  Seller  of  this
Agreement,  the performance by the Seller of its  obligations  and  undertakings
hereunder,  or the consummation by the Seller of the  transactions  contemplated
hereby.  This Agreement has been duly executed and delivered by the Seller,  and
constitutes the legal, valid and binding obligations of the Seller,  enforceable
against the Seller in accordance with its terms.

                  (b)  Conflicts;  Consents.  The  execution and delivery by the
Seller of this  Agreement,  the performance by the Seller of its obligations and
undertakings  hereunder,  and the consummation by the Seller of the transactions
contemplated  hereby,  do not and will  not  conflict  with,  or  result  in any
violation  of, or  default  under,  or result  in the  creation  of any Lien (as
defined in Section 2.2(c)) on the properties or assets of the Seller under,  any
provision of (i) any contract, agreement, instrument or arrangement to which the
Seller  is a party or by which any of the  Seller's  properties  or  assets  are
bound, (ii) any license,  franchise,  permit or other similar authorization held
by the Seller, or (iii) to the knowledge of the Seller,  any judgment,  order or
decree, statute, law, ordinance,  rule or regulation applicable to the Seller or
the Seller's properties or assets.

                  (c) Title to Properties and Assets; Liens, Etc. Except for any
Lien arising out of this  Agreement,  as of the Closing,  Seller is the owner of
all right,  title and  interest in and to the Note,  and the Note is free of any
mortgage,  pledge,  lien,  encumbrance,  charge or other adverse claim (each,  a
"Lien") other than Liens in favor of the Purchaser.

            2.3  Purchaser's  Representations,  Warranties  and  Covenants.  The
Purchaser  hereby  represents,  warrants  and  covenants to the Seller as of the
Closing as follows:

                                      -4-
<PAGE>

                  (a) Organization and Standing.  The Purchaser is a corporation
duly  incorporated,  validly  existing  and in good  standing  under the laws of
Delaware.

                  (b) Authorization;  Valid and Binding Agreement. The Purchaser
has all requisite power and authority to execute and deliver this Agreement,  to
perform its  obligations  and  undertakings  hereunder,  and to  consummate  the
transactions contemplated hereby. The execution and delivery by the Purchaser of
this  Agreement,  the  performance  by  the  Purchaser  of its  obligations  and
undertakings   hereunder,   and  the   consummation  by  the  Purchaser  of  the
transactions  contemplated  hereby, have been duly and validly authorized by all
necessary  action on the part of the Purchaser and no other  proceedings  on the
part of the  Purchaser  are  necessary to authorize the execution or delivery by
the  Purchaser  of this  Agreement,  the  performance  by the  Purchaser  of its
obligations and  undertakings  hereunder or the consummation by the Purchaser of
the transactions  contemplated hereby. This Agreement has been duly executed and
delivered by the Purchaser, and constitutes the valid and binding obligations of
the Purchaser, enforceable against the Purchaser in accordance with its terms.

                  (c)  Conflicts;  Consents.  The  execution and delivery by the
Purchaser of this Agreement, the performance by the Purchaser of its obligations
and undertakings  contemplated hereunder,  and the consummation by the Purchaser
of the transactions  contemplated  hereby, do not and will not conflict with, or
result in any  violation  of, or default  under or result in the creation of any
Lien on the  properties or assets of the Purchaser  under,  any provision of (i)
the Certificate of Incorporation,  Bylaws of the Purchaser, each as the same has
been amended to date, (ii) any contract, agreement, instrument or arrangement to
which the Purchaser is a party or by which any of the Purchaser's  properties or
assets  are  bound,  (iii)  any  license,  franchise,  permit  or other  similar
authorization held by the Purchaser,  or (iv) to the knowledge of the Purchaser,
any  judgment,  order or decree,  statute,  law,  ordinance,  rule or regulation
applicable to the Purchaser or the Purchaser's properties or assets.

      3. MISCELLANEOUS.

            3.1 Benefits of Agreement.  Except as otherwise  expressly  provided
herein,  the  provisions  hereof shall inure to the benefit of, be binding upon,
and be enforceable  by, the parties hereto and their  respective  successors and
assigns.

            3.2  Assignment.  This  Agreement  and the  rights  and  obligations
hereunder  shall not be assignable or  transferable  by either party without the
prior written consent of the other party.  Any instrument  purporting to make an
assignment in violation of this Section 3.2 shall be void.

            3.3  Entire  Agreement.  This  Agreement,  together  with the  other
Transaction  Documents,  and the exhibits hereto and thereto constitute the full
and entire  understanding  and agreement  between the parties with regard to the
subject matter hereof.

                                      -5-
<PAGE>

            3.4 Severability. In case any provision of this Agreement or portion
hereof, shall be invalid, illegal or unenforceable,  the validity,  legality and
enforceability  of the remaining  provisions shall not in any way be affected or
impaired thereby.

            3.5 Amendment and Waiver. This Agreement and any provision hereof or
right or obligation  hereunder may be amended,  modified or waived only with the
prior written consent of the Seller and the Purchaser.

            3.6 Delays or  Omissions;  Remedies.  It is agreed  that no delay or
omission to exercise any right,  power or remedy accruing to any party, upon any
breach,  default or  noncompliance  by the other  party,  shall  impair any such
right,  power or remedy,  nor shall it be  construed  to be a waiver of any such
breach,  default or noncompliance,  or any acquiescence therein, or of or in any
similar breach, default or noncompliance thereafter occurring.

            3.7  Notices.  All  notices and other  communications  given or made
pursuant to this Agreement  shall be in writing and shall be deemed  effectively
given: (a) upon personal delivery to the party to be notified,  (b) when sent by
confirmed  electronic  mail or facsimile if sent during normal business hours of
the recipient, and if not so confirmed,  then on the next business day, (c) five
(5) days after having been sent by registered or certified mail,  return receipt
requested,  postage  prepaid,  or (d) one business (1) day after  deposit with a
nationally recognized overnight courier,  specifying next business day delivery,
with written  verification of receipt.  All communications  shall be sent to the
respective  parties at their address as set forth on the  signature  page, or to
such e-mail address,  facsimile  number or address as  subsequently  modified by
written notice given in accordance  with this Section 3.7. If notice is given to
the Seller, a copy shall also be sent to Kornblumenring 3, 12357 Berlin,  and if
notice is given to the Purchaser,  a copy shall also be given to Reitler Brown &
Rosenblatt LLC, 800 Third Avenue,  21st Floor,  New York, New York 10022,  (212)
371-5500, Attention: Scott H. Rosenblatt, Esq.

            3.8 Expenses.  Except as otherwise provided herein, each party shall
pay all costs and  expenses  that it incurs  with  respect  to the  negotiation,
execution, delivery, performance and consummation of this Agreement.

            3.9 Titles and Subtitles. The titles of the sections and subsections
of this  Agreement  are for  convenience  of  reference  only  and are not to be
considered in construing this Agreement.

            3.10 Pronouns.  All pronouns  contained  herein,  and any variations
thereof,  shall be  deemed  to  refer to the  masculine,  feminine  or  neutral,
singular or plural, as the identity of the parties may require.

