Document:

SHARE AND WARRANT PURCHASE AGREEMENT

 

EXHIBIT 4.17

Share and Warrant Purchase Agreement, dated as of March 17, 2004, by

and between RADCOM Ltd. and the purchasers listed therein

SHARE AND WARRANT PURCHASE AGREEMENT

     SHARE AND WARRANT PURCHASE AGREEMENT (this “Agreement”), dated as of March
21, 2004, by and between RADCOM LTD., an Israeli company listed on the Nasdaq
National Market (the “Company”), and the purchasers listed on Schedule I hereto
(each a “Purchaser” and collectively, the “Purchasers”).

W I T N E S S E T H:

     WHEREAS, subject to the terms and conditions set forth in this Agreement,
the Company desires to sell to the Purchasers and the Purchasers, severally and
not jointly, desire to purchase from the Company Ordinary Shares, par value of
NIS 0.05 each (“Ordinary Shares”), of the Company pursuant to the terms and
conditions of this Agreement; and

     WHEREAS, concurrently with the sale of the Ordinary Shares and subject to
the terms and conditions set forth in this Agreement and in the Warrants, the
Company desires to grant the Purchasers, and the Purchasers, severally and not
jointly, desire to receive from the Company Warrants to purchase one Ordinary
Share per four Ordinary Shares issued pursuant to this Agreement (the
“Warrants”); and

     WHEREAS, concurrently with the sale of the Ordinary Shares and the grant
of the Warrants, the Company desires to grant the Purchasers registration
rights with respect to the Ordinary Shares and the shares underlying the
Warrants, and the Purchasers, severally and not jointly, desire to receive such
registration rights;

     NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers agree
as follows:

SECTION 1: DEFINITIONS

     As used in this Agreement, the following terms have the respective
meanings set forth below or set forth in the Section hereof following such
term:

     “Affiliate” of a specified Person shall mean a Person that directly or
indirectly controls or is controlled by, or is under common control with, such
specified Person. For this purpose, “control” shall mean the possession, direct
or indirect, of the power to direct or cause

 

 

the direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.

     “Business Day” means any day other than a Friday, Saturday, Sunday or such
other day on which banks in the State of Israel or the State of New York are
required or authorized to close.

     “Escrow Account” means the account to which each Purchaser will deposit,
at the date of this Agreement, its respective aggregate purchase price.

     “Escrow Agent” means the agent for the Escrow Account.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Filing Date” means the 45th day following the Closing.

     “Losses” shall have the meaning set forth in Section 6.4(a).

     “Material Adverse Effect” means, any of the following: (a) an effect which
would adversely affect the performance, legality, validity or enforceability of
this Agreement or (b) an effect which has or results in a material adverse
effect on the results of operations, assets, business or condition (financial
or otherwise) of the Company and its subsidiaries, taken as a whole, provided,
however, that any adverse change or development attributable to the industry in
which the Company operates as a whole shall not, by itself, be deemed to
constitute a Material Adverse Effect on the Company.

     “Person”: shall mean an individual, partnership, joint-stock company,
corporation, limited liability company, trust or unincorporated organization,
and a government or agency or political subdivision thereof.

     “Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

     “Prospectus” means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by the
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.

     “Registrable Securities” means (i) the Ordinary Shares purchased and sold
pursuant to this Agreement, as well as the Warrant Shares and (ii) any shares
issued as (or issuable upon the conversion or exercise of any warrant, right or
other security which is issued as) a dividend or other distribution with
respect to, or in exchange for or in replacement of, the Ordinary Shares and
the Warrants Shares described in clause (i) above; excluding in all cases,

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however, any Registrable Securities transferred in a transaction in which
registration rights under this Agreement are not assigned in accordance with
this Agreement, provided, however, that Ordinary Shares or other securities
shall only be treated as Registrable Securities if and so long as they have not
been sold to or through a broker or dealer or underwriter in a public
distribution or a public securities transaction.

     “Registration Statement” means the initial registration statement
regarding which the Company shall use its best efforts to file, including the
Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.

     “Regulation S” means Regulation S under the Securities Act, as the same
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.

     “Rule 144” means Rule 144 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC having substantially the same
effect as such Rule.

     “Rule 415” means Rule 415 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC having substantially the same
effect as such Rule.

     “Rule 424” means Rule 424 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC having substantially the same
effect as such Rule.

     “SEC” means the Securities and Exchange Commission.

     “Securities Act” means the Securities Act of 1933, as amended.

     “Trading Day” means any day on which the Nasdaq Stock Market is open for
trading.

     “Warrant Shares” means the Ordinary Shares that may be purchased upon
exercise of the Warrants.

SECTION 2: PURCHASE AND SALE OF SECURITIES

     2.1 Purchase and Sale of the Shares.

     (a) Subject to the terms and conditions set forth in this Agreement, and
in reliance upon each party’s representations set forth below, on the Closing
Date, the Company shall sell to the Purchasers, and the Purchasers shall,
severally and not jointly, purchase from the Company the number of Shares as is
set forth opposite their respective names on Schedule I hereto (collectively,
the “Shares”), at a purchase price per Ordinary Share equal to (x) the average
closing market price of the Ordinary Shares of the Company on the Nasdaq
National Market on the ten (10) Trading Days ending on the Trading Day prior to
the Company’s

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shareholders’ meeting approving the transactions described in this
Agreement (“Average Share Price”), minus (y) a discount determined as follows:
(i) At an Average Share Price of $1.30 or lower, the discount will be 10% of
the Average Share Price; (ii) At an Average Share Price from $1.30 to $2.00,
the discount will be linear from 10% to 25% of the Average Share Price; (iii)
At an Average Share Price from $2.00 to $2.667, the discount will be 25% of the
Average Share Price; provided that, at an Average Share Price of $2.667 or
higher, the price per share will be $2.00 (the purchase price determined by
clause (i), (ii), (iii) or the proviso, as the case may be, the “Purchase
Price”). Except as otherwise indicated, all references in this Agreement to
“$” or “dollars” shall be to United States dollars (US$).

     (b) Subject to the terms and conditions set forth in this Agreement and in
further detail in the Warrant, the form of which is attached hereto as ANNEX A,
and in reliance upon each party’s representations set forth below, on the
Closing Date the Company shall grant each Purchaser a Warrant to purchase one
Ordinary Share for each four Ordinary Shares purchased by such Purchaser
pursuant to Section 2.1(a) hereof. The Warrants will be exercisable until the
second anniversary of the Closing for an exercise price per Ordinary Share
equal to the Average Share Price plus 25%.

     (c) The closing of such sale and purchase (the “Closing”) shall take place
at 1:00 P.M., Israel time, on March 28, 2004, or such other date as the parties
agree to in writing (the “Closing Date”), at the offices of Goldfarb, Levy,
Eran & Co., Eliahu House, 2 Ibn Gvirol Street, Tel Aviv, Israel, or such other
location as the parties shall mutually select.

