LOAN
      AGREEMENT

    


    THIS
      LOAN
      AGREEMENT (this “Agreement”)
      is
      made as of the 1st
      day of
      April, 2008, by and among (i) RADCOM LTD. (the “Company”),
      Company No. 52004356, a company duly incorporated under the laws of the State
      of
      Israel, whose shares are traded on NASDAQ and TASE, having its principal place
      of business at 24 Roul Wallenberg Street Tel Aviv 69719, Israel, and (ii) the
      entities listed in Schedule
      I
      hereto
      (collectively, the “Lenders”),
      all
      of which shall be represented exclusively hereunder by Plenus Management (2004)
      Ltd. and Plenus Management III 2007 Ltd. (collectively, “Plenus
      Management”),
      private companies organized under the laws of the State of Israel, with offices
      located at 16 Abba Eben Blvd., Herzliya Pituach, Israel. 

     

    WITNESSETH:

    


    WHEREAS,
      the Company wishes to borrow money from the Lenders on the terms and conditions
      set forth in this Agreement; and

    


    WHEREAS,
      the Lenders are willing to lend money to the Company on the terms and conditions
      set forth in this Agreement.

    


    NOW
      THEREFORE, the parties hereto hereby agree as follows:

    


    1. Loan,
      Warrant and Security.
      

    


    1.1 The
      Loan.
      Subject
      to the terms and conditions and on the basis of the representations and
      warranties set forth herein, the Lenders will lend to the Company, and the
      Company will borrow from the Lenders, an aggregate amount of two million, five
      hundred thousand dollars ($2,500,000) (the “Loan”)
      against the receipt of a U.S. dollar denominated note (the "Note"),
      substantially in the form attached hereto as Exhibit
      A.
      

    


    1.2 Closing;
      Loan Disbursement.
      Subject
      to the terms and conditions contained herein, the Lenders shall provide the
      Company with the Loan, and the Company shall deliver the Note and grant and
      deliver the Warrants (as defined below) to the Lenders, at the closing of the
      transactions contemplated hereby (the “Closing”)
      which
      shall take place at the offices of Yossi Avraham, Arad & Co., Advocates, on
      the date on which all closing conditions set forth herein have been met or,
      to
      the extent possible, waived by the applicable party, but in any event not prior
      to the date which is at least two (2) Business Days (as defined below) following
      the date hereof and, unless agreed to otherwise in writing by the parties,
      not
      later than forty five (45) days following the date hereof (the “Closing
      Date”).
      For
      the avoidance of doubt, in the event that in spite of the Company's best
      commercially reasonable efforts to meet the closing conditions, forty five
      (45)
      days following the date hereof the Closing Date has not transpired and there
      has
      been no agreement by the parties to extend the Closing Date, then this Agreement
      shall be terminated. 

     

    The
      Loan
      shall be extended to the Company by means of wire transfer in accordance with
      wire instructions to be provided in writing to Plenus Management by the Company
      or, if no other instructions are given, to: 


    
      
        
        

      

      
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    RADCOM
      LTD.

    Account
      no. 610384317 

    Branch
      no. 610

    Swift
      Code: POALILIT 

    Radcom
      LTD 

    Bank
      Hapoalim, 

    Hadar
      Yosef 

    28
      Rozen
      Pinchas

    Tel-Aviv
      69512

    Israel

    


    The
      Company acknowledges that the Loan to be provided to the Company hereunder
      will
      be divided among the Lenders in accordance with their pro rata participation
      amounts in the Loan as set forth in Schedule
      I
      or as
      may otherwise be agreed among the Lenders. 

    


    1.3 Delivery
      of Documents.
      

     

    1.3.1
       On
      or
      prior to the Closing, the Company shall deliver to Plenus Management the
      following documents: 

    


    the
      duly
      executed Note;

    


    (ii)
      a duly
      executed warrant, in the form of Exhibit
      B
      (the
“Warrant”),
      in
      the name of the Lenders, for the purchase of Warrant Shares (as defined in
      the
      Warrant) in accordance with the terms of the Warrant;

    


    (iii)
      (a)
      a Fixed
      Charge Agreement, in the form of Exhibit
      C1,
      and a
      Floating Charge Agreement, in the form of Exhibit
      C2
      (the
      "Pledge
      Agreements"),
      duly
      signed by the Company, and (b)
      certificates issued by the applicable governmental agencies, reasonably
      satisfactory to Plenus Management, that the charges, liens, pledges and/or
      security interests pursuant to the Pledge Agreements have been perfected;


    


    (iv)
      a true
      and correct copy of resolutions of the Company's Board of Directors, dated
      as of
      the date hereof, authorizing: (a)
      the
      Company to enter into this Agreement, the Warrant and the Pledge Agreements
      and
      all other agreements and documents attached or ancillary hereto or thereto
      (collectively, the "Company
      Transaction Documents"),
      (b)
      the
      consummation by the Company of the transactions contemplated in the Company
      Transaction Documents, including, inter alia, the issuance and delivery of
      the
      Warrant to the Lenders at the Closing, the reservation of a sufficient number
      of
      Warrant Shares to be issued upon exercise of the Warrant and, subject to the
      approval of the SEC (as defined below), the registration of the Warrant Shares
      for trading on NASDAQ and TASE (as more fully set forth below), and
      (c)
      an
      officer of the Company to execute and deliver on behalf of the Company the
      Company Transaction Documents; 


    
      
        
        

      

      
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    (v)
      (a)
      a
      Subsidiary Guaranty (the "Subsidiary
      Guaranty"),
      in
      the form of Exhibit
      D1
      executed
      by each of Radcom Investments (1996) Ltd. and Radcom (UK) Ltd. and in the form
      of Exhibit
      D2
      executed
      by Radcom Equipment, Inc. (each - a "Subsidiary",
      and
      collectively – the "Subsidiaries")
      (b)
      a
      Security Agreement, in the form of Exhibit
      D3
      (the
      "Subsidiary
      Security Agreement"),
      duly
      signed by Radcom Equipment, Inc., (c)
      a
      Deposit Account Control Agreement, substantially in the form of Exhibit
      D4,
      duly
      signed by Radcom Equipment, Inc. and the bank(s) with which Radcom Equipment,
      Inc. maintains deposit accounts (the "Control
      Agreement,
      and
      together with
      the
      Subsidiary Guaranty, the Subsidiary Security Agreement and all other documents
      pertaining to the transactions contemplated hereby and thereby - the "Subsidiaries
      Transaction Documents"
      and,
      collectively with the Company Transaction Documents, the "Transaction
      Documents")
      and
      (d)
      an
      evidence reasonably
      satisfactory to Plenus Management that the charges pursuant to the Subsidiary
      Security Agreement have been perfected; 

    


    (vi)
      a true
      and correct copy of resolutions of the Board of Directors of each Subsidiary
      authorizing: (a)
      such
      Subsidiary to execute and deliver the respective Subsidiary Transaction
      Documents, and (b)
      an
      officer of such Subsidiary to execute and deliver such respective Subsidiary
      Transaction Documents; 

    


    (vii)
      copies
      of all waivers, notifications, consents and approvals required for the
      consummation of the transactions contemplated by the Transaction
      Documents;

     

    (viii)
      a
      Management Rights Letter, in the form of Exhibit
      E,
      duly
      signed by the Company; 

    


    (ix)
      a legal
      opinion by counsel to the Company, in the form of Exhibit
      F;
      

    


    (x) a
      joinder
      (the "Joinder"),
      in the
      form of Exhibit
      G,
      to that
      certain Share Purchase Agreement, dated December 19, 2007, duly executed by
      the
      Company and the other parties thereto
      solely
      with respect to the registration rights provided to the “Purchasers”
thereunder;  

    


    (xi)
      a
      compliance certificate (the "Closing
      Compliance Certificate"),
      in the
      form of Exhibit
      H,
      duly
      executed by the Company's Chief Financial Officer (without any personal
      liability).

     

    1.3.2. Closing
      Condition.
      Without
      derogating from the Company's obligation to timely furnish the Lenders with
      all
      of the documents set forth in Section 1.3.1, the obligations of the Lenders
      pursuant hereto shall be subject to receipt of all of such documents on or
      prior
      to the Closing Date, and the Lenders shall have the right to terminate this
      Agreement, without liability, by written notice to the Company should it
      transpire that the Company would fail to furnish all of the said documents
      by
      the date which is forty five (45) days following the date
      hereof.