            3.11  Dispute  Resolution.  The parties (a) hereby  irrevocably  and
unconditionally  submit to the  jurisdiction of the state courts of New York and
to the  jurisdiction  of the  United  States  District  Court  for the  Southern
District  of New York for the  purpose of any suit,  action or other  proceeding
arising out of or based upon this Agreement, (b) agree not to commence any suit,
action or other proceeding arising out of or based upon this Agreement except in
such courts, and (c) hereby waive, and agree not to assert, by way of motion, as
a defense, or otherwise, in any such suit, action or proceeding,  any claim that
it is not subject personally to the jurisdiction of the above-named courts, that
its property is exempt or immune from  attachment or  execution,  that the suit,
action or proceeding is brought in an inconvenient  forum, that the venue of the
suit,  action or  proceeding  is improper or that this  Agreement or the subject
matter hereof may not be enforced in or by such court.

                                      -6-
<PAGE>

            3.12 Waiver of Jury Trial. Each party hereto waives any right it may
have to a trial by jury in any  action  or  proceeding  directly  or  indirectly
arising out of or relating to this  Agreement or the  transactions  contemplated
hereby (whether based on contract, tort, equity or any other theory). Each party
certifies  that no  representative,  agent or  attorney  of the other  party has
represented,  expressly  or  otherwise,  that the other party to this  Agreement
would not, in the event of litigation,  seek to enforce the foregoing waiver and
acknowledges  that all  parties  hereto  have been  induced  to enter  into this
Agreement by, among other things,  the waivers and  certifications  contained in
this Section 3.12.

            3.13 Delays or  Omissions.  No delay or  omission  to  exercise  any
right,  power, or remedy  accruing to any party under this  Agreement,  upon any
breach or default of any other party under this Agreement, shall impair any such
right,  power, or remedy of such nonbreaching or nondefaulting  party, nor shall
it be construed to be a waiver of or acquiescence to any such breach or default,
or to any 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.  All remedies,  whether under this
Agreement or by law or otherwise  afforded to any party, shall be cumulative and
not alternative.

                          [Signature Page(s) Follow(s)]

                                      -7-
<PAGE>

         IN WITNESS  WHEREOF,  each of the  undersigned  parties has caused this
NOTE  PURCHASE  AGREEMENT to be duly executed and delivered as of the date first
above written.

                                 SELLER:

                                 -------------------------------
                                 Andy Roesch

                                 Address:  Kornblumenring 3
                                           12357 Berlin

                                 PURCHASER:

                                 DATA SYSTEMS & SOFTWARE INC.

                                 By:_____________________________
                                 Name:
                                 Title:

                                 Address:  200 Route 17
                                           Mahwah, New Jersey 07430
                                           Attention:  John A. Moore
                                           President and Chief Executive Officer

<PAGE>

                                    EXHIBIT A
                                    ---------

                                 PAKETERIA GmbH

                           CONVERTIBLE PROMISSORY NOTE

(euro) 210,000                                                   BERLIN, GERMANY
                                                                  August 7, 2006

         FOR VALUE RECEIVED, PAKETERIA GmbH, a German limited liability company,
and its successors and assigns  (collectively,  the "Company"),  hereby promises
unconditionally  to pay to ANDY  ROESCH (the  "Holder"),  or  permitted  assigns
pursuant to Section 3 hereof,  in immediately  available and lawful money of the
Republic of Germany  ("Euros" or "(euro)"),  the principal amount of Two Hundred
and Ten Thousand Euros ((euro) 210,000) (the "Principal"),  plus any accrued and
unpaid  Interest  thereon,  or such other  amount as may be  outstanding  on the
Maturity Date (as such terms are defined below). The following is a statement of
the rights of the Holder under this  secured  convertible  promissory  note (the
"Note")  and the  conditions  to which  this Note is  subject,  and to which the
Holder, by accepting this Note, agrees:

         1.       CERTAIN DEFINITIONS.

                  As used herein,  the following  terms shall have the following
meanings:

                  "Affiliate"  means, with respect to any specified Person,  any
other Person who or which,  directly or indirectly,  controls, is controlled by,
or is under  common  control  with  such  specified  Person,  including  without
limitation any partner,  officer,  director,  manager or employee of such Person
and any venture capital fund now or hereafter  existing that is controlled by or
under common control with one or more general  partners or managing  members of,
or shares the same management company with, such Person.

                  "Business Day" means any day that is not a Saturday, Sunday or
a legal holiday in the State of New York.

                  "Common  Stock" means the common stock  ("Stammkapital")  or -
after   conversion   into  a  Stock   Corporation  -  the  base  equity  capital
("Grundkapital") of the Company.

                  "Equity   Securities"  means  any  limited  liability  company
interests or units representing such interests, common stock, preferred stock or
any  other  security   representing  equity  of  the  Company  or  any  security
convertible, exercisable or exchangeable for any of the foregoing.

                  "Event of Default" shall have meaning assigned to such term in
Section 4.1.

                  "Issue Date" means the first date written above,  which is the
date of execution and issuance of this Note.

<PAGE>

                  "Maturity  Date" means the three (3) year  anniversary  of the
Issue Date, as may be extended pursuant to Section 2.4.

                  "Person" means any individual,  corporation, limited liability
company,  partnership,  firm, joint venture,  association,  joint stock company,
trust or other  entity or  organization,  including a  government  or  political
subdivision or an agency or instrumentality thereof.

         2. REPAYMENT.

            2.1.  Principal.  Unless  earlier  converted  into  Common  Stock in
accordance with the provisions  hereof, the entire unpaid Principal shall be due
and payable on the Maturity Date.

            2.2. Interest. Interest on the Note ("Interest"),  during the period
from the Issue Date  through  the  Maturity  Date,  shall  accrue at a straight,
non-compounded rate equal to eight percent (8%) per annum (the "Initial Interest
Rate").  Interest  shall be computed on the basis of a 365-day  year  applied to
actual days elapsed.  Notwithstanding  the  foregoing,  upon the  occurrence and
during the continuation of an Event of Default,  the Initial Interest Rate shall
be increased by 2 percent (2%) per annum.  Unless earlier  converted into shares
of Common Stock in accordance with the provisions hereof, all accrued and unpaid
Interest  shall be due and payable on the  Maturity  Date.  The rate of Interest
payable  under this Note from time to time shall in no event  exceed the maximum
rate, if any,  permissible under applicable law. If the rate of Interest is ever
reduced as a result of the  preceding  sentence and at any time  thereafter  the
maximum  rate  permitted  by  applicable  law shall  exceed the rate of interest
provided  hereunder,  then the rate provided for hereunder shall be increased to
the maximum rate permitted  under  applicable law for such period as required so
that the total  amount of  interest  received  by the Holder is that which would
have been  received  by the  Holder  but for the  operation  of the  immediately
preceding sentence.

            2.3. Prepayment.  This Note may not be prepaid, in whole or in part,
by the Company,  without the prior written consent of the Conversion  Holder (as
defined in Section 3).