     (d) At the Closing, and as a condition thereto, the following transactions
shall occur, which transactions shall be deemed to take place simultaneously
and no transaction shall be deemed to have been completed or any document
delivered until all such transactions have been completed and all required
documents delivered: (A) The Company shall deliver to each Purchaser all
appropriate documents demonstrating the satisfaction of the closing conditions
set forth in Sections 7.3, 7.5, 7.6 and 7.7 hereof; (B) the Escrow Agent shall
release, upon receipt of a written notice from the Company that all closing
conditions set forth in Section 7 have been satisfied (the “Notice”), the full
amount of the funds deposited by the Purchasers reflecting the aggregate
purchase price, to the Company in cash in United States Dollars by wire
transfer of immediately available funds to the account of the Company set forth
below; (C) the Company shall instruct its transfer agent to deliver to each
Purchaser a stock certificate in the name of such Purchaser evidencing the
number of Shares to be transferred to such Purchaser, and (D) the Company shall
deliver a signed Warrant to each Purchaser. The wire instructions for the
Company’s account are as follows:

Bank Name: Hapoalim Bank, New York Branch

Address: 1177 Avenue of the Americas, New York, NY 10036

Account Name: Radcom Ltd.

Account No.: 010105303201

SECTION 3: REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company hereby represents and warrants to the Purchasers, as of the
date hereof and the Closing Date, as follows:

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     (a) Organization and Qualification. The Company is a corporation duly
organized and validly existing under the laws of the State of Israel. The
Company has the requisite corporate power and authority to own and use its
properties and assets and to carry on its business as currently conducted. The
Company is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

     (b) Authorization; Enforcement. The Company has, subject to the Required
Approvals, the requisite corporate power and authority to enter into and to
consummate the transactions contemplated by this Agreement and otherwise to
carry out its obligations hereunder, and the execution and delivery by the
Company of this Agreement and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of the Company. This Agreement has been duly executed by the Company and,
when delivered in accordance with the terms hereof, will constitute the valid
and binding obligation of the Company enforceable against them in accordance
with its terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and to general equity principles.

     (c) Capitalization. The authorized share capital of the Company consists
of 40,000,000 Ordinary Shares, of which 10,583,641 Ordinary Shares were issued
and outstanding as of March 10, 2004. No securities of the Company are entitled
to preemptive or similar rights, nor is any holder of the securities of the
Company entitled to preemptive or similar rights arising out of any agreement
or understanding with the Company by virtue of this Agreement.

     (d) Shares. Upon delivery to the Purchasers, the Shares will be duly and
validly issued, fully paid and nonassessable, free and clear of all liens,
encumbrances, rights of first refusal of any kind and any adverse claims of any
third parties. Upon exercise of the Warrant in accordance with its terms, the
Warrant Shares will be duly and validly issued, fully paid and non-assessable,
free and clear of all liens, encumbrances, rights of first refusal of any kind
and any adverse claims of any third parties.

     (e) No Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby do not and will not (i) conflict with or
violate any provision of the Company’s memorandum or articles of association,
or (ii) conflict with, or constitute a material default (or an event which with
notice or lapse of time or both would become a material default) under, or give
to others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any agreement, instrument
(evidencing a Company debt) or other understanding to which the Company is a
party or by which any property or asset of the Company is bound or affected, or
(iii) subject to obtaining the Company Required Approvals, result in a
violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which the Company
or a Subsidiary is subject; except in the case of each of clauses (ii) and
(iii), as would not reasonably be expected, individually or in the aggregate,
to have or result in a Material Adverse Effect.

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     (f) Filings, Consents and Approvals. Except for the approval to be
obtained by the Company from its shareholders in their March 15, 2004
extraordinary meeting (the “Company Required
Approval”), the Notification Form
to the Nasdaq Stock Market regarding the Additional Listing of Shares, and the
notice on Form D to be filed with the SEC, the Company is not required to
obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of this Agreement, other
than those whose failure to be obtained shall not be reasonably expected to
have a Material Adverse Effect.

     (g) SEC Documents; Financial Statements.

     (i) The Company has filed all reports required to be filed by it under the
Exchange Act with the SEC, including pursuant to Section 13(a) or 15(d)
thereof, for the three years preceding the date hereof (the foregoing materials
being collectively referred to herein as the “SEC Documents”) on a timely basis
or has received a valid extension of such time of filing and has filed any such
SEC Documents prior to the expiration of any such extension. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder (collectively, the “Securities Laws”), and none of the
SEC Documents, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The Company has not received any material
correspondence from the SEC or the Nasdaq National Market concerning the SEC
Documents. The financial statements of the Company included in the SEC
Documents comply in all material respects with applicable accounting
requirements and the Securities Laws with respect thereto as in effect at the
time of filing. Such financial statements have been prepared in accordance
with U.S. generally accepted accounting principles applied on a consistent
basis during the periods covered therein (“GAAP”), except as may be otherwise
specified in such financial statements or the notes thereto, and fairly and
accurately present in all material respects the financial position of the
Company and its consolidated subsidiaries as of and for the respective dates
thereof and the results of operations and cash flows for the respective periods
then ended, subject, in the case of unaudited statements, to normal, year-end
audit adjustments.

     (ii) The audited consolidated statements of operations and balance sheet
of the Company for the one year period ending on December 31, 2003, comply in
all material respects with applicable accounting requirements. Such
consolidated statements of operations and balance sheet have been prepared in
accordance with U.S. generally accepted accounting principles applied on a
consistent basis (“GAAP”), except as may be otherwise specified in such
consolidated statements of operations and balance sheet or the notes thereto,
and fairly and accurately present in all material respects the financial
position of the Company and its consolidated subsidiaries as of such date.

     (h) Material Changes. From December 31, 2003 to the date of this
Agreement, (A) the Company has not altered its method of accounting or the
identity of its auditors and (B) the Company has not declared or made any
payment or distribution of cash or other property to its shareholders.

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     (i) Certain Fees. No fees or commissions will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. The Company shall indemnify and hold harmless
the Purchasers from and against all fees, commissions or other payments owing
by the Company to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person acting on behalf of
the Company in connection with the transactions contemplated by this Agreement.

     (j) No Public Offer. Assuming the accuracy of the Purchaser’s
representations and warranties in Section 4 hereof (solely to the extent any
breach thereof entails a breach of the following representation), neither the
Company nor anyone acting on its behalf has offered securities of the Company
or any part thereof or any similar securities for issuance or sale to, or
solicited any offer to acquire any of the same from, anyone so as to make
issuance and sale of the Shares, the Warrants and/or the Warrant Shares
hereunder not exempt from the registration requirements of Section 5 of the
Securities Act or the Israeli Securities Law, 1968. The Shares and Warrants,
when issued and allotted hereunder, and the Warrant Shares, when issued upon
exercise of the Warrants, will be offered and sold in compliance with all
applicable U.S. federal and state and Israeli securities laws.