    
      
        
        

      

      
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    1.4 Security.
      The
      Company agrees to secure the repayment of the principal amount of the Loan
      (the
      "Principal
      Amount")
      outstanding from time to time, any accrued and unpaid Interest (as defined
      below) and any other amount due to the Lenders hereunder or in connection
      herewith by (a) creating for the benefit of the Lenders, a first ranking fixed
      charge (as such term is defined in the Companies Ordinance [New-Version]-1983)
      on the Intellectual Property (as defined below) of the Company owned on the
      date
      hereof and/or throughout the term of this Agreement, and a first ranking
      floating charge (as such term is defined in the Companies Ordinance
      [New-Version]-1983) on the Company’s tangible and intangible assets and rights
      of any kind, whether contingent or absolute, including, but not limited to,
      the
      Company's technology and other Intellectual Property, as more fully set forth
      in
      the Pledge Agreements, (b) causing each Subsidiary to guarantee the fulfillment
      of the Company's obligations hereunder, as more fully set forth in the
      Subsidiary Guaranty, and (c) causing Radcom Equipment, Inc. to secure the
      Company’s obligations hereunder, as more fully set as more in the Subsidiary
      Security Agreement and the Control Agreement. The Company shall inform Plenus
      Management in writing of any additional registration of Intellectual Property,
      or application for such registration or renewal thereof, and shall take all
      such
      steps as shall be reasonably required in order to extend the charges created
      hereunder to such additional registration. From time to time Plenus Management
      may demand the execution and delivery of, and the Company shall execute and
      deliver, or cause the execution and delivery of, such additional documents
      as
      may be reasonably necessary to maintain or extend the charges created pursuant
      to the Pledge Agreements and the Subsidiary Security Agreement, including,
      without limitation, by creating additional security in favor of the Lenders
      on
      the assets of any Subsidiary or new subsidiary. For the avoidance of doubt,
      Plenus Management and the Lenders acknowledge that the right to realize the
      above charges and pledges is subject to the rights and privileges of the Office
      of the Chief Scientist of the Ministry of Industry and Trade (the “OCS”).

    


    1.5 Termination
      of Security Interests.
      Upon
      repayment in full of the Principal Amount together with any accrued Interest
      thereon and any other amount due the Lenders under the Transaction Documents
      or
      in connection therewith, the Security Interests (as defined in Section 1.6)
      granted pursuant hereto shall terminate and be of no further force and effect.
      In such event, the Lenders shall, at the Company’s expense, promptly execute and
      deliver to Company such documents as the Company shall reasonably request to
      evidence or effect the termination of the Lenders' Security
      Interests.

    


    1.6 Seniority.
      Other
      than with respect to fixed charges on assets of the Company or any subsidiary
      of
      the Company acquired by the Company or such subsidiary following the Closing
      Date, which charges are made in favor of the actual sellers or lessors of such
      assets, or in connection with purchase loans (including bank guarantees and
      letters of credit) made by the actual seller of such assets or a financial
      institution specifically financing such an acquisition or lease of assets
      (שסל"ן)
      or as
      otherwise provided by law, the Loan and all amounts accrued thereon, as well
      as
      all other amounts due to the Lenders pursuant to the Transaction Documents,
      shall rank senior to any other Security Interest on the assets and rights of
      the
      Company and the Company's subsidiaries, to any other indebtedness to banks,
      financial and lending institutions, creditors, shareholders and other parties,
      all to the extent permitted by applicable law. 



    
      
        
        

      

      
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    For
      purposes of this Agreement, the term “Security
      Interest”
      shall
      mean any Lien (as defined below), assignment or other encumbrance over or in
      any
      person’s or entity’s property, and the term “Lien”
shall
      mean any lien, pledge, encumbrance, security interests, charge, option,
      preemptive right or transfer or other similar restriction.

    


    2. Payments.

    


    2.1
       Repayment
      of Principal Amount.
      Subject
      to the provisions of Section 2.5 below, the Principal Amount shall be due and
      payable in twenty four (24) consecutive, equal monthly installments of
      $104,166.66, commencing thirteen (13) months after the Closing Date and
      continuing on the same day of each of the following twenty three (23) months
      (and if such day is not a Business Day, then on the first Business Day
      thereafter), with the last installment becoming due and payable on the third
      (3rd)
      anniversary of the Closing Date. 

    


    For
      the
      purposes of this Agreement, “Business
      Day”
shall
      mean each day on which at least two of the three biggest banking institutions
      in
      Israel are open for business.

    


    2.2 Interest
      on Principal Amount.
      The
      Principal Amount outstanding from time to time shall bear interest (denominated
      in United States dollars and calculated on a 360 day year for the actual number
      of days elapsed and compounded annually) at an annual rate of ten percent (10%),
      until the date of repayment, plus value added tax (“VAT”),
      if
      applicable (together, the “Interest”).
      The
      accrued Interest shall be payable on the first Business Day of each calendar
      quarter, with respect to the preceding quarter (or part thereof), except in
      the
      case of early prepayment, in which case accrued Interest shall be due and
      payable on such date of early repayment, or for the Interest accrued during
      the
      quarter (or part thereof) in which the last installment of the Principal Amount
      is due and payable, which Interest shall be due and payable concurrently with
      such last repayment of the Principal Amount.

     

    2.3 Interest
      on Late Payments.
      Without
      derogating from any rights or remedies afforded by law, any portion of the
      Principal Amount and/or Interest which is not paid by the Company on its due
      date as set forth above, shall bear an additional interest of 5% per annum
      from
      the due date and until actual payment, plus VAT, if applicable (together, the
      "Additional
      Interest").
      The
      Additional Interest shall be compounded daily, except for Additional Interest
      charged as a result of the first two incidents of late payment, which
      shall be compounded daily only if such failures to timely pay are not remedied
      within the
      five (5)
      Business Days after the due date. 

     

    2.4 Bank
      Information.
      Unless
      and until otherwise notified by Plenus Management to the Company in writing,
      all
      payments payable by the Company to the Lenders hereunder shall be divided among
      the Lenders in the manner described below (and in Schedule I) and shall be
      made
      to the following accounts:

    


    (i)
      17%
      of each payment shall be made to the following bank account (Plenus II): Bank
      Leumi, 11 Galgaley Haplada st. Herzelia, Business Herzelia Branch 864 Plenus
      II,
      L.P. 233400/61 Swift code: LUMIILITTLV; and


    
      
        
        

      

      
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    (ii)
      the
      remaining 83% of each such payment shall be made to the following bank account
      (Plenus III): Bank Leumi, 11 Galgaley Haplada St. Herzelia, Business Herzelia
      Branch 864 Plenus II, L.P. 259400/19 Swift code: LUMIILITTLV

    


    2.5 Prepayment.
      Notwithstanding anything to the contrary herein contained, the Company may
      prepay the Loan and any amounts owed to the Lenders under the Transaction
      Documents, at any time, without penalty or premium, provided
      that the
      Company gives Plenus Management at least ten (10) days prior written notice
      of
      its intention to prepay and specifying therein the date and the amount of such
      prepayment, and further provided
      that
      each such prepayment is in an amount of not less than the lesser of (a)
      $200,000, or (b) the sum of the outstanding Principal Amount plus any accrued
      and unpaid Interest and all other amounts due the Lenders under the Transaction
      Documents. Any prepaid amount of part of the outstanding Principal Amount shall
      also reduce proportionately the repayment amount of each future installment
      of
      the Principal Amount. 

    


    2.6 Set-off.
      The
      Lenders may set-off any obligation owed to them by the Company under the
      Transaction Documents against any obligation (whether or not due and payable)
      owed by the Lenders to the Company, regardless of the place of payment or
      currency of either obligation, upon giving the Company a written notice to
      this
      effect. If an obligation is not liquidated or is unascertained, the Lenders
      may
      set-off in an amount estimated by them in good faith to be the amount of that
      obligation, provided,
      however,
      that in
      case the actual amount owed by the Company transpires to be lower than the
      amount estimated by the Lenders, the Lenders shall refund the difference to
      the
      Company. If obligations are in different currencies, the Lenders may convert
      either obligation at a market rate of exchange in their usual course of business
      for the purpose of the set-off. The Lenders shall not be obliged to exercise
      any
      right given to them under this Section 2.6. The Company may not
      set-off
      any obligation owed to it by the Lenders against any obligation it owes to
      the
      Lenders under the Transaction Documents.

    


    2.7 Lenders'
      Books as Evidence.
      The
      Lenders' books and accounts shall serve as prima
      facie
      evidence
      in all their particulars, including all references to the computation of the
      Principal Amount, Interest, Additional Interest, payments made and any other
      financial matter related hereto.