            2.4.  Extension of Maturity  Date.  If the Principal and accrued and
unpaid Interest become due and payable on any day other than a Business Day, the
Maturity Date shall be extended to the next succeeding Business Day, and to such
payable amounts shall be added the Interest which shall have accrued during such
extension period at the rate per annum herein specified.

            2.5  Limitation  on  Repayment.  The  Company is  entitled  to delay
repayment of the outstanding  Principal and the payment of any accrued  interest
if, to the extent and as long as the Company  will after such payment not retain
enough cash to finance its business.  The existence of such a situation shall be
proved by the  Company  by way of  written  confirmation  by its  auditor.  Such
confirmation  shall be renewed every three months unless waived by the Holder or
Conversion Holder, as the case may be.

                                      -2-
<PAGE>

            2.6.  Surrender  of  Note.   Promptly  following  the  repayment  or
conversion in full of all  outstanding  Principal  and  Interest,  the Holder or
Conversion Holder shall surrender this Note to the Company for cancellation.

            2.7. Release of Obligations.  As a condition to the issuance of this
Note,  the Holder has executed a release and waiver of any other amount owed, or
that may be owed, by the Company to the Holder or any of his  Affiliates,  other
than the amounts evidenced by this Note.

            2.8. Subordination.  Any rights and claims to payment the Holder has
or may have in the future against the Company under this Note including (without
limitation)  any  rights  and  claims to  principal  and  interest,  are  hereby
subordinated behind the rights and claims of any other creditors of the Company,
it being  understood  that such  rights  and  claims of the  Holder  may only be
fulfilled out of future  profits after any loss carry forward has been made good
("Bilanzgewinn"),   or  out   of  the   assets   remaining   after   liquidation
("Liquidationserlos"),  or out of other property in excess of other debts of the
Company, and it further being understood that the Holder shall be precluded from
participating  as a Creditor,  in  relation  to such  rights and claims,  in any
bankruptcy  proceedings against the Company in the event such proceedings should
be instituted.  The Holder shall  cooperate in any change to this  subordination
that may be necessary under  applicable  statutes and case law to make sure that
the  obligations  subject  to the  subordination  do not have to be  booked as a
liability  in a  balance  sheet  of  the  Company  set up for  the  purposes  of
determining  overindebtedeness  for the purpose of the determination  whether an
obligation to file for bankruptcy  exists for the Company's  managing  directors
("Uberschuldungsstatus").  For the avoidance of doubt,  it is hereby stated that
the  Conversion  right  pursuant to Section 5 hereof is in no way  precluded  or
affected by this Section 2.8 at any time.

         3. ASSIGNMENT.

            The Holder may not assign or transfer this Note to any Person, other
than to Data Systems & Software Inc., a Delaware  corporation  ("DSSI"),  or the
designee or successor of DSSI  (collectively,  the  "Conversion  Holder").  Such
permitted  assignment  may take place in relation to the entire  principal  plus
related  interest or in relation to any partial  amounts of such  principal,  in
each case plus related interest.

                                       -3-
<PAGE>

         4. DEFAULT.

            4.1. Events of Default.  The following  events shall each constitute
an event of default under this Note (each, an "Event of Default"):

                  (a) the Company's failure to pay when due any Principal of, or
Interest on, this Note, any fees or any other amount payable hereunder;

                  (b) the Company's  commencement  of a voluntary  case or other
proceeding seeking  liquidation,  reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter  in  effect  or  seeking  the  appointment  of  a  trustee,  receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property,  or the Company's consent to any such relief or to the appointment
of or taking  possession  by any such official in an  involuntary  case or other
proceeding  commenced  against it, or the Company's making a general  assignment
for the  benefit of  creditors,  or failure  generally  to pay its debts as they
become due, or the Company's  taking of any corporate action to authorize any of
the foregoing; and

                  (c) the  commencement  against the  Company of an  involuntary
case or other proceeding  seeking  liquidation,  reorganization  or other relief
with  respect  to it or its debts  under  any  bankruptcy,  insolvency  or other
similar law now or hereafter in effect or seeking the  appointment of a trustee,
receiver,  liquidator,  custodian  or  other  similar  official  of  it  or  any
substantial part of its property,  and such involuntary case or other proceeding
shall  remain  un-dismissed  for a period of sixty  (60)  days,  or an order for
relief shall be entered against the Company under the federal bankruptcy laws as
now or hereafter in effect.

            4.2.  Remedies.  Upon the  occurrence  of an Event of  Default,  the
Holder may, by written  notice to the Company,  declare this Note  together with
accrued  Interest  hereon,  to be due and payable without  presentment,  demand,
protest  or other  notice of any kind,  all of which  are  hereby  waived by the
Company;  provided,  however,  that in the case of any of the  Events of Default
specified in Section 4.1(a), the Company shall have twenty (20) Business Days to
cure such Event of  Default  (if  curable),  and  absent  such  cure,  this Note
together with accrued interest herein shall become  immediately due and payable;
provided, further, that in the case of any of the Events of Default specified in
Section 4.1(b) or Section 4.1(c), without any notice to the Company or any other
act by the Holder,  the Principal  together with accrued  Interest thereon shall
become immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Company.

         5. CONVERSION.

            5.1.  Conversion.  This Note may only be  converted  by a Conversion
Holder.  In the  event  this  Note is  assigned  to a  Conversion  Holder,  such
Conversion  Holder may at any time  convert  this Note,  at its  option,  (x) in
whole,  or (y) in partial amounts of outstanding  Principal  divisible by (euro)
70,000 plus  related  Interest,  into shares of Common  Stock.  The nominal Euro
amount of the share shall be obtained by dividing  (x) the  Principal or partial
amount  thereof to be  converted,  plus  related  Interest  by (y) the  Adjusted
Conversion Price. For purposes of this Note,  "Adjusted  Conversion Price" means
initially  a price of (euro)  50.70 for each Euro of Common  Stock  (subject  to
adjustment for any splits,  reverse  splits,  combinations  or similar  events),
subject to adjustment  pursuant to Section 5.6. If the nominal amount  resulting
from such  division  is not  divisible  by 50, it shall be  rounded  to the next
higher amount divisible by 50.

                                      -4-
<PAGE>

                  5.2. Form of Conversion.  The conversion shall be exercised by
written notice by the Conversion Holder to the Company.

                  5.3  Effect  of   Conversion.   Upon  the  conversion  of  any
outstanding  Principal or partial  amount  thereof along with related  Interest,
this Note shall, by virtue hereof, and without any further action being required
by any party, terminate and be discharged with respect to such converted portion
of this Note's  principal,  less the cash  contribution  to be made  pursuant to
Section 5.4(i),  and shall to the extent so terminated  represent only the right
to receive the Common Stock to be issued upon such conversion (Section 5.4).