     Each of the Purchasers acknowledges and agrees that the Company does not
make nor has made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
this Section 3.

SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

     Each Purchaser hereby, for itself and for no other Purchaser, represents
and warrants to the Company, as of the date hereof and the Closing Date, as
follows:

     (a) Organization; Authority. Such Purchaser is an entity duly organized
or formed, validly existing and in good standing under the laws of the
jurisdiction of its organization or formation with the requisite personal,
corporate or partnership power and authority to enter into and to consummate
the transactions contemplated by this Agreement and otherwise to carry out its
obligations hereunder. The purchase by such Purchaser of the Shares to be
acquired by it hereunder has been duly authorized by all necessary action on
the part of such Purchaser. This Agreement has been duly executed by such
Purchaser, and when delivered by such Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of such
Purchaser, enforceable against it in accordance with its terms, subject to laws
of general application relating to bankruptcy, insolvency and the relief of
debtors, and to general equity principles.

     (b) Investment Intent. Such Purchaser is, and will be, acquiring the
Shares, the Warrants and, if applicable, the Warrant Shares as principal for
its own account or for the benefit of another person or entity for whom the
representations and warranties herein are true and correct for investment
purposes only and not with a view to or for distributing or reselling such
Shares, the Warrants and, if applicable, the Warrant Shares or any part
thereof, without prejudice, however, to such Purchaser’s right, subject to the
provisions of this Agreement, at all times to sell or otherwise dispose of all
or any part of such Shares, the Warrants or the Warrant

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Shares in compliance with applicable securities laws. Such Purchaser does
not have any agreement or understanding, directly or indirectly, with any
Person to distribute the Shares, the Warrants or the Warrant Shares.

     (c) Purchaser Status. At the time such Purchaser was offered the Shares
and the Warrants, he, she or it was, and at the date hereof he, she or it is,
and on the Closing Date he, she or it will be either (a) an “accredited
investor” as defined in Rule 501(a) under the Securities Act or (b) not a “U.S.
Person” within the meaning of Regulation S promulgated under the Securities Act
and is not acquiring the Shares or Warrants for the account of a U.S. Person,
each as set forth opposite such Purchaser’s name on Schedule I hereto, as
applicable. . Such Purchaser is not registered as a broker-dealer under the
Exchange Act.

     (d) Experience of such Purchaser. Such Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Shares, and has so
evaluated the merits and risks of such investment.

     (e) Ability of such Purchaser to Bear Risk of Investment. Such Purchaser
is able to bear the economic risk of an investment in the Shares and Warrants
and, at the present time, is able to afford a complete loss of such investment.

     (f) Reliance. Such Purchaser understands and acknowledges that (i) the
Shares and Warrants are being offered and sold to it without registration under
the Securities Act in a private placement that is intended to be exempt from
the registration provisions of the Securities Act and (ii) the availability of
such exemption, depends in part on, and the Company will rely upon the accuracy
and truthfulness of, the foregoing representations and such Purchaser hereby
consents to such reliance.

     (g) Certain Fees. No fees or commissions will be payable by such
Purchaser to any broker, financial advisor or consultant, finder, placement
agent, investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. The Purchasers shall indemnify and hold
harmless the Company from and against all fees, commissions or other payments
owing by the Purchasers to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person acting on behalf of
the Purchasers in connection with the transactions contemplated by this
Agreement.

SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES

     5.1 Resale of Securities.

     (a) Each Purchaser, severally and not jointly, covenants that (i) it will
observe all applicable securities law, (ii) it will not sell or otherwise
transfer the Shares, the Warrants or the Warrant Shares except pursuant to an
effective registration under the Securities Act or in a transaction which, in
the opinion of counsel reasonably satisfactory to the Company, qualifies as an
exempt transaction under the Securities Act and the rules and regulations
promulgated thereunder and, if such sale is made in Israel, under the Israeli
Securities Law, 5728-1968 and the rules and regulations promulgated thereunder.

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     (b) The certificates evidencing the Shares, the Warrants and the Warrant
Shares will bear the following legend reflecting the foregoing restrictions on
the transfer of such securities:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE
SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY
BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1)
IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE
SECURITIES ACT, AND BASED ON AN OPINION OF COUNSEL, WHICH COUNSEL AND
OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT THE PROVISIONS
OF REGULATION S HAVE BEEN SATISFIED (2) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS OR (3) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO THE COMPANY AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION
ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE
OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED IN THE MANNER
CONTEMPLATED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.
HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES
ACT.

     5.2 Further Assurance. Each of the parties shall execute such documents
and other papers and take such further actions as may be reasonably required or
desirable to carry out the provisions hereof and the transactions contemplated
hereby. Each such party shall use its reasonable efforts to fulfill or obtain
the fulfillment of the conditions to the Closing as promptly as practicable.

     5.3 Publicity and Reports. Each of the parties hereto shall cooperate and
shall use their reasonable efforts to agree on the form and substance of any
press releases to be issued relating to the transactions contemplated by this
Agreement, provided that no party shall be precluded from making such filings
or giving such notices as may be required by law or the applicable rules of any
stock market.

     5.4 Reimbursement of Legal Expenses. Notwithstanding Section 10.2,
concurrently with the Closing, the Company shall reimburse the Purchasers for
the actual and documented fees of one legal counsel up to a maximum of $15,000
plus VAT.

     5.5 Restrictions on Short Sales. Each Purchaser represents, warrants and
covenants that neither such Purchaser nor any Affiliate of such Purchaser which
(x) had knowledge of the transactions contemplated hereby, (y) has or shares
discretion relating to such

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Purchaser’s investments or trading or information concerning such
Purchaser’s investments, including in respect of the Shares, the Warrants and
the Warrant Shares, or (z) is subject to such Purchaser’s review or input
concerning such Affiliate’s investments or trading, has or will, directly or
indirectly, during the period beginning on the date on which the Company first
contacted such Purchaser regarding the transactions contemplated by this
Agreement (and involving the Company) and ending on the Closing Date, engaged
in (i) any “short sales” (as such term is defined in Rule 3b-3 promulgated
under the Exchange Act) of the Ordinary Shares, including, without limitation,
the maintaining of any short position with respect to, establishing or
maintaining a “put equivalent position” (within the meaning of Rule 16a-1(h)
under the Exchange Act) with respect to, entering into any swap, derivative
transaction or other arrangement (whether any such transaction is to be settled
by delivery of Ordinary Shares, other securities, cash or other consideration)
that transfers to another, in whole or in part, any economic consequences or
ownership, or otherwise dispose of, any of the Shares or Warrant Shares by the
Purchaser or (ii) any hedging transaction which establishes a net short
position with respect to the Shares or Warrant Shares (clauses (i) and (ii)
together, a “Short Sale”); except for (A) Short Sales by the Purchaser or
Affiliate of such Purchaser which was, prior to the date on which such
Purchaser was first contacted by the Company regarding the transactions
contemplated by this Agreement, a market maker for the Ordinary Shares,
provided that such Short Sales are in the ordinary course of business of such
Purchaser or Affiliate of such Purchaser and are in compliance with the
Securities Act, the rules and regulations of the Securities Act and such other
securities laws as may be applicable, (B) Short Sales by the Purchaser or an
Affiliate of such Purchaser which by virtue of the procedures of such Purchaser
are made without knowledge of the transactions contemplated by this Agreement
or (C) Short Sales by the Purchaser or an Affiliate of such Purchaser to the
extent that such Purchaser or Affiliate of such Purchaser is acting in the
capacity of a broker-dealer executing unsolicited third-party transactions.