     

    3. Acceleration.

     

    For
      purposes of this Agreement, each of the following events shall be deemed an
      "Event
      of Acceleration":

    


    (i) the
      Company fails to pay any sum due from it under any of the Transaction Documents
      at the time, in the currency and in the manner specified therein, or is
      otherwise in breach of any of the Transaction Documents, including, without
      limitation, the financial covenants referred to in Section 7.4 hereof, and,
      where such breach can be cured by the Company, such breach is not remedied
      within five (5) Business Days in case of non-payment, within ten (10) Business
      Days in case of another fundamental breach, or twenty one (21) Business Days
      in
      case of a non-fundamental breach; or

     

    
      
        
        

      

      
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    (ii) the
      Company admits or indicates its inability to pay its debts as they become due,
      consistently fails to pay its undisputed debts as they fall due, commences
      negotiations with its creditors with a view to a general readjustment or
      rescheduling or another arrangement regarding its indebtedness in general or
      makes a general assignment for the benefit of, or a composition with, its
      creditors; or

    


    (iii) any
      indebtedness of the Company to a third party for borrowed money in the amount
      of
      more than $200,000 is not paid when due (or the Company is otherwise in default
      under any agreement with banks or financial institutions), other than as a
      result of legitimate disputes, "grace periods" provided by such lender or trade
      liabilities incurred in the ordinary course of business and payable in
      accordance with customary practices; or

    


    (iv) the
      adoption of a resolution by the Company to voluntarily liquidate; the filing
      by
      or against the Company of any petition in liquidation or any petition for relief
      under the provisions of applicable law for the relief of debtors; or the
      appointment of a special manager, liquidator or temporary liquidator, receiver
      or temporary receiver or trustee to take possession of any material assets
      of
      the Company; provided,
      however,
      that if
      such filing, or appointment were instigated without the Company's consent,
      it
      shall be deemed an Event of Acceleration only if not cancelled, removed or
      stayed within sixty (60) days; or

    


    (v) any
      representation or statement made by the Company in any of the Transaction
      Documents, or in any other document, certificate or written statement delivered
      by it as part of the Transaction Documents, proves to have been incorrect or
      misleading in any material respect when made; provided,
      however,
      that
      with respect to (a) the representations contained in clauses (ii), (iv), (v),
      (ix), (x), (xi), (xiii) and (xiv) – (xvii) of Section 4 hereof this Event
      of Acceleration may only apply until the Company provides Plenus Management
      with
      audited, consolidated financial statements as at, and for the year ended on,
      December 31, 2007, including its balance sheet, statements of income, cash-flow
      and changes in shareholder equity for the period ended thereon, and (b) the
      representations contained in clauses (i), (iii), (vi) - (viii) and (xii) of
      Section 4 hereof this Event of Acceleration may only apply until the earlier
      of
      repayment in full of all amounts due the Lenders pursuant to the Transaction
      Documents or the third (3rd)
      anniversary of the Closing Date; or


    
      
        
        

      

      
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    (vi) any
      event
      or series of events occur(s) which, in the reasonable opinion of Plenus
      Management, may have a material adverse effect on the business, condition
      (financial or otherwise), or results of operations of the Company and the
      Subsidiaries (taken as a whole) or on the ability of the Company or the
      Subsidiaries to comply with any of their material obligations under any of
      the
      Transaction Documents ("Material
      Adverse Effect").
      Provided,
      however,
      that
      none of the following shall be deemed a Material Adverse Effect: (a) changes
      in
      general economic or political conditions or financial credit or securities
      markets in general (including changes in interest or exchange rates) in any
      country or region in which any of the Company or the Subsidiaries conducts
      a
      material portion of its business, except to the extent such changes affect
      the
      Company and the Subsidiaries in a disproportionate manner as compared to other
      companies that compete with the Company or the Subsidiaries operating in any
      such country or region in industries in which the Company or the Subsidiaries
      operate or do business; (b) any events, circumstances, changes or effects that
      affect the industries in which the Company or the Subsidiaries operate, except
      to the extent such events, circumstances, changes or effects affect the Company
      and the Subsidiaries in a disproportionate manner as compared to other
      participants in the industry; (c) any changes in GAAP occurring after the date
      of this Agreement; (d) acts of war, armed hostilities or terrorism, or
      escalation or worsening thereof, that cause any damage or destruction to, or
      render physically unusable, any facility or property of the Company or any
      of
      the Subsidiaries or otherwise disrupt the business or operations of the Company
      or any of the Subsidiaries; (e) any action taken by the Company at the written
      request or with the written consent of Plenus Management; (f) any decline in
      the
      market price or decrease or increase in the trading volume of Company shares
      after the date of this Agreement; and (g) any failure to meet internal or
      published projections, forecasts, or revenue or earning predictions for any
      period after the date of this Agreement; and further provided
      that
      prior to declaring an Event of Acceleration under this clause (vi), if such
      Event of Acceleration can be cured, Plenus Management shall give the Company
      at
      least 5
      Business Days prior written notice in which the Company may cure such Event
      of
      Acceleration; or 

    


    (vii)
      a
      breach by any Subsidiary of any of its respective Subsidiary Transaction
      Documents which, where the breach can be cured by such Subsidiary, is not
      remedied within (5) Business Days, in case of non-payment, ten (10) Business
      Days, in case of another fundamental breach, or twenty one (21) Business Days,
      in case of a non-fundamental breach.

    


    Without
      derogating from the provisions contained herein, the Company shall promptly
      inform Plenus Management in writing of the occurrence of any Event of
      Acceleration as soon as it becomes aware of it. In addition, upon receipt of
      a
      written request to that effect from Plenus Management, the Company shall confirm
      to Plenus Management that, except as previously notified to Plenus Management,
      if notified, or as notified in such confirmation, if notified, no Event of
      Acceleration has occurred. 

    


    In
      the
      event that an Event of Acceleration described in paragraphs 3(i), 3(v), 3(vi)
      or
      3(vii) has happened and is continuing following any cure period set forth in
      such provisions (if any), the Lenders may, by notice in writing sent to the
      Company, declare all amounts due to the Lenders on account of the Loan due
      and
      payable. In the event that an Event of Acceleration described in paragraphs
      3(ii), 3(iii) or 3(iv) has happened and is continuing following any cure period
      set forth in such provisions (if any), all amounts due to the Lenders on account
      of the Loan shall become due and payable without notice. 

    


    Notwithstanding
      anything to the contrary contained herein, upon such amounts becoming due and
      payable as a result of any Event of Acceleration as aforesaid, the Company
      will
      forthwith pay to the Lenders all amounts due to the Lenders on account of the
      Loan, including VAT if applicable. Additional Interest shall accrue on any
      delinquent payment, in accordance with the provisions of Section 2.3
      above.


    
      
        
        

      

      
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    4. Representations
      and Warranties of
      the Company.

    


    The
      Company, being aware that the Lenders have agreed to enter into the Transaction
      Documents in reliance upon the representations and warranties contained in
      this
      Section 4, hereby represents and warrants to the Lenders (on its behalf and
      on
      behalf of the Subsidiaries) that, except as set forth on a Disclosure Schedule
      (the “Disclosure
      Schedule”)
      attached hereto as Schedule
      4
      or in
      the Company's SEC Reports (as defined below), as of the date hereof:


    


    (i)  The
      Company is a company duly formed and validly existing under the laws of the
      State of Israel. The Subsidiaries are duly formed, validly existing and, where
      applicable, in good standing, under the laws of the states in which they were
      incorporated and the Company has no other subsidiaries. The Company’s current
      Memorandum of Association and Articles and Radcom Equipment Inc.'s Certificate
      of Incorporation and Bylaws are attached to the Disclosure Schedule as
Annex
      4(i).
      The
      Company and the Subsidiaries have full corporate power and authority to enter
      into and perform their obligations under the respective Transaction Documents,
      and all of such documents, upon their execution and delivery, constitute legally
      binding obligations of the Company or the Subsidiaries (as the case may be),
      enforceable against the Company and the Subsidiaries in accordance with their
      respective terms, subject to applicable bankruptcy, insolvency, reorganization
      moratorium, and other laws of general application affecting enforcement of
      creditors rights generally. 