                  5.4   Conversion   Mechanics.   Upon  the  conversion  of  any
outstanding  Principal  along with related  Interest,  the  shareholders  of the
Company shall adopt,  no later than  forty-five (45) calendar days after receipt
of the  notice  pursuant  to  Section  5.2,  by way of  notarized  shareholders'
resolution, and the Company shall file with the Commercial Register of the Lower
Court ("Amtsgericht") of Berlin Charlottenburg, an increase of the share capital
of the Company by an amount equal to the nominal amount determined in accordance
with Section 5.1. The  increase of the share  capital  shall have the  following
terms:

                  (i) the share shall be issued  against  payment in cash of its
nominal amount to the Company;

                  (ii) the share shall be issued to the Conversion Holder;

                  (iii)  the  share to be  issued  shall be  entitled  to profit
participation as from the beginning of the business year in which the conversion
is exercised.

                  If after any  conversion,  any Principal  and Interest  remain
outstanding,  upon the  submission  to the  Company of this  original  Note or a
replacement Note issued in accordance with Section 6, the Company shall issue to
the  Conversion  Holder  a duly  authorized,  validly  issued  replacement  note
evidencing  the portion of the  Principal  with  related  Interest  that was not
subject to the conversion.

                  5.5.  Release of Obligations  Under Note.  Upon  conversion or
satisfaction  in whole of the  Principal  and  Interest  and the issuance of all
securities  issuable in connection with the conversion hereof and the payment of
all amounts due hereunder, the Company shall be forever released from all of its
obligations,  undertakings and liabilities under this Note as it applies to this
Note.

                  5.6.  Adjustments.  (i) If at any  time or  from  time to time
after the date of this Note,  the Company  issues or sells,  or is deemed by the
express provisions of this Section 5.4 to have issued or sold, Additional Shares
of Common Stock (as defined in Section 5.4(iv)  hereof),  for an Effective Price
(as  defined  in  Section  5.6(iv))  less  than  the  then  applicable  Adjusted
Conversion  Price,  then in each such case, the Adjusted  Conversion Price to be
applied in any conversion  completed after such issue or sale, shall be reduced,
concurrently with such issue, to the Effective Price received by the Company for
such issue or deemed issue of Additional Shares of Common Stock.

                                      -5-
<PAGE>

                  (ii) For the  purpose of the  adjustment  required  under this
Section 5.6, the consideration  received by the Company for any issue or sale of
securities  shall (i) to the extent it consists of cash,  be computed at the net
amount of cash received by the Company after  deduction of any  underwriting  or
similar commissions,  compensation or concessions paid or allowed by the Company
in  connection  with such issue or sale but without  deduction  of any  expenses
payable by the  Company,  (ii) to the extent it consists of property  other than
cash, be computed at the fair value of that property as determined in good faith
by the  Managing  Directors of the Company,  and (iii) if  Additional  Shares of
Common Stock,  Convertible Securities (as defined in Section 5.6(iii)) or rights
or options to purchase either  Additional  Shares of Common Stock or Convertible
Securities  are issued or sold  together with other stock or securities or other
assets of the Company for a consideration  which covers both, be computed as the
portion of the  consideration  so received that may be reasonably  determined in
good faith by the Managing  Directors to be allocable to such Additional  Shares
of Common Stock, Convertible Securities or rights or options.

                  (iii) For the purpose of the  adjustment  required  under this
Section  5.6,  if the  Company  issues or sells  (i)  stock or other  securities
convertible  into,  Additional Shares of Common Stock (such convertible stock or
securities being herein referred to as "Convertible Securities"), or (ii) rights
or options for the purchase of Additional  Shares of Common Stock or Convertible
Securities and if the Effective Price of such Additional  Shares of Common Stock
is less than the Adjusted  Conversion  Price, in each case the Company shall not
be deemed to have issued the  Additional  Shares of Common  Stock at the time of
the issuance of such rights or options or Convertible Securities. The adjustment
to the  Adjusted  Conversion  Price shall  occur upon the  issuance of shares of
Common Stock issued due to the sale or upon the  conversion  or exercise of such
rights or options or Convertible Securities.

                  (iv) For purposes of this Note, the following terms shall have
the meaning assigned below:

                    (x)  "Additional  Shares of  Common  Stock"  shall  mean all
shares of Common Stock issued by the Company or deemed to be issued  pursuant to
this Section 5.6, other than Permitted Issuances.

                    (y) "Effective  Price" of Additional  Shares of Common Stock
shall mean the quotient  determined  by dividing the total number of  Additional
Shares of Common Stock issued or sold,  or deemed to have been issued or sold by
the Company under this Section 5.6, into the aggregate  consideration  received,
or deemed to have been  received  by the  Company,  for such  issue  under  this
Section 5.6 for such Additional Shares of Common Stock.

                    (z) "Permitted Issuances" shall have the meaning ascribed to
such term in that  certain  Investors'  Rights  Agreement,  dated as of the date
hereof, among the Company and each party signatory thereto.

                                      -6-
<PAGE>

         6. REPLACEMENT OF NOTE.

            Upon  receipt by the Company of evidence  satisfactory  to it of the
loss,  theft,  destruction or mutilation of this Note,  and (if mutilated)  upon
surrender and  cancellation  of this Note, the Company shall make and deliver to
the Holder or Conversion Holder, as the case may be, a new note of like tenor in
lieu of this Note. Any  replacement  note made and delivered in accordance  with
this Section 6 shall be dated as of the date hereof.

         7. MISCELLANEOUS.

            7.1.  Benefits of Note. The provisions of this Note shall be binding
upon the successors and assigns of the Company and shall inure to the benefit of
and be enforceable by each person who shall be a Holder from time to time.

            7.2.  Severability.  In case any  provision  of this  Note  shall be
invalid, illegal or unenforceable,  the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

            7.3.  Amendment and Waiver. No modification,  amendment or waiver of
any  provision  of, or consent  required  by, this Note,  nor any consent to any
departure herefrom, shall be effective unless it is in writing and signed by the
Company. Such modification, amendment, waiver or consent shall be effective only
in the specific instance and for the purpose for which given.

            7.4.  Delays or Omissions.  No delay by the Holder in exercising any
powers or rights hereunder shall operate as a waiver of such power or right, nor
shall any single or partial  exercise  of any power or right  preclude  other or
further exercise thereof,  or the exercise of any other power or right hereunder
or otherwise.

            7.5. Notices. All notices,  requests, and other communications given
or made  pursuant  to this  Agreement  shall be in  writing  and shall be deemed
effectively given (i) upon personal  delivery to the party to be notified;  (ii)
when sent by  confirmed  electronic  mail or  facsimile  if sent  during  normal
business  hours  of the  recipient,  and if not so  confirmed,  then on the next
business  day;  (iii)  five (5) days after  having  been sent by  registered  or
certified mail, return receipt requested,  postage prepaid;  or (iv) one (1) day
after  deposit  with  a  nationally  recognized  overnight  courier,  specifying
next-day  delivery,  with written  verification of receipt.  All  communications
shall be sent to the respective  parties at their  addresses as set forth on the
cover page or signature page hereto, or to such email address, facsimile number,
or address as  subsequently  modified by written notice given in accordance with
this Section 7.5.