     5.6 Office of Chief Scientist’ Undertaking. Each Purchaser hereby
covenants to execute and deliver concurrently with the signing of this
Agreement, an undertaking to the Office of Chief Scientist in the form of
Exhibit 5.6 hereto.

     5.7 Escrow Account. Concurrently with the signing of this Agreement, the
Company, the Purchasers and the Escrow Agent shall execute and deliver the
Escrow Agreement attached hereto as Exhibit 5.7, and each Purchaser shall
transfer its respective full purchase price to the Escrow Account.

     5.8 Use of Proceeds. The proceeds from the investment hereunder shall be
used by the Company in accordance with the Company’s budget, as such budget is
approved by the Company’s Board of Directors from time to time.

     5.9 Stamp Duty. The Company shall bear the stamp duty costs associated
with the issuance of the Shares to the Purchasers.

SECTION 6. REGISTRATION RIGHTS

     6.1. The Registration. On or prior to the Filing Date, the Company shall
use its best efforts to prepare and file with the SEC a Registration Statement
covering the resale of all

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Registrable Securities for an offering to be made on a continuous basis
pursuant to Rule 415. Such Registration Statement shall be on Form F-3 (except
if the Company is not then eligible to register for resale the Registrable
Securities on Form F-3, in which case such registration shall be on another
appropriate form in accordance herewith) and shall contain (except if otherwise
directed by the Purchasers and agreed by the Company) the “Plan of
Distribution” attached hereto as ANNEX B. The Company shall take all
reasonable steps required to cause such Registration Statement to become
effective and remain effective as provided herein. The Company shall use its
best efforts to cause such Registration Statement to be declared effective
under the Securities Act as promptly as possible after the filing thereof, and
shall use, subject to applicable law, its best efforts to keep such
Registration Statement continuously effective under the Securities Act until
the date which is two (2) years after the date that such Registration Statement
is declared effective by the SEC or such earlier date when all Registrable
Securities covered by such Registration Statement have been sold or all such
Registrable Securities may be sold without volume restrictions pursuant to
Rule 144(k) or any other restrictions pursuant to Rule 144, as determined by
the counsel to the Company pursuant to a written opinion letter to such effect,
addressed and acceptable to the Company’s transfer agent and the affected
Purchasers (the “Effectiveness Period”).

     6.2 Registration Procedures. In connection with the Company’s registration
obligations hereunder, the Company shall:

     (a) Not less than four Trading Days prior to the filing of the
Registration Statement or any related Prospectus or any amendment or supplement
thereto, (i) furnish to the Purchasers copies of all such documents proposed to
be filed (including documents incorporated or deemed incorporated by reference,
unless such documents are already publicly available) which documents will be
subject to the reasonable review of such Purchasers, and (ii) cause its
officers and directors, counsel and independent certified public accountants to
respond to such inquiries as shall be necessary, in the reasonable opinion of
respective counsel to conduct a reasonable investigation within the meaning of
the Securities Act. The Company shall not file the Registration Statement or
any such Prospectus or any amendments or supplements thereto to which the
Purchasers of a majority of the Registrable Securities shall reasonably object
in good faith in writing within such four Trading Day period.

     (b) (i) Prepare and file with the SEC such amendments, including
post-effective amendments, to the Registration Statement and the Prospectus
used in connection therewith as may be necessary to keep the Registration
Statement continuously effective as to the Registrable Securities for the
Effectiveness Period; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so supplemented or
amended to be filed pursuant to Rule 424; (iii) respond as promptly as
reasonably possible to any comments received from the SEC with respect to the
Registration Statement or any amendment thereto and, as promptly as reasonably
possible, upon request, provide the Purchasers true and complete copies of all
correspondence from and to the SEC relating to the Registration Statement; and
(iv) comply in all material respects with the provisions of the Securities Act
and the Exchange Act in order to facilitate the disposition of all Registrable
Securities covered by the Registration Statement during the applicable period
in accordance with the intended methods of disposition by the Purchasers
thereof set forth in the Registration Statement as so amended or in such
Prospectus as so supplemented.

11

 

     (c) Notify the Purchasers of Registrable Securities to be sold as promptly
as reasonably possible (and, in the case of (i)(A) below, not less than four
Trading Days prior to such filing) and (if requested by any such Person)
confirm such notice in writing no later than one Trading Day following the day
(i)(A) when a Prospectus or any Prospectus supplement or post-effective
amendment to the Registration Statement is proposed to be filed; (B) when the
SEC notifies the Company whether there will be a “review” of such Registration
Statement and whenever the SEC comments in writing on such Registration
Statement (the Company shall provide true and complete copies thereof and all
written responses thereto to each of the Purchasers); and (C) with respect to
the Registration Statement or any post-effective amendment, when the same has
become effective; (ii) of any request by the SEC or any other Federal or state
governmental authority for amendments or supplements to the Registration
Statement or Prospectus or for additional information; (iii) of the issuance by
the SEC of any stop order suspending the effectiveness of the Registration
Statement covering any or all of the Registrable Securities or the initiation
of any Proceedings for that purpose; (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (v) of the occurrence of any event or passage of time that makes
the financial statements included in the Registration Statement ineligible for
inclusion therein or any statement made in the Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the case of
the Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.

     (d) Use its best efforts to avoid the issuance of, or, if issued, obtain
the withdrawal of (i) any order suspending the effectiveness of the
Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.

     (e) Furnish to each Purchaser, without charge, at least one conformed copy
of each Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference unless such documents are already publicly
available, and all exhibits to the extent requested by such Person (including
those previously furnished or incorporated by reference) promptly after the
filing of such documents with the SEC.

     (f) Promptly deliver to each Purchaser, without charge, as many copies of
the Prospectus or Prospectuses (including each form of prospectus) and each
amendment or supplement thereto as such Persons may reasonably request.