    


    (ii)  The
      (i)
      Company's audited, consolidated financial statements as at, and for the year
      ended on, December 31, 2006, including its balance sheet, statements of income,
      cash-flow and changes in shareholder equity for the period ended thereon, and
      (ii) Company's unaudited, consolidated financial statements for the year ended
      on December 31, 2007, and its statements of income and cash-flow for such 12
      month period, are attached to the Disclosure Schedule as Annex
      4(ii)
      (the
“Financial
      Statements”).
      The
      Financial Statements are true and correct in all material respects, were audited
      in the case of item (i) above by a recognized firm of independent certified
      public accountants, are in accordance with the books and records of the Company,
      have been prepared in accordance with U.S. generally accepted accounting
      principles consistently applied ("GAAP"),
      and
      accurately present in all material respects the consolidated financial position
      of the Company as of such dates and the results of its operations for the
      periods then ended. Since December 31, 2007, there has not been any material
      adverse change in the assets, liabilities, condition (financial or otherwise)
      or
      business of the Company, including, without limitation:

    


    (a) any
      damage, destruction or loss, whether or not covered by insurance, materially
      and
      adversely affecting the assets, properties, conditions (financial or otherwise),
      operating results or business of the Company;

    


    (b) any
      waiver by the Company of a valuable right or of a material debt owed to
      it;


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    


    (c) any
      satisfaction or discharge of any material Lien, material claim or material
      encumbrance or payment of any material obligation by the Company, except in
      the
      ordinary course of business;

    


    (d) any
      material change or amendment to a material contract or material arrangement
      by
      which the Company is bound or to which any of its assets or properties
      subject;

    


    (e) any
      loans
      made by the Company to its employees, officers or directors, other than travel
      advances and the like made in the ordinary course of business;

    


    (f) any
      sale,
      transfer or lease of, except in the ordinary course of business, or mortgage
      or
      pledge or imposition of Lien on, any of the Company’s material assets;
      or

    


    (g) any
      change in the accounting methods or accounting principles or practices employed
      by the Company.

    


    (iii)  The
      execution and delivery of the respective Transaction Documents by the Company
      and the Subsidiaries and performance of the Company’s and the Subsidiaries'
      obligations thereunder have been duly and validly authorized by all necessary
      corporate action. 

     

    (iv)
        The
      Company has filed all forms, reports, statements and other documents required
      to
      be filed with the Securities and Exchange Commission (“SEC”)
      for
      the three years preceding the date hereof and, to the extent not available
      on
      the SEC’s EDGAR system, has heretofore delivered to Plenus Management, in the
      form filed with the SEC during such period, together with any amendments
      thereto, all Annual Reports on Form 20-F (collectively, the “Company
      SEC Reports”).
      As of
      their respective filing or publication dates, the Company SEC Reports complied
      in all material respects with the requirements of the United States Securities
      Exchange Act of 1934 and the United States Securities Act of 1933, as amended,
      applicable to the Company. The Company SEC Reports did not, at the time they
      were filed, 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 the light of the circumstances under which they were made, not
      misleading.  

    


    (v)
        (a)
      The
      Financial Statements reflect, in accordance with GAAP, all material taxation
      for
      which the Company was then liable or accountable in respect of or by reference
      to any income, sales, value added, profit, receipt, gain, transaction,
      agreement, distribution or event which was earned, accrued, received, or
      realized, entered into, paid or made on or before December 31, 2004, and the
      Company has promptly paid or provided in its books of account for all taxation
      for which it has become liable or accountable in the period from the date of
      its
      incorporation to the Closing Date, except for such omissions which would not
      reasonably be likely to have a Material Adverse Effect.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    


       (b)
      The
      Company has at all times and within the requisite time limits promptly, fully
      and accurately observed, performed and complied with all material obligations
      or
      conditions imposed on it under any legislation relating to taxation, except
      for
      such non compliance that, both individually and in the aggregate, would not
      have
      a Material Adverse Effect. 

    


       (c)
      The
      Company is not aware of any circumstances which will or may, whether by lapse
      of
      time or the issue of any notice of assessment or otherwise, give rise to any
      dispute with any relevant taxation authority in relation to its liability or
      accountability for taxation, any claim made by it, any relief, deduction, or
      allowance afforded to it, or in relation to the status or character of the
      Company or any of its enterprises under or for the purpose of any provision
      of
      any legislation relating to taxation, except for such dispute or claim that,
      both individually and in the aggregate, are not likely to have a Material
      Adverse Effect.

    


    (vi)  The
      Company has taken all corporate actions, and has procured all consents and
      approvals, necessary for the issuance of the Warrant; and the Warrant and the
      Warrant Shares when issued (provided that, with respect to the Warrant Shares,
      the Warrant was properly exercised in accordance with its terms), shall be
      duly
      authorized, validly issued, fully paid, nonassessable and shall not trigger
      any
      preemptive rights which have not been waived. 

     

    (vii)  Neither
      the execution nor the delivery of any of the Transaction Documents, nor the
      consummation of the transactions contemplated thereby, will contravene any
      agreement or negative pledge, or any law, rule, restriction or decree to which
      the Company or any Subsidiary is subject, and will not result in any such
      violation or be in conflict with or constitute, with or without the passage
      of
      time and giving of notice, either a default under any such provision,
      instrument, judgment, order, writ, decree or contract or an event that results
      in the creation of any Lien upon any assets of the Company or any Subsidiary
      or
      the suspension, revocation, impairment, forfeiture, or non-renewal of any
      material permit, license, authorization, or approval applicable to the Company
      or any Subsidiary, its respective business or operations or any of its
      respective assets or properties except for, in each case, such contraventions,
      conflicts, defaults and the like that both individually and in the aggregate,
      are not likely to have a Material Adverse Effect. 

    


    (viii)  There
      is
      no order, writ, injunction or decree of any court, government or governmental
      agency that, if occurred after the Closing, would constitute an Event of
      Acceleration pursuant to clause (vi)
      of
      Section 3; nor is there any
      action, suit, proceeding or investigation pending or threatened against the
      Company or any Subsidiary that questions the validity of any of the Transaction
      Documents, or the right of the Company or any Subsidiary to execute and deliver
      any such document or to consummate the transactions contemplated thereby, or
      that may have, either individually or in the aggregate, a Material Adverse
      Effect; nor is the Company aware that there is any basis for the
      foregoing.

    


    (ix)  There
      are
      no material claims, guarantees, royalty payments, payments to government
      entities or regulatory bodies, Security Interests, options or other rights
      outstanding with respect to any assets or securities of the Company or any
      Subsidiary, and neither the Company nor any Subsidiary has any outstanding
      loans
      or financial obligations to any third parties, including, but not limited to,
      any banking obligations, and any Liens, whether registered or not, on the
      Company’s or any Subsidiary's bank accounts or other assets of the Company or
      any Subsidiary.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    


    (x)  (a)
      To the
      Company's best knowledge, the Company and the Subsidiaries own, free and clear
      of claims or rights of any other person, with full right to use, sell, license,
      sublicense, dispose of, and bring actions for infringement of, or have acquired
      or have licenses or other rights to use, all Intellectual Property (as defined
      below) used by them in the conduct of their business as presently conducted.
      A
      complete list of all patents, trademarks and key domain names registered by
      the
      Company or any Subsidiary in any jurisdiction as of the date hereof, and
      all
      applications for registration or renewal of such patents, trademarks and key
      domain names in any jurisdiction as of the date hereof, is set forth in the
      Disclosure Schedule.

    


       (b)
      To the
      Company's knowledge, the business of the Company and the Subsidiaries as
      presently conducted and the production, marketing, licensing, use and servicing
      of any products or services of the Company and the Subsidiaries do not infringe
      or conflict with any Intellectual Property. The Company and the Subsidiaries
      have not received written notice from any third party asserting that any
      Intellectual Property owned or licensed by the Company or the Subsidiaries,
      or
      which the Company or the Subsidiaries otherwise have the right to use, is
      invalid or unenforceable by the Company and the Subsidiaries and there is no
      reasonable basis for any such claim (whether or not pending or threatened).
      