            7.6.  Expenses of Conversion.  The Company shall be responsible  for
all expenses incurred by any Conversion Holder in connection with the conversion
of the Principal and accrued and unpaid  Interest  under this Note. The issuance
of shares of Common Stock or a replacement  note  representing  any Principal or
Interest  that  remains  outstanding  after a  conversion  shall be made without
charge to the  Conversion  Holder  for any fees,  costs or  expenses  in respect
thereof.

                                      -7-
<PAGE>

            7.7.  Expenses of Enforcement.  The Holder or Conversion  Holder, as
the case may be, shall be entitled to recover  from the Company all fees,  costs
and  expenses  of  enforcing  any  provisions  of this Note,  including  without
limitation,  such  reasonable  fees and expenses of attorneys  and  accountants,
which shall include, without limitation, all fees, costs and expenses of appeals
(except for any such fees, costs and expenses relating to any lawsuit brought by
the Holder or  Conversion  Holder,  as the case may be, in which the  Company is
finally determined to be the prevailing party).

            7.8.   Titles  and  Subtitles.   The  titles  of  the  sections  and
subsections of this Note are for convenience of reference only and are not to be
considered in construing this Note.

            7.9. Governing Law. This Note shall be construed in accordance with,
and governed by, the laws of the State of New York (without giving effect to its
conflict of laws principles).

            7.10.  Dispute  Resolution.  The Company (a) hereby  irrevocably and
unconditionally  submits to the jurisdiction of the state courts of New York and
to the  jurisdiction  of the  United  States  District  Court  for the  Southern
District  of New York for the  purpose of any suit,  action or other  proceeding
arising  out of or based upon this Note,  (b) agrees not to  commence  any suit,
action or other proceeding arising out of or based upon this Agreement except in
such courts,  and (c) hereby waives, and agrees not to assert, by way of motion,
as a defense,  or otherwise,  in any such suit, action or proceeding,  any claim
that it is not subject personally to the jurisdiction of the above-named courts,
that its property is exempt or immune from  attachment  or  execution,  that the
suit,  action or proceeding is brought in an inconvenient  forum, that the venue
of the suit,  action or  proceeding  is improper or that this  Agreement  or the
subject matter hereof may not be enforced in or by such court.

            7.11. Waiver of Jury Trial. The Company waives any right it may have
to a trial by jury in any action or proceeding  directly or  indirectly  arising
out of or relating to this Note or the transactions contemplated hereby (whether
based on contract, tort, equity or any other theory). The Company certifies that
no  representative,  agent or  attorney of the Holder or  Conversion  Holder has
represented,  expressly or otherwise,  that the Holder or the Conversion  Holder
would not, in the event of litigation,  seek to enforce the foregoing waiver and
acknowledges  that the Holder and the Conversion Holder each has been induced to
purchase  this Note by,  among other  things,  the  waivers  and  certifications
contained in this Section 7.11.

            7.12.  Integration.  This Note  constitutes the entire agreement and
understanding  between the  Company  and the Holder with  respect to the subject
matters  hereof  and  supersedes  all  prior  agreements,   understandings,  and
representations and warranties with respect to such subject matters.

                            [Signature Page Follows]

                                      -8-
<PAGE>

         IN  WITNESS   WHEREOF,   the  Company  has  executed  and  issued  this
Convertible Promissory Note as of the date first set forth above.

                                 PAKETERIA GmbH

                                 By: ___________________________________
                                     Name:
                                     Title:

<PAGE>

                                    Exhibit B
                                    ---------

                           Form of Notice of Exercise
                           --------------------------

      Pursuant to Section 1.2 of the Note Purchase Agreement, dated as of August
____,  2006,  by and  between  Andy Roesch (the  "Seller"),  and Data  Systems &
Software,  Inc., a Delaware corporation (the "Purchaser"),  the Purchaser hereby
elects to purchase from the Seller,  a portion of the  principal  amount of that
certain  Convertible  Promissory  Note,  dated as of August __, 2006,  issued by
Paketeria GmbH (the "Company") to the Seller,  in the principal amount of (euro)
210,000 (the "Note") equal to (the  "Purchase  Price")  ________________________
Euros ((euro) _________),  for an aggregate purchase price equal to the Purchase
Price.

      Upon delivery of the Purchase Price, the Seller shall deliver the Note, or
shall cause the Company to reissue  and  deliver a new  promissory  note in like
tenor in the principal  amount of the portion of the Note so  purchased,  to the
Purchaser.

                                                       -------------------------EXHIBIT 10.3

                            STOCK PURCHASE AGREEMENT
                            ------------------------

         THIS STOCK PURCHASE AGREEMENT (this "Agreement"), is made as of the 7th
day of August  2006,  by and  between  John A. Moore  ("Moore"),  Richard  Rimer
("Rimer" and jointly hereinafter,  the "Sellers"),  and Data Systems & Software,
Inc., a Delaware corporation (the "Purchaser").

                                    RECITALS
                                    --------

         WHEREAS,   in  connection  with  that  certain  Common  Stock  Purchase
Agreement,  dated as of the date  hereof  (the  "Purchase  Agreement"),  between
Paketeria GmbH  ("Paketeria") and Purchaser,  and the transactions  contemplated
thereby, the parties hereto are entering into this Agreement;

         WHEREAS,  the Purchase  Agreement  states  that,  as a condition to its
effectiveness, the Sellers and the Purchaser enter into this Agreement;

         WHEREAS,  the share  capital of  Paketeria in the  aggregate  amount of
(euro) 37,450 currently is held as follows:

         Shareholder                   Shares             Total Amount of Shares
         -------------          -------------             ----------------------
         Andy Rosch             (euro) 18,750
                                 (euro) 4,950                      (euro) 23,700
         -------------          -------------             ----------------------
         Ralf Budde              (euro) 1,600
                                 (euro) 1,400                       (euro) 3,000
         -------------          -------------             ----------------------
         Joseph Benson             (euro) 950                         (euro) 950
         -------------          -------------             ----------------------
         John Moore              (euro) 3,300
                                   (euro) 950
                                   (euro) 650                       (euro) 4,900
         -------------          -------------             ----------------------
         Richard Rimer           (euro) 3,350
                                   (euro) 900
                                   (euro) 650                       (euro) 4,900
         -------------          -------------             ----------------------
         Total                         37,450                             37,450

The  aforementioned  shares of Moore in the aggregate  nominal  amount of (euro)
4,900 and the aforementioned  shares of Rimer in the aggregate nominal amount of
(euro) 4,900 are hereinafter, collectively, referred to as the "Securities".

         WHEREAS,  the Sellers are also entitled to receive new shares of common
stock of Paketeria  ("Stammkapital")  in the aggregate  nominal amount of (euro)
2,000  against  payment  of its par  value of  (euro)  2,000  with no agio  (the
"Subscription  Rights"),  of which Moore is  entitled  to the nominal  amount of
(euro)  1,000 and  Rimer is  entitled  to the  nominal  amount  of (euro)  1,000
(collectively, the "Subscription Rights Shares").