     (g) Prior to any public offering of Registrable Securities, use its best
efforts to register or qualify or cooperate with the selling Purchasers in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities for offer and
sale under the securities or Blue Sky laws of such jurisdictions within the
United States as any Purchaser requests in writing, to keep each such
registration or qualification (or

12

 

exemption therefrom) effective during the Effectiveness Period and to do
any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by a
Registration Statement; provided, that the Company shall not be required to (i)
qualify generally to do business in any jurisdiction where it is not then so
qualified, (ii) subject the Company to any material tax or similar liability in
any such jurisdiction where it is not then so subject or (iii) execute a
general consent to service of process in any jurisdiction where it is not then
so subject.

     (h) Cooperate with the Purchasers to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be delivered to
a transferee pursuant to a Registration Statement, which certificates shall be
free, to the extent permitted by the Purchase Agreement, of all restrictive
legends, and to enable such Registrable Securities to be in such denominations
and registered in such names as any such Purchasers may request.

     (i) Upon the occurrence of any event contemplated by Section 6.2(c)(v), as
promptly as reasonably possible, prepare a supplement or amendment, including a
post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.

     (j) Comply with all applicable rules and regulations of the SEC.

     (k) The Company may require each selling Purchaser to furnish to the
Company a certified statement as to the number of Ordinary Shares beneficially
owned by such Purchaser and, if requested by the SEC, the controlling person
thereof.

     It shall be a condition precedent to the obligations of the Company to
take any action pursuant to this Agreement with respect to the Registrable
Securities of any selling Purchaser that such Purchaser shall furnish to the
Company such information regarding itself, the Registrable Securities held by
it and the intended method of disposition of such Registrable Securities as
shall be required pursuant to the terms of the Selling Purchaser Questionnaire
attached hereto as ANNEX C. Each Purchaser who desires that all or a portion of
its Registrable Securities be included in the Registration Statement is hereby
requested to send the Company a completed Selling Stockholder Questionnaire
within ten (10) Trading Days of the date hereof.

     6.3 Registration Expenses. All fees and expenses relating to the
registration of the Registrable Securities shall be borne by the Company other
than fees and expenses, if any, of legal counsel or other advisers to the
Purchasers or underwriting discounts, brokerage fees and commissions incurred
by the Purchasers, if any.

     6.4 Indemnification With Respect to the Registration Rights

     (a) Indemnification by the Company. The Company shall, notwithstanding
any termination of this Agreement, indemnify and hold harmless each Purchaser,
the officers,

13

 

directors, agents and employees of each Purchaser from and against any and
all losses, claims, damages, liabilities, costs (including, without limitation,
reasonable costs of preparation and reasonable attorneys’ fees) and expenses
(collectively, “Losses”), as incurred, arising out of or relating to any untrue
or alleged untrue statement of a material fact contained in the Registration
Statement, any Prospectus or any form of prospectus or in any amendment or
supplement thereto, or arising out of or relating to any omission of a material
fact required to be stated therein or necessary to make the statements therein
(in the case of any Prospectus or form of prospectus or supplement thereto, in
light of the circumstances under which they were made) not misleading, except
to the extent, that (1) such untrue statements or omissions are based upon
information regarding such Purchaser furnished in writing to the Company by
such Purchaser expressly for use therein, or to the extent that such
information relates to such Purchaser or such Purchaser’s proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Purchaser expressly for use in the Registration Statement,
such Prospectus or such form of Prospectus or in any amendment or supplement
thereto (it being understood that the Purchaser has approved Annex A hereto for
this purpose), (2) in the case of an occurrence of an event of the type
specified in Section 6.2(c)(ii)-(v), the use by such Purchaser of an outdated
or defective Prospectus after the Company has notified such Purchaser in
writing that the Prospectus is outdated, or (3) such untrue statements or
omissions were made in a preliminary Prospectus but eliminated or remedied in
the amended Prospectus at the time the Registration Statement became effective
or in the final Prospectus and a copy of the final Prospectus was furnished by
the Company at or prior to the time the same is required by the Securities Act.
The Company shall notify the Purchasers promptly of the institution, overt
threat or assertion of any Proceeding of which the Company is aware in
connection with the transactions contemplated by this Agreement.

     (b) Indemnification by Purchasers. Each Purchaser shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and
the directors, officers, agents or employees of such controlling Persons, to
the fullest extent permitted by applicable law, from and against all Losses, as
incurred, arising out of or based upon: (x) such Purchaser’s failure to comply
with the prospectus delivery or any other requirements of the Securities Act
or (y) any untrue statement of a material fact contained in any Registration
Statement, any Prospectus, or any form of prospectus, or in any amendment or
supplement thereto, or arising out of or based upon any omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading to the extent that such untrue statement or omission is
contained in any information so furnished in writing by such Purchaser to the
Company specifically for inclusion in such Registration Statement or such
Prospectus or to the extent that (1) such untrue statements or omissions are
based upon information regarding such Purchaser furnished in writing to the
Company by such Purchaser expressly for use therein, or to the extent that such
information relates to such Purchaser or such Purchaser’s proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Purchaser expressly for use in the Registration Statement
(it being understood that the Purchaser has approved Annex A hereto for this
purpose), such Prospectus or such form of Prospectus or in any amendment or
supplement thereto, (2) in the case of an occurrence of an event of the type
specified in Section 6.2(c)(ii)-(v), the use by such Purchaser of an outdated
or defective Prospectus after the Company has notified such Purchaser in
writing that the Prospectus is outdated or defective, or

14

 

(3) such untrue statements or omissions were made in a preliminary
Prospectus but eliminated or remedied in the amended Prospectus at the time the
Registration Statement became effective or in the final Prospectus and a copy
of the final Prospectus was furnished by the Company at or prior to the time
the same is required by the Securities Act; in each case up to the amount of
net proceeds received by such Purchaser for the sale of Registrable Securities

     (c) Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
“Indemnified Party”), such Indemnified Party shall promptly notify the Person
from whom indemnity is sought (the “Indemnifying Party”) in writing, and the
Indemnifying Party shall assume the defense thereof, including the employment
of counsel reasonably satisfactory to the Indemnified Party (to the extent
permitted by law, one counsel shall be employed for all indemnified parties)
and the payment of all fees and expenses incurred in connection with defense
thereof; provided, that the failure of any Indemnified Party to give such
notice shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except to the extent that such failure
shall have proximately prejudiced the Indemnifying Party.

     An Indemnified Party shall have the right to employ separate counsel in
any such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall have been advised by counsel that a conflict of interest is likely to
exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ one separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have
the right to assume the defense thereof and the reasonable expenses of such
counsel shall be at the expense of the Indemnifying Party). The Indemnifying
Party shall not be liable for any settlement of any such Proceeding effected
without its written consent, which consent shall not be unreasonably withheld.
No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding in respect
of which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.

     All fees and expenses of the Indemnified Party (including reasonable fees
and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner consistent with this Section,
but only to the extent covered within the definition of “Losses” above) shall
be paid to the Indemnified Party, as incurred, within twenty Trading Days of
written notice thereof to the Indemnifying Party (regardless of whether it is
ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses to
the extent it is finally judicially determined that such Indemnified Party is
not entitled to indemnification hereunder).