    


      (c)
      The
      Company and the Subsidiaries have taken all steps determined by them to be
      reasonably required in order to establish and preserve their ownership in their
      owned Intellectual Property and to keep confidential all material technical
      information developed by, or belonging to, the Company and the Subsidiaries
      which has not been patented or copyrighted. To the Company's best knowledge,
      the
      Company and the Subsidiaries are not making any material unlawful use of any
      Intellectual Property of any other person, including, without limitation, any
      former employer of any past or present employees of the Company and the
      Subsidiaries. To the Company's best knowledge, neither the Company or the
      Subsidiaries nor any of their employees have any agreements or arrangements
      with
      former employers of such employees relating to any Intellectual Property of
      such
      employers, which materially interfere or conflict with the performance of such
      employee’s duties for the Company or the Subsidiaries or result in any former
      employers of such employees having any rights in, or claims on, the Intellectual
      Property of the Company or the Subsidiaries. Each current and former employee
      of
      the Company or the Subsidiaries has executed agreements regarding
      confidentiality, proprietary information and assignment of inventions and
      copyrights to the Company or the Subsidiaries, respectively, each independent
      contractor or consultant of the Company or the Subsidiaries having access to
      confidential information of the Company or the Subsidiaries has executed
      agreements regarding confidentiality and proprietary information, and the
      Company and the Subsidiaries have not received written notice that any employee,
      consultant or independent contractor is in violation of any agreement or in
      breach of any agreement or arrangement relating to proprietary information
      or
      assignment of inventions.



    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    


    For
      purposes of this Agreement, “Intellectual
      Property”
means
      patents, patent rights, patent applications, trademarks, trade names, service
      marks, brand names, logos and other trade designations (including unregistered
      names and marks), trademark and service mark registrations and applications,
      copyrights and copyright registrations and applications, inventions, protected
      formulae, formulations, processes, methods, trade secrets, computer software,
      computer programs and source codes, and similar technical information,
      engineering know-how, assembly number and test data drawings.

    


    (xi)  The
      Company's capitalization on
      a
      fully diluted basis as of the date hereof is as set forth in the Disclosure
      Schedule. The outstanding shares of any class of the Company are duly and
      validly authorized and issued, fully paid and nonassessable, and were issued
      in
      accordance with applicable securities laws or pursuant to valid exemptions
      therefrom. There are no outstanding options, warrants, rights or agreements
      for
      the purchase or acquisition from the Company of any shares of its share capital.
      The Company is not a party or subject to any agreement or understanding and,
      to
      the Company's knowledge, there is no agreement or understanding between any
      persons and/or entities, which affects or relates to the voting rights or to
      the
      giving of written consents with respect to (1) any of the Company's securities,
      or (2) appointment or removal of a director of the Company. 

    


    (xii)
      No
      consent, approval, order or authorization of, or registration, qualification,
      designation, declaration or filing with, any governmental authority on the
      part
      of the Company or any Subsidiary is required in connection with the consummation
      of the transactions contemplated by the Transaction Documents, except as set
      forth in the Transaction Documents and compliance with applicable securities
      laws.

    


    (xiii) 
      Each
      Material Agreement (as defined below) is in full force and effect, is not
      subject to rescission and, to the Company's knowledge, there are no existing
      circumstances which would reasonably be expected to materially modify the terms
      thereof. To the Company’s knowledge, no third party is in default under any
      Material Agreement. A list of the Material Agreements is set forth in the
      Disclosure Schedule. Neither the Company not any of the Subsidiaries is in
      breach of any obligation under any Material Agreement. 

    


    For
      the
      purposes of this Agreement, the term “Material
      Agreement”
shall
      mean any agreement to which the Company or any Subsidiary is a party and which
      (i) was filed as an exhibit to the Company’s SEC Reports or (ii) is material to
      the Company's business taken as a whole, including instruments, leases,
      licenses, arrangements or undertakings of any nature, written or oral.


    


    (xiv)
       (a)
      The
      Company has delivered to Plenus Management full and complete copies of all
      employment agreements or management and consulting agreements currently in
      force
      for each of the three most highly paid individuals employed or hired by the
      Company.

    


        (b)
      The
      form(s) of contracts under which substantially all the officers, employees
      and
      consultants of the Company and the Subsidiaries at the date hereof, who have
      access to confidential information of the Company or the Subsidiaries, are
      engaged, include customary provisions relating to non-disclosure and
      non-competition.


    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    


      (c)
      There
      is not now or has been threatened any material labor dispute, strike, slow-down,
      picketing, work stoppage or other similar labor activity with respect to the
      employees of the Company and the Subsidiaries, taken as a group. 

     

    (xv)(a)
      No
      Interested Party (as such term in Hebrew ("בעל
      ענין") is
      defined in the Companies Law, 5759-1999) has any direct or indirect interest
      in
      any material asset used in or otherwise relating to the business of the Company
      or the Subsidiaries; (b) no Interested Party is indebted to the Company or
      any
      Subsidiary; (c) no Interested Party has entered into, or has had any direct
      or
      indirect financial interest in, any Material Agreement, material transaction
      or
      material business dealing with or involving the Company or any Subsidiary;
      (d)
      no Interested Party is competing, directly or indirectly, with the Company
      or
      any Subsidiary; and (e) no Interested Party has any material claim or right
      against the Company or any Subsidiary (other than rights to receive amounts
      not
      yet due with respect to compensation for services performed as an employee
      or
      director of the Company or any Subsidiary). 

    


    (xvi)
      No
      person
      has, or will have, as a result of any act or omission by the Company, or anyone
      acting on behalf of the Company, any right, interest or valid claim against
      the
      Company or the Lenders for any commission, fee or other compensation as a finder
      or broker or in any similar capacity in connection with the transactions
      contemplated by this Agreement. The
      Company will indemnify and hold the Lenders harmless from and against any claim
      or liability resulting from any party claiming any such commission or fee,
      if
      such claims shall be contrary to the foregoing statement.

    


    (xvii)
      The
      representations and warranties made by the Company in this Section 4 do not
      contain any untrue statement of a material fact or omit to state a material
      fact
      necessary to make the statements made therein, in light of the circumstances
      under which they were made, not misleading. 


    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    


    4A.
      Representations
      and Warranties of
      the Lenders.

     

    Each
      of
      the Lenders, being aware that the Company has entered into the Transaction
      Documents in reliance upon the representations and warranties contained in
      this
      Section 4A, hereby represents and warrants to the Company as
      follows:

     

    4A.1
      The
      Transaction Documents to be executed by such Lender, when executed and delivered
      by such Lender on the date hereof or on the Closing Date, shall constitute
      the
      valid, binding and enforceable obligations of such Lender. The execution,
      delivery and performance of the Transaction Documents and the consummation
      of
      the transactions contemplated thereby by such Lender will not conflict with,
      or
      result in a violation of, any of the terms, conditions and provisions of such
      Lender's governing instruments. 

     

    4A.2
      The
      execution, delivery and performance of the obligations of such Lender hereunder
      have been duly authorized by all necessary corporate action, if such Lender
      is a
      corporate entity, and will not violate, together with the consummation of the
      transactions contemplated thereby, any provision of any instrument, judgment,
      order, writ, decree or contract to which it is party or by which it is bound,
      or
      any provision of law, rule or regulation applicable to such Lender which would
      prevent the execution by such Lender of the Transaction Documents or the
      performance of its obligations hereunder and the consummation of the
      transactions contemplated thereby.

     

     4A.3
      No
      agent, broker, investment banker, person or firm acting in a similar capacity
      on
      behalf of or under the authority of such Lender is or will be entitled to any
      broker's or finder's fee or any other commission or similar fee, directly or
      indirectly, on account of any action taken by such Lender in connection with
      any
      of the transactions contemplated under the Transaction Documents. Such Lender
      will indemnify and hold the Company harmless from and against any claim or
      liability resulting from any party claiming any such commission or fee, if
      such
      claims shall be contrary to the foregoing statement.

     

    4A.4
      All
      Lenders are exclusively and irrevocably represented by Plenus Management for
      all
      intents and purposes under this Agreement and the other Transaction Documents,
      and the actions of Plenus Management shall be binding upon the
      Lenders,
      as
      confirmed in the Side Letter attached hereto as Exhibit
      I.
      The
      Company shall be entitled to fully rely on any instructions and actions by
      Plenus Management as if they were instructions of the Lenders. 

     

    4A.5
      It
      is an experienced and knowledgeable lender and investor and is capable of
      evaluating the risks of its loan to the Company and of its investment in the
      Warrants. Such Lender is an “accredited investor” within the meaning of Rule 501
      propagated under the Securities Act of 1933, as amended. 

     

    Nothing
      set forth in this Section 4A shall be deemed to detract from or otherwise
      prejudice the Lenders' reliance on the Company's representations and warranties
      set forth in Section 4 above.