<PAGE>

         WHEREAS,   the  Sellers  have  caused   Paketeria   and  their  current
shareholders  to agree,  in the Purchase  Agreement,  to issue the  Subscription
Rights Shares  directly to the  Purchaser,  subject to the parties  execution of
this  agreement  and  Purchaser's  payment of the par value of the  Subscription
Rights Shares of (euro) 2,000 to Paketeria.

         WHEREAS,  each  Seller  wishes  to sell,  transfer  and  assign  to the
Purchaser all of his rights,  titles,  interests,  duties and obligations in, to
and in connection  with (i) the  Securities,  representing  all capital stock of
Paketeria held by the Sellers,  and (ii) the Subscription Rights, and the shares
issuable with respect thereto,  and the Purchaser,  subject to the terms of this
Agreement,  wishes to purchase and receive from each Seller all of such Seller's
rights, titles, interests, duties and obligations in, to and in connection with,
(i) the Securities and (ii) the Subscription Rights and the shares issuable with
respect thereto, on the terms and conditions set forth herein.

         NOW, THEREFORE, the parties hereby agree as follows:

         1. SALE, PURCHASE AND ASSIGNMENT.

            1.1 Sale and  Purchase.  Upon the delivery by the  Purchaser to each
Seller of a written notice,  (the "Exercise Notice") on or before August 7, 2007
(the "Trigger  Date"),  substantially  in the form attached hereto as Exhibit A,
each Seller shall sell,  transfer and assign to the Purchaser and its successors
and assigns  forever,  and the  Purchaser  shall  purchase  and accept from each
Seller for itself and its successors and assigns  forever,  all of such Seller's
rights,  titles and  interests  in and to (i) the  Securities,  for an aggregate
purchase  price of  (euro)  496,831  and (ii) the  Subscription  Rights,  for an
aggregate  purchase price of (euro) 101,394 (the aggregate  purchase price to be
paid for the Securities and  Subscription  Rights,  the "Purchase  Price").  The
rights sold include (without  limitation) the profit participation right for the
current  business  year as well as all rights to any  undistributed  profits (if
any) related to the Securities and the Subscription Rights Shares.

            1.2 Form of  Consideration.  The Purchase Price shall be paid by the
Purchaser  to each  Seller by the  issuance  to each  Seller,  pursuant to their
respective ownership interest in the Securities and the Subscription Rights, of:

                  (a) a number of validly issued,  fully paid and non-assessable
shares of common stock, par value $0.01 per share (the "Common  Stock"),  of the
Purchaser  equal to the  Purchase  Price  divided by Two Dollars and  Sixty-Five
Cents ($2.65) (such shares of Common Stock, the "Purchase Price Shares"); and

                  (b) a stock  purchase  warrant  exercisable  for a  number  of
shares of Common Stock equal to the Purchase  Price Shares  divided by four (4),
with an exercise price of Two Dollars and Seventy-Eight Cents ($2.78) per share,
in substantially the form issued by the Purchaser to the investors participating
in its most recent  private  placement  of Common  Stock that closed on or about
August 1, 2006 (the  "Purchase  Price  Warrant",  and together with the Purchase
Price  Shares and the shares of common  issuable  upon  exercise of the Purchase
Price Warrant, collectively, the "Purchase Price Securities").

                                      -2-
<PAGE>

The conversion  rate of Dollars ($) to Euros ((euro)) shall be determined at the
time of delivery of the Exercise  Notice by reference to the conversion  rate as
set forth in the Wall Street Journal.

            1.3  Closing.  Following  the  delivery of the  Exercise  Notice,  a
closing of the  transactions  described in Section 1.1 (a "Closing")  shall take
place before a German notary on whom the Sellers and the Purchaser will mutually
agree,  on such  date and at such  place as the  Seller  and the  Purchaser  may
mutually  agree,  but in any event no later  than two weeks  after the  Exercise
Notice has been delivered to the Seller.

            1.4 Closing Deliveries. At the Closing:

                  (a)  the  Purchaser  shall  deliver  to  each  Seller  or  his
designee,  certificates  representing  such Seller's  respective  Purchase Price
Shares and a warrant  certificate  evidencing such Seller's  respective Purchase
Price  Warrant,   in  each  case,  free  and  clear  of  all  liens,  claims  or
encumbrances;

                  (b)  each  Seller  shall  assign  to the  Purchaser  by way of
notarial  deed all of such Seller's  rights,  titles and interests in and to the
Securities and the Subscription Rights; and

                  (c) the  Purchaser  and each Seller shall have  delivered  all
other  documents,  instruments  and  writing  required  by the other party to be
delivered to them pursuant to this Agreement, in form and substance satisfactory
to such party.

         2. REPRESENTATIONS AND WARRANTIES.

            2.1 Construction.  For purposes of this Section 2, a person shall be
deemed to have "knowledge" of a particular fact or other matter if the person is
actually  aware,  or should in the exercise of reasonable  judgment be aware, of
such fact or other matter. A person that is a corporation,  partnership or other
business  entity shall be deemed to have  "knowledge"  of a  particular  fact or
other matter if any officer,  director,  manager,  managing member or partner of
such person has knowledge (as described in the preceding  sentence) of such fact
or other matter.

            2.2 Seller's  Representations  and  Warranties.  Each Seller  hereby
represents  and warrants to the Purchaser as of the date of the Closing,  solely
as to  himself  and his  assets  (and not as to the  other  Seller  or the other
Seller's assets) as follows:

            (a)  Authorization;  Valid and  Binding  Agreement.  Except  for any
notices  required to be delivered to the Purchaser in  connection  therewith and
any  consent  required to be obtained  from the  Purchaser,  such Seller has all
requisite power and authority to execute and deliver this Agreement,  to perform
all of its  obligations  and  undertakings  hereunder,  and  to  consummate  the
transactions  contemplated  hereby. The execution and delivery by such Seller of
this  Agreement,   the  performance  by  such  Seller  of  its  obligations  and
undertakings  hereunder and the  consummation by such Seller of the transactions
contemplated  hereby,  have been duly and validly  authorized  by all  necessary
action of such  Seller and no other  proceedings  on the part of such Seller are
necessary  to  authorize  the  execution  or  delivery  by such  Seller  of this
Agreement,  the performance by such Seller of its  obligations and  undertakings
hereunder,  or the consummation by such Seller of the transactions  contemplated
hereby.  This Agreement has been duly executed and delivered by such Seller, and
constitutes the legal, valid and binding obligations of such Seller, enforceable
against such Seller in accordance with its terms.

                                      -3-
<PAGE>

            (b) Conflicts;  Consents.  The execution and delivery by such Seller
of this  Agreement,  the  performance  by such  Seller  of his  obligations  and
undertakings hereunder,  and the consummation by such Seller of the transactions
contemplated  hereby,  do not and will  not  conflict  with,  or  result  in any
violation  of, or  default  under,  or result  in the  creation  of any Lien (as
defined in Section 2.2(c)) on the properties or assets of such Seller under, any
provision of (i) any contract,  agreement,  instrument or  arrangement  to which
such Seller is a party or by which any of such Seller's properties or assets are
bound, (ii) any license,  franchise,  permit or other similar authorization held
by such Seller, or (iii) to the knowledge of such Seller, any judgment, order or
decree, statute, law, ordinance, rule or regulation applicable to such Seller or
such Seller's properties or assets.