15

 

     (d) Contribution. If a claim for indemnification under Section 6.4(a) or
6.4(b) is unavailable to an Indemnified Party (by reason of public policy or
otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates
to information supplied by, such Indemnifying Party or Indemnified Party, and
the parties’ relative intent, knowledge, access to information and opportunity
to correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include,
subject to the limitations set forth in Section 6.4(c), any reasonable
attorneys’ or other reasonable fees or expenses incurred by such party in
connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
this Section was available to such party in accordance with its terms. The
maximum contribution by a Purchaser shall be an amount equal to the net
proceeds received by such Purchaser for the sale of Registrable Securities.

     The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6.4(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding
paragraph.

SECTION 7. PURCHASERS’ CLOSING CONDITIONS

     The obligation of each Purchaser to purchase the Shares on the Closing
Date shall be subject, in the absence of a written waiver by or on behalf of
such Purchaser , to the satisfaction, prior thereto or concurrently therewith,
of the following further conditions:

     7.1 Representations and Warranties. The representations and warranties of
the Company contained in this Agreement shall be true in all material respects
on and as of the Closing Date as though such warranties and representations
were made at and as of such date.

     7.2 Compliance with Agreement. The Company shall have performed and
complied in all material respects with all agreements, covenants and conditions
contained in this Agreement which are required to be performed or complied with
by the Company prior to or on the Closing Date.

     7.3 Company Officer’s Certificate. Such Purchaser shall have received a
certificate of the Company, dated the Closing Date, signed by the Chief
Executive Officer, the President or the Chief Financial Officer of the Company,
certifying that the conditions applicable to the Company, as specified in the
foregoing Sections 7.1 and 7.2 hereof have been fulfilled.

16

 

     7.4 Injunction. There shall be no effective injunction, writ, preliminary
restraining order or any order of any nature issued by a court of competent
jurisdiction directing that the transactions provided for herein or any of them
not be consummated as herein provided.

     7.5 Required Approvals. The Company Required Approvals shall have been
obtained.

     7.6 Stock Certificates. A copy of the instruction letter from the Company
to its transfer agent regarding issuance of stock certificates evidencing the
Shares shall be delivered to such Purchaser.

     7.7 Nasdaq Listing. (a) the Company shall not have received notice that
the Nasdaq Listing and Hearing Review Council intends to review the
determination, dated February 13, 2004 of the Nasdaq Listing Qualifications
Panel regarding the Company’s listing on the Nasdaq National Market, and (b)
the Company shall be listed on Nasdaq National Market, and (c) the Company
shall not have received a written communication from either the SEC or Nasdaq
indicating that the Company is or will be subject to a formal investigation by
the SEC or Nasdaq, as applicable.

SECTION 8. COMPANY’S CLOSING CONDITIONS

     The obligation of the Company to sell the Shares on the Closing Date shall
be subject, in the absence of a written waiver by the Company, to the
satisfaction, prior thereto or concurrently therewith, of the following further
conditions:

     8.1 Representations and Warranties. The representations and warranties of
each of the Purchasers contained in this Agreement shall be true on and as of
the Closing Date in all material respects as though such warranties and
representations were made at and as of such date.

     8.2 Compliance with Agreement. Each Purchaser shall have performed and
complied in all material respects with all agreements, covenants and conditions
contained in this Agreement which are required to be performed or complied with
by it prior to or on the Closing Date.

     8.3 Injunction. There shall be no effective injunction, writ, preliminary
restraining order or any order of any nature issued by a court of competent
jurisdiction directing that the transactions provided for herein or any of them
not be consummated as herein provided.

     8.4 Required Approvals. The Company Required Approvals shall have been
obtained.

     8.5 Nasdaq Approval. The Company shall not have received notice that the
Nasdaq Listing and Hearing Review Council intends to review the determination,
dated February 13, 2004 of the Nasdaq Listing Qualifications Panel regarding
the Company’s listing on the Nasdaq National Market.

SECTION 9. INTERPRETATION OF THIS AGREEMENT

17

 

     9.1 Survival. The representations and warranties of the parties hereto
contained in this Agreement shall survive the Closing until the
90th day
following the filing of the Company’s annual report on Form 20-F for the year
2004 with the SEC.

     9.2 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Israel as applicable to contracts
between two residents of the State of Israel entered into and to be performed
entirely within the State of Israel. Any dispute arising under or in relation
to this Agreement shall be resolved exclusively in the competent court for Tel
Aviv-Jaffa district, and each of the parties hereby submits irrevocably to the
exclusive jurisdiction of such court.

     9.3 Paragraph and Section Headings. The headings of the sections and
subsections of this Agreement are inserted for convenience only and shall not
be deemed to constitute a part thereof.

SECTION 10. TERMINATION

     In the event that the Closing does not occur within one hundred and twenty
(120) days after the date of this Agreement, then this Agreement shall be
terminated and the rights and obligations of the parties hereto shall become
null and void.

SECTION 11. MISCELLANEOUS

     11.1 Notices

     (a) All communications under this Agreement shall be in writing and shall
be delivered by hand, electronic transmission or facsimile or mailed by
overnight courier or by registered mail or certified mail, postage prepaid:

if to the Company:

Radcom Ltd.

24 Raoul Wallenberg Street

Tel Aviv 69719, Israel

Fax: +972-3-6474681

Email: davidz@radcom.com

Attention: Chief Financial Officer

each notice to the Company, with a copy to (which shall not constitute notice):

Goldfarb, Levy, Eran & Co.

Eliahu House

2 Ibn Gvirol Street

Tel-Aviv 64077, Israel

Facsimile: +972-3-608-9908

Attention: Ashok J. Chandrasekhar, Adv.

if to the Purchasers: to the addresses set forth in Schedule I.

18

 

     (b) Any notice so addressed shall be deemed to be given: if delivered by
hand, electronic mail or facsimile, on the date of such delivery (provided that
any delivery of a notice by electronic mail is accompanied by a contemporaneous
delivery of said notice by facsimile); if mailed by courier, on the third
Business Day following the date of such mailing; and if mailed by registered or
certified mail, on the seventh Business Day after the date of such mailing.

     11.2 Expenses. Except as specifically provided otherwise in this
Agreement, Each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement.

     11.3 Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties. No
party shall be entitled to assign this Agreement without the prior written
consent of the other parties. Notwithstanding the foregoing, subject to the
applicable securities law, any Purchaser shall be entitled to assign this
Agreement to any Affiliates of such Purchaser without such consent, provided
that at the time of such assignment, (i) the Company is given written notice by
such Purchaser at the time of such assignment stating the name and address of
such assignee, and the number of Shares and/or Warrants with respect to which
such assignment is being made, and that any such assignee shall receive such
assigned rights subject to all the terms and conditions of this Agreement,
including without limitation, the provisions of this Section 10.3 and (ii) each
assignee shall furnish the Company and the Company with the assignee’s written
agreement to be bound by this Agreement and confirming the accuracy of the
representations and warranties set forth in Section 4 with respect to such
assignee.