    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    


    5.
      Reporting
      and Notice Rights;
      Confidentiality.

    


    5.1
      Reporting
      and Notice Rights.
      Without
      derogating from the management rights contained in the Management Rights Letter,
      but subject to limitations, if any, under applicable law, the Company shall
      provide the Lenders (including by filing of such information on EDGAR) with
      all
      of the following information commencing from the Closing Date until the full
      repayment of the Loan and all amounts related thereto, and with the information
      set forth in clauses (i), (ii) and (v) below following such repayment and so
      long as the Lenders and/or their Permitted Transferees (as defined below) hold
      the Warrant or shares of the Company constituting at least 20% of the the
      Warrant Shares: (i) audited financial statements, within one-hundred and eighty
      (180) days after the end of each fiscal year (including an audited annual
      balance sheet of the Company as of
      the end
      of the fiscal year and the statement of income and cash flow of the Company
      for
      the fiscal year then ended), (ii) unaudited quarterly financial statements,
      within forty-five (45) days after the end of each of the first, second and
      third
      quarter, (iii) all board materials, at the same time that members of the Board
      of Directors of the Company receive them, (iv) such other data and information
      as the Lenders may reasonably request, provided such data and information are
      reasonably available, (v) in the event of a merger or consolidation of the
      Company, a sale of all or substantially all of the assets or shares of the
      Company or any other reorganization or restructuring of the Company having
      similar effects or a distribution of dividends, advanced written notice of
      at
      least seven (7) Business Days prior to the anticipated closing of such
      transaction or distribution, and (vi) advanced written notice of at least seven
      (7) Business Days prior
      to
      the anticipated date of
      any
      public offering of the Company’s securities pursuant to a registration statement
      filed with the Securities and Exchange Commission under the U.S. securities
      laws
      or pursuant to a registration statement filed with a similar authority under
      the
      securities laws of any other jurisdiction.

    


    Furthermore,
      as long as the Company owes the Lenders any amount hereunder, the Lenders shall
      have, at reasonable times and upon reasonable notice, full access to all books
      and records of the Company and shall be entitled to inspect the properties
      of
      the Company and consult with management of the Company regarding the same,
      to
      the extent reasonably required or advisable for the purpose of monitoring
      compliance by the Company with its obligations under the Transaction
      Documents.

    


    5.2 Confidentiality.
      The
      Lenders acknowledge that the data and the information obtained pursuant to
      the
      Transaction Documents or by the operation of any applicable law are
      confidential, and also acknowledge the prohibition on the use of material
      non-public information pursuant to applicable securities law, and agree that
      such data and information will not be disclosed, used or otherwise exploited
      for
      any other purpose, without the prior written consent of the Company;
provided,
      however,
      that
      the Lenders may disclose any data and information: (i) in connection with
      reports to their shareholders, partners, and investors, but only to the extent
      so required and (ii) to their directors, officers and employees on a need to
      know basis; on the condition, in each such case, that the recipient of data
      or
      information shall be subject to the same obligations to which the Lenders are
      subject to with respect to such data and information pursuant
      hereto.


    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    


    6. Deleted.
      

     

    7. Covenants.
      

    


    7.1 Authorizations,
      Approvals, Licenses and Consents.
      The
      Company shall comply with the terms of, and do all that is commercially
      reasonably necessary to maintain in full force and effect, all authorizations,
      approvals, licenses and consents required in, or by the laws and regulations
      of,
      the State of Israel or any other applicable jurisdiction to enable it and the
      Subsidiaries to lawfully enter into, and perform their obligations under, the
      Transaction Documents, and to ensure the legality, validity, enforceability
      or
      admissibility in evidence of all such documents.

    


    7.2  Registration
      Rights.

    


    (i)
      The
      Company shall prepare and file with the SEC as soon as commercially reasonable,
      but in any event not later than May 30, 2008 (the “Filing
      Deadline”),
      a
      registration statement (the 'Registration
      Statement")
      on
      Form F-3 (or, if Form F-3 is not then available to the Company, on such form
      of
      registration statement as is then available to effect a registration for resale
      of the Warrant Shares and any other securities issued or issuable with respect
      to any of the Warrant Shares) (collectively, the "Registrable
      Securities")
      covering the resale of the Registrable Securities. Subject to any SEC comments,
      such Registration Statement shall include the plan of distribution attached
      hereto as Exhibit
      J.
      Such
      Registration Statement also shall cover, to the extent allowable under the
      Securities Act of 1933, as amended, and the rules and regulations promulgated
      thereunder (including Rule 416), such indeterminate number of additional
      Ordinary Shares resulting from share splits, bonus shares (stock dividends)
      or
      similar transactions with respect to the Registrable Securities. The
      Registration Statement (and each amendment or supplement thereto, and each
      request for acceleration of effectiveness thereof) shall be provided to Plenus
      Management and its counsel prior to its filing or other submission.


     

    (ii)
      The
      Company shall use commercially reasonable efforts to have the Registration
      Statement declared effective as soon as practicable. The Company shall notify
      Plenus Management by facsimile or e-mail as promptly as practicable, and in
      any
      event, within twenty-four (24) hours, after any Registration Statement is
      declared effective and shall simultaneously provide Plenus Management with
      copies of any related Prospectus to be used in connection with the sale or
      other
      disposition of the securities covered thereby. The Company shall maintain the
      effectiveness of the Registration Statement until the earlier of (i) the sale
      of
      all of the Registrable Securities by the Lenders; (ii) such time as all of
      the
      Registrable Securities may be sold by the Lenders pursuant to Rule 144(k);
      or
      (iii) the fifth (5th)
      anniversary of the Closing Date.


    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    


    (iii)
      If
      (A) a Registration Statement covering the Registrable Securities is not filed
      by
      the Filing Deadline, (B) such Registration Statement is not declared effective
      by the SEC prior to the later of (i) five (5) Business Days after the SEC shall
      have informed the Company that no review of the Registration Statement will
      be
      made or that the SEC has no further comments on the Registration Statement
      or
      (ii) the 180th day after the Closing Date or (C) after a Registration Statement
      has been declared effective by the SEC, sales cannot be made pursuant to such
      Registration Statement for any reason within the Company's control (including,
      without limitation, by reason of a stop order, or the Company’s failure to
      update the Registration Statement) (each, an “Event”
and
      the
      date on which such Event occurs, the “Event
      Date”),
      then
      without diminishing the Company's obligation to cause the registration of the
      Registrable Securities as soon as practicable or the Lenders' right to seek
      injunctive relief, the Lenders shall be entitled to a payment in ordinary shares
      of the Company, based on the then
      Warrant
      Exercise Price (as therein defined), in the amount of $20,000
      payable on the
      applicable
      Event
      Date and an additional payment of $7,000 for any additional month of delay.
      

     

    7.3 Negative
      Covenants.

    


    The
      Company will not, without prior written consent of Plenus Management:


    


    (a)
      materially change the general nature of its
      business; 

    


    (b)
      make
      or maintain any loan, except for loans and other advances in the aggregate
      amount of up to $250,000 at any given time that are granted in the ordinary
      course of business.
      For
      the
      avoidance of doubt, the foregoing limitation shall not apply to loans and other
      advances between the Company and any of its subsidiaries which entered into
      a
      security agreement with the Lenders and to payment terms negotiated with
      customers in arm’s length transactions; 

    


    (c)
      receive financial loans or similar extensions of credit from a bank, another
      financial institution or other similar third party exceeding (together with
      the
      amounts set forth in clause (d) below), other than short term loans, or similar
      extensions of credit, of up to thirty (30) days received in the ordinary course
      of business which do not exceed an aggregate amount of $200,000; 

    


    (d)
      provide any guarantee or otherwise incur any contingent liability in connection
      with any financial loan or similar extension of credit from a bank or another
      financial institution or other similar third party, other than in the ordinary
      course of business and in an aggregate amount which may not exceed in the
      aggregate (together with the amounts set forth in clause (c) above) an amount
      of
      $200,000. For the avoidance of doubt, nothing herein shall prevent the Company
      from granting in the ordinary course of business a performance bond, performance
      guarantee or any other similar guarantees in connection with performance of
      the
      Company's obligations and/or
      the obligations of a subsidiary which entered into a security agreement with
      the
      Lenders, pursuant
      to a contract to which it
      and/or
      such subsidiary
      is a
      party;

     

    For
      the
      purpose of clarity, the restrictions contained in clauses (c) and (d) of this
      Section 7.3 shall not apply to any commercial debts (e.g., payments due to
      suppliers or guarantees in respect thereof) incurred by the Company in the
      ordinary course of its business; 