            (c) Title to Properties and Assets;  Liens, Etc. Except for any Lien
arising out of this  Agreement,  as of the Closing,  such Seller is the owner of
all right,  title and  interest in and to the  Securities  and the  Subscription
Rights owned by such Seller,  and such  Securities and  Subscription  Rights are
free of any mortgage,  pledge, lien, encumbrance,  charge or other adverse claim
(each, a "Lien") other than Liens in favor of the Purchaser.

            (d) Securities Law  Representations  and Warranties of Seller.  As a
condition to the issuance of the Purchase Price Securities,  except as otherwise
provided, each Seller represents and warrants to the Purchaser that:

                           (i) Such  Seller  is  acquiring  the  Purchase  Price
         Securities   for  his  own  account  and  not  with  a  view  to  their
         distribution  within the meaning of Section 2(11) of the Securities Act
         of  1933,  as  amended  (the  "Securities  Act").  Such  Seller  hereby
         acknowledges  and agrees that the Purchase  Price  Securities  have not
         been registered  under the Securities Act or under any state securities
         or  "blue  sky"  laws  and may not be sold,  transferred  or  otherwise
         disposed of except in compliance  with the provisions of the Securities
         Act and the rules and regulations promulgated thereunder and such state
         securities or "blue sky" laws and the Purchase Price Securities contain
         a restrictive  legend stating that the Purchase Price  Securities  have
         not been  registered  and may  only be sold  pursuant  to an  effective
         registration  statement  or a valid  exemption  from  the  registration
         requirements of the Securities Act. Moore further  understands  that he
         is an "affiliate" of the Purchaser.

                           (ii) Such Seller  agrees that he will not,  under any
         circumstances,  sell the Purchase Price  Securities in violation of any
         applicable law or regulation  promulgated  under the laws of the United
         States or any state or  jurisdiction.  Such Seller  acknowledges  that,
         from  time to time  and  under  various  circumstances,  such  laws may
         restrict  the  disposition  of  Purchase  Price  Securities  or  impose
         conditions upon such disposition.

                           (iii)  Such  Seller is an  "accredited  investor"  as
         defined in Regulation D of the Securities Act.

                                      -4-
<PAGE>

                           (iv) Such Seller has such  knowledge and expertise in
         financial  and business  matters that he is capable of  evaluating  the
         merits and risks of an investment in the Purchase Price  Securities and
         of making an informed investment decision.

            2.3  Purchaser's  Representations,  Warranties  and  Covenants.  The
Purchaser  hereby  represents,  warrants and  covenants to each Seller as of the
Closing as follows:

            (a) Organization  and Standing.  The Purchaser is a corporation duly
incorporated, validly existing and in good standing under the laws of Delaware.

            (b) Authorization;  Valid and Binding  Agreement.  The Purchaser has
all  requisite  power and  authority to execute and deliver this  Agreement,  to
perform its  obligations  and  undertakings  hereunder,  and to  consummate  the
transactions contemplated hereby. The execution and delivery by the Purchaser of
this  Agreement,  the  performance  by  the  Purchaser  of its  obligations  and
undertakings   hereunder,   and  the   consummation  by  the  Purchaser  of  the
transactions  contemplated  hereby, have been duly and validly authorized by all
necessary  action on the part of the Purchaser and no other  proceedings  on the
part of the  Purchaser  are  necessary to authorize the execution or delivery by
the  Purchaser  of this  Agreement,  the  performance  by the  Purchaser  of its
obligations and  undertakings  hereunder or the consummation by the Purchaser of
the transactions  contemplated hereby. This Agreement has been duly executed and
delivered by the Purchaser, and constitutes the valid and binding obligations of
the Purchaser, enforceable against the Purchaser in accordance with its terms.

            (c) Conflicts; Consents. The execution and delivery by the Purchaser
of this  Agreement,  the  performance  by the Purchaser of its  obligations  and
undertakings  contemplated  hereunder,  and the consummation by the Purchaser of
the  transactions  contemplated  hereby,  do not and will not conflict  with, or
result in any  violation  of, or default  under or result in the creation of any
Lien on the  properties or assets of the Purchaser  under,  any provision of (i)
the Certificate of Incorporation,  Bylaws of the Purchaser, each as the same has
been amended to date, (ii) any contract, agreement, instrument or arrangement to
which the Purchaser is a party or by which any of the Purchaser's  properties or
assets  are  bound,  (iii)  any  license,  franchise,  permit  or other  similar
authorization held by the Purchaser,  or (iv) to the knowledge of the Purchaser,
any  judgment,  order or decree,  statute,  law,  ordinance,  rule or regulation
applicable to the Purchaser or the Purchaser's properties or assets.

            (d) Valid Issuance of Shares. The Purchase Price Shares, when issued
and delivered in accordance with the terms and for the  consideration  set forth
in this Agreement, will be validly issued, fully paid and nonassessable and free
of any liens or encumbrances  or restrictions on transfer.  The shares of Common
Stock  issuable  upon  exercise of the Purchase  Price  Warrant  (the  "Warrants
Shares") will upon issuance in accordance  with the terms of the Purchase  Price
Warrant,  be validly issued,  fully paid and nonassessable and free of any liens
or  encumbrances  or  restrictions  on  transfer.  Assuming  the accuracy of the
representations  of the Seller in Section 2.2 of this  Agreement,  the  Purchase
Price  Shares  and the  Warrant  Shares  will be issued in  compliance  with all
applicable laws.

                                      -5-
<PAGE>

         3. Repurchase Option.

            3.1 Repurchase  Option on Subscription  Rights Shares.  In the event
that the Purchaser does not deliver  Exercise Notices on or prior to the Trigger
Date, at any time following such Trigger Date, each Seller shall have the option
to repurchase from the Purchaser one share in the nominal amount of (euro) 1,000
in the common stock of Paketeria (the Subsciption  Rights Shares) for a purchase
price of (euro) 1,000 (the "Repurchase Option").

            3.2 Exercise of Repurchase  Option.  The Repurchase  Option shall be
exercised  by  written  notice  signed by a Seller  and  delivered  or mailed as
provided in Section 4.7 to the Purchaser. Such notice shall notify the Purchaser
of the time,  place and date for  settlement  of such  purchase,  which shall be
scheduled  by the Seller  and shall be within  ninety  (90) days of the  written
notice of exercise of the  Repurchase  Option  delivered  by such  Seller.  Such
Seller shall pay for any the Subscription Rights Shares repurchased hereunder at
the Seller's option in cash by certified  check or wire transfer.  Upon delivery
of such  notice and  payment of the  relevant  purchase  price by a Seller,  the
Purchaser   shall  take  all  reasonable   action   required  to  transfer  such
Subscription Rights Shares to such Seller.