     11.4 Entire Agreement; Amendment and Waiver. This Agreement constitutes
the entire understanding of the parties hereto and supersedes all prior
agreements or understandings with respect to the subject matter hereof among
such parties. This Agreement may be amended, and the observance of any term of
this Agreement may be waived, with the written consent of the Company and each
of the Purchasers.

     11.5 Severability. In the event that any part or parts of this Agreement
shall be held illegal or unenforceable by any court or administrative body of
competent jurisdiction, such determination shall not effect the remaining
provisions of this Agreement which shall remain in full force and effect.

     11.6 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.

     11.7 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under this
Agreement. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
described in the foregoing sentence and hereby agrees to waive in any

19

 

action for specific performance of any such obligation the defense that a
remedy at law would be adequate.

     11.8 Independent Nature of Purchasers’ Obligations and Rights. The
obligations of each Purchaser under this Agreement are several and not joint
with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser. Nothing contained herein or in this Agreement, and no action taken
by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers
as a partnership, an association, a joint venture or any other kind of entity,
or create a presumption that the Purchasers are in any way acting in concert or
as a group with respect to such obligations or the transactions contemplated by
this Agreement.

[Signature Pages Immediately Follow]

20

 

IN WITNESS WHEREOF the parties have signed this Share Purchase Agreement as of the date first hereinabove set forth.

	 	 	 	 	 	 	 
	THE COMPANY:	 	 	 	 
	 
	 	 	 	 	 	 
	RADCOM LTD.	 	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	

	
 	 	 	 	 
	

	Name:	 	 	 	 
	

	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	THE PURCHASERS:	 	SUBSCRIPTION AMOUNT:	 	 
	 
	 	 	 	 	 	 
	STAR GROWTH ENTERPRISE	 	US$1,300,000	 	 
	 
	 	 	 	 	 	 
	a German Civil Law Partnership (with limitation of liability)	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	

	
 	 	 	 	 
	

	Name:	 	 	 	 
	

	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	SVM STAR VENTURES	 	US$100,000	 	 
	 
	 	 	 	 	 	 
	Managemementgesellschaft mbH Nr. 3	 	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	

	
 	 	 	 	 
	

	Name:	 	 	 	 
	

	Title:	 	 	 	 

21

 

	 	 	 
	THE PURCHASERS:

	 	SUBSCRIPTION AMOUNT:
	 
	 	 
	ZOHAR ZISAPEL

	 	US$739,000
	 
	 	 
	RACHEL SAMSONOV

	 	US$500,000
	 
	 	 
	RAD DATA COMMUNICATIONS LTD.

	 	US$57,000
	 
	 	 
	By:                                      
	 	 
	Name:
	 	 
	Title:
	 	 
	 
	 	 
	YEHUDA ZISAPEL

	 	US$664,000
	 
	 	 
	PETER FREEDBERGER

	 	US$50,000

22

 

	 	 	 
	THE PURCHASERS:

	 	SUBSCRIPTION AMOUNT:
	 
	 	 
	VICTOR HALPERT

	 	US$50,000
	 
	 	 
	B.C.S. GROWTH FUND (ISRAEL) LP

	 	US$400,000
	 
	 	 
	By:                                      
	 	 
	Name:
	 	 
	Title:
	 	 
	 
	 	 
	GMM CAPITAL LLC

	 	US$250,000
	 
	 	 
	By:                                      
	 	 
	Name:
	 	 
	Title:
	 	 
	 
	 	 
	BENNY BERGMAN

	 	US$225,000

23

 

	 	 	 
	THE PURCHASERS:

	 	SUBSCRIPTION AMOUNT:
	 
	 	 
	PORTO INVEST & FINANCE s.a.

	 	US$225,000
	 
	 	 
	By:                                      
	 	 
	Name:
	 	 
	Title:
	 	 
	 
	 	 
	ADIGAR TECHNOLOGIES LTD.

	 	US$130,000
	 
	 	 
	By:                                      
	 	 
	Name:
	 	 
	Title:
	 	 
	 
	 	 
	GUY CASPI

	 	US$60,000
	 
	 	 
	YARIV CASPI 
	 	US$60,000
	 
	 	 
	WERTHEIMER VENTURES LP

	 	US$250,000
	 
	 	 
	By:                                      
	 	 
	By:
	 	 
	Name:
	 	 
	Title:
	 	 

24

 

	 	 	 
	THE PURCHASERS:

	 	SUBSCRIPTION AMOUNT:
	 
	 	 
	MEDISTART LTD.

	 	US$310,000
	 
	 	 
	By:                                      
	 	 
	Name:
	 	 
	Title:
	 	 
	 
	 	 
	Amos And Daughter Investments And Properties Ltd

	 	US$130,000
	 
	 	 
	By:                                      
	 	 
	Name:
	 	 
	Title:
	 	 

[SIGNATURE PAGE TO SHARE PURCHASE AGREEMENT]

25

 

Schedule I

Purchasers

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Purchaser Name	 	 	 	 	 	Aggregate	 	Number of	 	Investor
	 and Address	 	Number of Shares	 	Purchase Price	 	Warrants	 	Status*
	Star Growth Enterprise, a German
	 	 	910,364	 	 	$	1,300,000	 	 	 	227,591	 	 	Accredited
	Civil Law Partnership (with
	 	 	 	 	 	 	 	 	 	 	 	 	 	investor ; not a
	limitation of liability)

	 	 	 	 	 	 	 	 	 	 	 	 	 	US person
	Address: 

Possartstr. 9

D-81679 Munich

Germany

Fax: 49-69-419430-30

Attn: Controller
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	With a copy (which shall not
constitute notice) to:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Goldfarb, Levy, Eran & Co.

2 Ibn Gvirol Street 

Tel Aviv

Israel

Fax: 972-3-608-9908

Attn: Michael Heller, Adv.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	SVM Star Ventures
	 	 	70,028	 	 	$	100,000	 	 	 	17,507	 	 	Accredited
	Managementgesellschaft mbH Nr. 3

	 	 	 	 	 	 	 	 	 	 	 	 	 	investor; not a
	Address: 

	 	 	 	 	 	 	 	 	 	 	 	 	 	US person
	Possartstr. 9

D-81679 Munich

Germany

Fax: 49-69-419430-30

Attn: Controller
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	With a copy (which shall not
constitute notice) to:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Goldfarb, Levy, Eran & Co.