    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    


    (e)
      repay
      any loans (including, without limitation, shareholders’ loans), debts or other
      financial obligations, excluding, however (i) normal operating expenses of
      the
      Company which are incurred in the ordinary course of business, and (ii)
      repayment of loans or debts the assumption of which is not forbidden pursuant
      to
      this Agreement; 

    


    (f)
      sell,
      transfer, assign, pledge, or grant a Security Interest over any of the material
      assets of the Company (except for sales or transfers of assets of the Company
      in
      the Company's ordinary course of business), all except as expressly permitted
      herein;

     

    (g)
      make
      any Distribution (as such term in Hebrew ("חלוקה")
      is
      defined in the Companies Law, 5759-1999); and 

    


    (h)
      enter
      into, or be a party to, any transaction, arrangement or agreement with any
      Affiliate (as defined below) other than (i) investments in the Company or grant
      of options pursuant to the Company’s employee stock option plan then in effect,
      (ii) transactions involving insignificant amounts (provided that such
      transactions are limited in number), (iii) the transactions currently in place
      or extensions thereof, which are listed in Exhibit
      K,
      or (iv)
      arm's length transactions in the ordinary course of business. For the avoidance
      of doubt, material amendments of the terms of the transactions listed in said
      Exhibit
      K
      shall
      also require Plenus Management’s prior written consent. For purposes of this
      Agreement, the term “Affiliate”
shall
      mean, any individual or any type of entity, whether incorporated or not, which,
      directly or indirectly through one or more intermediaries, controls or is under
      common control with the Company.

    


    The
      above
      covenants shall also apply to each and every subsidiary of the Company,
      including subsidiaries formed following the Closing Date. This Section shall
      not
      apply to any transaction conducted solely between the Company and Radcom
      Equipment, Inc. or such other subsidiaries (subject to such other subsidiaries
      executing security agreements similar to the Subsidiary Security Agreement)
      in
      the ordinary course of business.

    


    7.4.
      Financial
      Covenants.
      The
      Company shall comply with the financial covenants set forth in Exhibit
      L.
      

    


    7.5.
      Merger;
      Consolidation; Acquisition; Investments.
      For so
      long as any amounts payable to the Lenders pursuant to the provisions of the
      Transaction Documents have not been repaid in full, the Company will have such
      amounts repaid, if the Lenders so desire, (i) immediately upon the consolidation
      of the Company with, or a merger with or into, or a sale of Company securities
      (by the Company or by the Company’s shareholders) to any third party, pursuant
      to which the Company’s shareholders immediately prior to such transaction will
      own less than 51% of the surviving entity immediately following such
      transaction, (ii) an acquisition or other transfer of all or substantially
      all
      of the Company’s assets, other than to an entity in which at least 51% of the
      outstanding share capital is beneficially owned by the Company and/or its
      shareholders (clauses (i) and (ii) above shall each be referred to herein as
      an
“M&A
      Transaction”),
      or
      (iii) the consummation of any secondary public offering of the Company's
      securities with net proceeds to the Company in excess of $5,000,000 (which,
      for
      the avoidance of doubt, will not include the PIPE transaction approved by the
      Company’s
      shareholders on January 30, 2008.


    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    


    8. Miscellaneous.
      

    


    8.1 Further
      Action.
      At any
      time and from time to time, each of the parties agrees, without further
      consideration, to take such actions and to execute and deliver such documents
      as, in the other party's opinion, may be reasonably necessary to carry out
      and
      give full effect to the provisions of the Transaction Documents and the
      intentions of the parties as reflected hereby and thereby. Without derogating
      from the generality of the foregoing, the Company shall use its best commercial
      efforts to maintain in full force and effect all authorizations, approvals,
      licenses and consents required by or under applicable laws and regulations
      in
      order to enter into the Transaction Documents and perform all of its obligations
      under the Transaction Documents.

    


    8.2 Governing
      Law.
      This
      Agreement shall be governed by, and construed in accordance with, the laws
      of
      the State of Israel, without regard to the conflict of laws provisions thereof.
      The parties hereby irrevocably submit to the exclusive jurisdiction of the
      competent courts sitting in Tel Aviv, Israel.

    


    8.3 Joint
      and Several.
      The
      rights and obligations of the entities comprising the Lenders hereunder are
      joint and several.

    


    8.4 Successors
      and Assigns.
      Except
      as otherwise expressly limited herein, the provisions hereof shall inure to
      the
      benefit of, and be binding upon, the successors, assigns, heirs, executors,
      and
      administrators of the parties hereto. 

     

    8.5 Non-assignability.
      None of
      the rights or obligations set forth in, arising under, or created by, this
      Agreement may be assigned or transferred by the Company or a Lender without
      the
      prior consent in writing of the other party, which consent shall not be
      unreasonably withheld. Anything in this Section 8.5 to the contrary
      notwithstanding, each Lender shall have the right to assign or transfer its
      rights and obligations under this Agreement, as long as such assignment or
      transfer is not to a competitor of the Company, to any of the following (each
      a
“Permitted
      Transferee”):
      (i)
      any other entity which controls, is controlled by, or is under common control
      with, such Lender, (ii) to any the other Lender, (iii) if the Lender is a
      trustee or is appointed to act on behalf of others - to its beneficiaries,
      or
      (iv) if the Lender is a general or limited partnership - to its partners and
      to
      affiliated partnerships managed by the same management company or managing
      general partner or to an entity which controls, is controlled by, or is under
      common control with, such management company or managing general partner. The
      limited right of a Lender to assign and transfer pursuant to this Section 8.5
      shall also apply,
      mutatis mutandis,
      to each
      Permitted Transferee.



    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    


    8.6 Entire
      Agreement.
      The
      Transaction Documents and their exhibits and schedules constitute the full
      and
      entire understanding and agreement among the parties with regard to the subject
      matters thereof and supersede and terminate all prior discussions, commitments,
      understandings or agreements heretofore. The preamble, exhibits and schedules
      to
      the Transaction Documents constitute integral parts thereof. 

    


    8.7 Transaction
      Expenses.
      The
      Company will participate in the payment of the legal fees and other expenses
      incurred by the Lenders in connection with the transactions contemplated by
      the
      Transaction Documents by paying, on or before the Closing Date, a one-time
      transaction fee of $25,000,
      plus applicable VAT. The Company shall also be responsible for all taxes and
      other compulsory payments to which the Lenders are, or shall be, subject under
      the Transaction Documents (other than taxes on the income of the Lenders imposed
      in any applicable jurisdiction). For the avoidance of doubt, Plenus Management
      and the Lenders declare that they are not aware of the existence of such taxes
      on the date hereof.

    


    8.8 Amendments
      and Waivers.
      Any
      term of this Agreement may be amended and the observance of any term hereof
      may
      be waived (either prospectively or retroactively and either generally or in
      a
      particular instance) only with the written consent of the Company and Plenus
      Management. No delay or omission to exercise any right, power or remedy accruing
      to any party upon any breach or default under this Agreement, shall be deemed
      a
      waiver of any other breach or default theretofore or thereafter occurring.
      All
      remedies, either under this Agreement or by law or otherwise afforded to any
      of
      the parties, shall be cumulative and not alternative, except as specifically
      set
      forth in this Agreement.

    


    8.9 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 (with
      electronic and telephone confirmation of receipt) emailed or mailed by
      registered or certified mail (return receipt required), postage prepaid, or
      by
      electronic mail (with electronic and telephone confirmation of receipt), or
      delivered by hand or by messenger, if to the Company - to the Company's address
      set forth above, to the attention of the Company’s Chief Financial Officer, and
      if to a Lender - to the Lenders' addresses set forth in Schedule I, to the
      attention of Mr. Shlomo Karako, or to such other address or to attention of
      such
      other person with respect to a party as such party shall notify the other party
      in writing as above provided. Any notice sent in accordance with this Section
      8.9 shall be effective (i) if mailed, three (3) Business Days after mailing,
      (ii) if sent by messenger, upon delivery, and (iii) if sent via fax or
      electronic mail, upon transmission and electronic confirmation of receipt or
      (if
      transmitted and received on a non-Business Day) on the first Business Day
      following transmission and electronic confirmation of receipt. 

    


    8.10 Currency;
      Manner of Payment.
      The
      term "dollars" or the symbol "$" appearing in this Agreement shall mean the
      legal currency of the United States of America, and all payments hereunder
      shall
      be made in such currency, unless otherwise agreed in writing by Plenus
      Management and the Company. 