            3.3  Covenants.  Until the  earlier  of the date that the  Purchaser
delivers an Exercise  Notice to each Seller and the Trigger Date,  the Purchaser
shall not (i) sell, transfer or otherwise dispose of the Subscription Rights and
the  Subscription  Rights  Shares,  or (ii)  except  as may exist as of the date
hereof,  create,  incur, assume or suffer to exist any Liens on the Subscription
Rights and the Subscription Rights Shares,  without the prior written consent of
each Seller.

         4. MISCELLANEOUS.

            4.1 Benefits of Agreement.  Except as otherwise  expressly  provided
herein,  the  provisions  hereof shall inure to the benefit of, be binding upon,
and be enforceable  by, the parties hereto and their  respective  successors and
assigns.

            4.2  Assignment.  This  Agreement  and the  rights  and  obligations
hereunder  shall not be assignable or  transferable  by either party without the
prior written consent of the other party.  Any instrument  purporting to make an
assignment in violation of this Section 3.2 shall be void.

            4.3  Entire  Agreement.   This  Agreement  (including  any  Exhibits
hereto),  together  with the Exercise  Notice,  constitutes  the full and entire
understanding  and  agreement  between the parties  with  respect to the subject
matter hereof,  and any other written or oral agreement  relating to the subject
matter hereof existing between the parties is expressly canceled.

            4.4  Severability.  In case  any  provision  of this  Agreement,  or
portion  hereof,  shall be  invalid,  illegal or  unenforceable,  the  validity,
legality and enforceability of the remaining  provisions shall not in any way be
affected or impaired thereby.

                                      -6-
<PAGE>

            4.5 Amendment and Waiver. This Agreement and any provision hereof or
right or obligation  hereunder may be amended,  modified or waived only with the
prior written consent of the Seller and the Purchaser.

            4.6 Delays or  Omissions;  Remedies.  It is agreed  that no delay or
omission to exercise any right,  power or remedy accruing to any party, upon any
breach,  default or  noncompliance  by the other  party,  shall  impair any such
right,  power or remedy,  nor shall it be  construed  to be a waiver of any such
breach,  default or noncompliance,  or any acquiescence therein, or of or in any
similar breach, default or noncompliance thereafter occurring.

            4.7  Notices.  All  notices and other  communications  given or made
pursuant to this Agreement  shall be in writing and shall be deemed  effectively
given: (a) upon personal delivery to the party to be notified,  (b) when sent by
confirmed  electronic  mail or facsimile if sent during normal business hours of
the recipient, and if not so confirmed,  then on the next business day, (c) five
(5) days after having been sent by registered or certified mail,  return receipt
requested,  postage  prepaid,  or (d) one business (1) day after  deposit with a
nationally recognized overnight courier,  specifying next business day delivery,
with written  verification of receipt.  All communications  shall be sent to the
respective  parties at their address as set forth on the  signature  page, or to
such e-mail address,  facsimile  number or address as  subsequently  modified by
written notice given in accordance  with this Section 3.7. If notice is given to
the Purchaser, a copy shall also be given to Reitler Brown & Rosenblatt LLC, 800
Third Avenue,  21st Floor, New York, New York 10022, (212) 371-5500,  Attention:
Scott H. Rosenblatt, Esq.

            4.8 Expenses.  Except as otherwise provided herein, each party shall
pay all costs and  expenses  that it incurs  with  respect  to the  negotiation,
execution, delivery, performance and consummation of this Agreement.

            4.9 Titles and Subtitles. The titles of the sections and subsections
of this  Agreement  are for  convenience  of  reference  only  and are not to be
considered in construing this Agreement.

            4.10 Pronouns.  All pronouns  contained  herein,  and any variations
thereof,  shall be  deemed  to  refer to the  masculine,  feminine  or  neutral,
singular or plural, as the identity of the parties may require.

            4.11  Dispute  Resolution.  The parties (a) hereby  irrevocably  and
unconditionally  submit to the  jurisdiction of the state courts of New York and
to the  jurisdiction  of the  United  States  District  Court  for the  Southern
District  of New York for the  purpose of any suit,  action or other  proceeding
arising out of or based upon this Agreement, (b) agree not to commence any suit,
action or other proceeding arising out of or based upon this Agreement except in
such courts, and (c) hereby waive, and agree not to assert, by way of motion, as
a defense, or otherwise, in any such suit, action or proceeding,  any claim that
it is not subject personally to the jurisdiction of the above-named courts, that
its property is exempt or immune from  attachment or  execution,  that the suit,
action or proceeding is brought in an inconvenient  forum, that the venue of the
suit,  action or  proceeding  is improper or that this  Agreement or the subject
matter hereof may not be enforced in or by such court.

                                      -7-
<PAGE>

            4.12 Waiver of Jury Trial. Each party hereto waives any right it may
have to a trial by jury in any  action  or  proceeding  directly  or  indirectly
arising out of or relating to this  Agreement or the  transactions  contemplated
hereby (whether based on contract, tort, equity or any other theory). Each party
certifies  that no  representative,  agent or  attorney  of the other  party has
represented,  expressly  or  otherwise,  that the other party to this  Agreement
would not, in the event of litigation,  seek to enforce the foregoing waiver and
acknowledges  that all  parties  hereto  have been  induced  to enter  into this
Agreement by, among other things,  the waivers and  certifications  contained in
this Section 3.13.

            4.13 Delays or  Omissions.  No delay or  omission  to  exercise  any
right,  power, or remedy  accruing to any party under this  Agreement,  upon any
breach or default of any other party under this Agreement, shall impair any such
right,  power, or remedy of such nonbreaching or nondefaulting  party, nor shall
it be construed to be a waiver of or acquiescence to any such breach or default,
or to any 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.  All remedies,  whether under this
Agreement or by law or otherwise  afforded to any party, shall be cumulative and
not alternative.

                          [Signature Page(s) Follow(s)]

                                      -8-
<PAGE>

         IN WITNESS  WHEREOF,  each of the  undersigned  parties has caused this
STOCK PURCHASE  AGREEMENT to be duly executed and delivered as of the date first
above written.

                                      SELLERS:

                                      -------------------------------
                                      John A. Moore

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

                                      -------------------------------
                                      Richard Rimer

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

                                      PURCHASER:

                                      DATA SYSTEMS & SOFTWARE INC.

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

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

                    Stock Purchase Agreement Signature Page

<PAGE>

                                    EXHIBIT A
                                    ---------

                           Form of Notice of Exercise
                           --------------------------

            Pursuant to Section 1.1 of the Stock Purchase Agreement, dated as of
August  ____,  2006,  among John A.  Moore,  Richard  Rimer  (collectively,  the
"Sellers"),  and Data  Systems & Software,  Inc.,  a Delaware  corporation  (the
"Purchaser"),  the Purchaser  hereby  elects to purchase  from the Sellers,  all
shares of capital stock of Paketeria GmbH (the "Company") held by the Sellers.

                                                   Data Systems & Software, Inc.

                                                   By:_________________________
                                                      Name:
                                                      Title:

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