     

    Payments
      due to the Lenders shall be made to their respective bank accounts set forth
      above or as shall otherwise be designated by the Lenders from time to time
      by
      written notice. The Company shall make such payments to such bank account by
      initiating such payments on a banking day, before 12.00 a.m., Israel time,
      by
      bank wire transfer of immediately available funds.


    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    


    8.11 Survival.
      All
      covenants made in this Agreement shall remain in full force and effect for
      as
      long as this Agreement is still in effect pursuant to its terms. Section 5.2
      above (Confidentiality)
      shall
      survive the termination of this Agreement. The Warrant, or the Warrant Shares
      if
      issued, shall not be returned to the Company even if this Agreement is
      terminated early for whatever reason.

    


    8.12 Partial
      Invalidity.
      If any
      provision of this Agreement is held by a court of competent jurisdiction to
      be
      invalid or 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.

    


    8.13.
      Limitations
      on Rights of Third Parties.
      Nothing
      expressed or implied in this Agreement is intended or shall be construed to
      confer upon or give any person, other than the Company, the Lenders and Plenus
      Management, any rights or remedies under this Agreement.

    


    [Remainder
      of page intentionally left blank.]



    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    


    IN
      WITNESS WHEREOF the parties have signed this Loan Agreement in one or more
      counterparts as of the date first appearing above set forth.

    


    
      	
              RADCOM
                LTD.

            
	 	 	 
	
              By:

            	 	 
	
              Its:

            	 	 
	 	 	 
	 	 	 
	 	 	 
	
              PLENUS
                II, LIMITED

              PARTNERSHIP
                

            
	
              By:

            	
              PLENUS
                MANAGEMENT 

              (2004)
                LTD.

            	 
	
              Its.

            	
              Management
                Company

            	 
	 	 	 
	
              By:

            	 	 
	
              Its:

            	 	 
	 	 	 
	 	 
	 
	 	 	 
	
              PLENUS
                II (D.C.M.), LIMITED

              PARTNERSHIP

            
	
              By:

            	
              PLENUS
                MANAGEMENT 

              (2004)
                LTD.

            	 
	
              Its.

            	
              Management
                Company

            	 
	 	 	 
	
              By:

            	 	 
	
              Its:

            	 	 
	 	 	 
	 	 	 
	 	 	 
	
              PLENUS
                III, LIMITED

              PARTNERSHIP

            
	
              By:

            	
              PLENUS
                MANAGEMENT III 

              2007
                LTD.

            	 
	
              Its.

            	
              Management
                Company

            	 
	 	 	 
	
              By:

            	 	 
	
              Its:

            	 	 
	 	 	 
	 	 	 
	 	 	 
	
              PLENUS
                III (D.C.M.), LIMITED

              PARTNERSHIP

            
	
              By:

            	
              PLENUS
                MANAGEMENT III 

              2007
                LTD.

            	 
	
              Its.

            	
              Management
                Company

            	 
	 	 	 
	
              By:

            	 	 
	
              Its:

            	 	 


    

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    
      	 	 
	 	 
	
              PLENUS
                III (2), LIMITED

              PARTNERSHIP.

            	
            
	
              By:

            	
              PLENUS
                MANAGEMENT III 

              2007
                LTD.

            	 
	
              Its.

            	
              General
                Partner

            	 
	
              By:

            	
              Management
                Company

            	 
	
              Its:

            	 	 
	 	 	 


    

     

    
      	
              PLENUS
                III (C.I.), L.P.

            
	
              By:
                

            	
              PLENUS
                MANAGEMENT III 

              2007
                LTD.

            	 
	
              Its:
                

            	
              Management
                Company

            	 
	 	 	 
	
              By:

            	 	 
	
              Its:

            	 	 


    

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    


    Exhibit
      L

    Financial
      Covenants

    


    Subject
      to the provisions of the last (bolded) paragraph of this financial covenants
      exhibit, below are the following two financial covenants applicable to the
      Company, which are cumulative
      (i.e.,
      the Company shall be required to comply with both (i) the Revenues/Bookings
      financial covenant and the Operating Loss financial covenant). 

    


    1.
      Revenues/Bookings
      Financial Covenant 

    


    For
      purposes of this financial covenant, the term "Revenues"
      means
      the Company's consolidated revenues for the applicable quarter, as reflected
      in
      the Company’s financial statements published in accordance with applicable laws
      and regulations, and (ii) the term "Bookings"
      means
      all binding and legally enforceable agreements and purchase orders that were
      received by the Company and/or any of its Subsidiaries in the applicable quarter
      (as confirmed in writing by the Company's Chief Financial Officer and Chief
      Executive Officer by no later than 45 days following the end of such quarter).
      

     

    Revenuers/Bookings
      Test

    


    The
      Company's consolidated Revenues or Bookings for each of the following quarters
      should not be less than the corresponding amount:

    


    Q2-08
      -
      $2.5 million

    Q3-08
      -
      $2.5 million

    Q4-08
      -
      $2.5 million

    Q1-09
      -
      $3.0 million

    Q2-09
      -
      $3.0 million

    Q3-09
      -
      $3.0 million

    Q4-09
      -
      $3.0 million

    


    It
      being
      clarified that: 

    


    
      	 	
              (i)

            	
              the
                Company shall be deemed to have complied with this financial covenant
                if
                it meets either
                the Revenues test or
                the Bookings test;

            


    

    


    
      	
            	(ii)	
              with
                respect to the Revenues and the Booking tests – should the Revenues
                or Booking in any given quarter be lower than the corresponding amount
                set
                forth above, the determination as to whether the Company has met
                the
                Revenues or Booking test for such quarter shall be postponed to the
                immediately following quarter and if the combined Revenues or Booking
                in
                such quarter and the immediately preceding quarter shall be at least
                equal
                to the aggregated minimum Revenues or Booking for such quarters as
                set
                forth above, the Company shall be deemed to have met the Revenues
                or
                Booking test for the applicable quarter. For example, should the
                Company
                fail to meet the Q2-08 Revenues test, it will need to have not less
                than
                $5 million worth of Revenues by the end of Q3-08 (the combined Revenues
                for Q2-08 and Q3-08) or else it shall be deemed to have failed to
                meet the
                Revenues test; and

            


    


    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    


    
      	 	
              (iii)

            	
              notwithstanding
                the foregoing, even if the Company fails to comply with the Revenues
                test
                and the Bookings test during any of the first 3 quarters of 2009
                but the
                accumulated Revenues of the Company for such quarter and the 3 quarters
                immediately preceding such quarter are equal to or higher than US$18
                million, the Company shall be deemed to have met this Revenues test
                for
                such quarter. The foregoing shall apply also to Q4-09, provided that
                the
                accumulated Revenues must be US$20 million or higher. For example,
                should
                the Company fail to meet the Q1-09 Revenues test, but the accumulated
                Revenues of the Company for Q2-08, Q3-08, Q4-8 and Q1-09 shall be
                equal to
                or exceed US$18 million, then the Company shall be deemed to have
                complied
                with the Revenues test for such quarter.


            


    

    


    2.
      Operating
      Loss Financial
      Covenant

    


    The
      Company's Operating Loss (as reflected in the Company’s financial statements
      published in accordance with applicable laws and regulations) for each of the
      quarters commencing on Q2-08 and ending on Q4-09 (inclusive) shall not exceed
      US$1 million. 

    


    Notwithstanding
      the foregoing, the Company shall not be deemed to be in breach of this Operating
      Loss financial covenant even if during any of the aforesaid quarters the
      Company's Operating Loss exceeds US$1 million, if the cumulative Operating
      Loss
      of such quarter and the immediately preceding and immediately ensuing financial
      quarter are less than US$3 million. For example, even if the Operating Loss
      of
      the Company for Q4-08 exceeded US$1 million, the determination as to whether
      the
      Company has met the Operating Loss financial covenant shall be postponed until
      the end of Q1-09 and if the combined Operating Loss of the Company for Q1-09
      together with the Operating Loss for Q3-08 and Q4-08 shall be equal to or lower
      than US$3 million, the Company shall be deemed to have met the Operating Loss
      financial covenant during such quarter.

     

    
      
        

      

       

    

    Notwithstanding
      anything to the contrary contained in this exhibit, if and for so long as the
      Company's available cash deposited in its bank account(s), as confirmed in
      writing by a bank statement issued by the applicable bank(s), shall be equal
      to
      or exceed an amount which is twice the outstanding amounts due the Lenders
      pursuant to the Agreement at such time, the Company shall not be required to
      meet any of the foregoing financial covenants.


    
      
        
        

      

      
        26