2 Ibn Gvirol Street 

Tel Aviv

Israel

Fax: 972-3-608-9908

Attn: Michael Heller, Adv.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Zohar Zisapel

	 	 	517,507	 	 	$	739,000	 	 	 	129,377	 	 	Accredited
	Address:

	 	 	 	 	 	 	 	 	 	 	 	 	 	investor; not a
	24 Raul Wallenberg Street

	 	 	 	 	 	 	 	 	 	 	 	 	 	US person
	Tel Aviv
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Rachel Samsonov

	 	 	350,140	 	 	$	500,000	 	 	 	87,535	 	 	Accredited
	Address:
	 	 	 	 	 	 	 	 	 	 	 	 	 	investor; not a

26

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Purchaser Name	 	 	 	 	 	Aggregate	 	Number of	 	Investor
	 and Address	 	Number of Shares	 	Purchase Price	 	Warrants	 	Status*
	3 Aya Street

	 	 	 	 	 	 	 	 	 	 	 	 	 	US person
	Ramat Hasharon
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Rad Data Communications Ltd.

	 	 	39,916	 	 	$	57,000	 	 	 	9,979	 	 	Accredited
	Address:

	 	 	 	 	 	 	 	 	 	 	 	 	 	investor; not a
	24 Raul Wallenberg Street

	 	 	 	 	 	 	 	 	 	 	 	 	 	US person
	Tel Aviv
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Yehuda Zisapel

	 	 	464,986	 	 	$	664,000	 	 	 	116,246	 	 	Accredited
	Address:

	 	 	 	 	 	 	 	 	 	 	 	 	 	investor ; not a
	24 Raul Wallenberg Street

	 	 	 	 	 	 	 	 	 	 	 	 	 	US person
	Tel Aviv

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Peter Freedberger

	 	 	35,014	 	 	$	50,000	 	 	 	8,754	 	 	Accredited
	Address:

	 	 	 	 	 	 	 	 	 	 	 	 	 	investor ; a US
	544 West 111th Street #6L

	 	 	 	 	 	 	 	 	 	 	 	 	 	person
	New York, NY 10025

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Victor Alpert

	 	 	35,014	 	 	$	50,000	 	 	 	8,754	 	 	Accredited
	Address:

	 	 	 	 	 	 	 	 	 	 	 	 	 	investor ; a US
	14 Peachtree Drive

	 	 	 	 	 	 	 	 	 	 	 	 	 	person
	Montville NJ 07045
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	B.C.S. Growth Fund (Israel) LP

	 	 	280,112	 	 	$	400,000	 	 	 	70,028	 	 	Accredited
	Address:

	 	 	 	 	 	 	 	 	 	 	 	 	 	investor; not a
	3 Daniel Frisch Street

	 	 	 	 	 	 	 	 	 	 	 	 	 	US person
	Tel Aviv 64731

Israel

Fax : 972-3-696-8828
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	GMM Capital LLC

	 	 	175,070	 	 	$	250,000	 	 	 	43,768	 	 	Accredited
	Address:

	 	 	 	 	 	 	 	 	 	 	 	 	 	investor; a US
	100 W. 33rd Street

	 	 	 	 	 	 	 	 	 	 	 	 	 	person
	Suite #923

New York, NY 10001

USA

Fax: 1-212-629-0188
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Benny Bergman

	 	 	157,563	 	 	$	225,000	 	 	 	39,391	 	 	Accredited
	Address:

	 	 	 	 	 	 	 	 	 	 	 	 	 	investor; not a
	3 Daniel Frisch Street

	 	 	 	 	 	 	 	 	 	 	 	 	 	US person
	Tel Aviv 64731

Israel

Fax : 972-3-696-8828
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Porto Invest & Finance s.a.

	 	 	157,563	 	 	$	225,000	 	 	 	39,391	 	 	Accredited
	Address:

	 	 	 	 	 	 	 	 	 	 	 	 	 	investor; not a
	Edificio Rocamar

	 	 	 	 	 	 	 	 	 	 	 	 	 	US person
	Calle 26 Apt. 301

Punta Del Este

Uruguay

Mailing Address:

Mr. Tenenbaum

POB 48128

Tel Aviv 61481
	 	 	 	 	 	 	 	 	 	 	 	 	 	 

27

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Purchaser Name	 	 	 	 	 	Aggregate	 	Number of	 	Investor
	 and Address	 	Number of Shares	 	Purchase Price	 	Warrants	 	Status*
	Israel

Fax: 972-3-744-0526
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Adigar Technologies Ltd.

	 	 	91,036	 	 	$	130,000	 	 	 	22,759	 	 	Accredited
	Address:

	 	 	 	 	 	 	 	 	 	 	 	 	 	investor; not a
	20 Lincoln Street

	 	 	 	 	 	 	 	 	 	 	 	 	 	US person
	Tel Aviv 67134

Israel

Fax: 972-3-565-2256

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Guy Caspi

	 	 	42,017	 	 	$	60,000	 	 	 	10,504	 	 	Accredited
	Address:

	 	 	 	 	 	 	 	 	 	 	 	 	 	investor; not a
	33 Yavetz Street

	 	 	 	 	 	 	 	 	 	 	 	 	 	US person
	Tel Aviv 65258

Israel

Fax: 972-3-796-1315
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Yariv Caspi

	 	 	42,017	 	 	$	60,000	 	 	 	10,504	 	 	Accredited
	Address:

	 	 	 	 	 	 	 	 	 	 	 	 	 	investor; not a
	73 Weitzman Street

	 	 	 	 	 	 	 	 	 	 	 	 	 	US person
	Tel Aviv 62155

Israel

Fax: 972-3-696-8828
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Wertheimer Ventures LP

	 	 	175,070	 	 	$	250,000	 	 	 	43,768	 	 	Accredited
	Address:

	 	 	 	 	 	 	 	 	 	 	 	 	 	investor; not a
	4 Hashalom Road

	 	 	 	 	 	 	 	 	 	 	 	 	 	US person
	Tel Aviv 67892, Israel
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Medistart LTD.

	 	 	217,087	 	 	$	310,000	 	 	 	54,272	 	 	Accredited
	Address:

	 	 	 	 	 	 	 	 	 	 	 	 	 	investor; not a
	50 Town Range

	 	 	 	 	 	 	 	 	 	 	 	 	 	US person
	Suites 7B & 8B

Gibraltar
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Amos And Daughter Investments And
	 	 	91,036	 	 	$	130,000	 	 	 	22,759	 	 	Accredited
	Properties Ltd 

	 	 	 	 	 	 	 	 	 	 	 	 	 	investor; not a
	Address:

	 	 	 	 	 	 	 	 	 	 	 	 	 	US person
	11 HaKison Street

Bnei Barak, Israel
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total
	 	 	3,851,541	 	 	$	5,500,000	 	 	 	962,885	 	 	 

     * Pursuant to Section 4(c)
of this Agreement, indicate whether or not Purchaser is an
“accredited investor” and/or a “US person” and, if Purchaser is
Israeli, which type of “institutional investor” under the Addendum.

28

 

ANNEX B

Plan of Distribution

     The selling shareholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their
ordinary shares on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The selling shareholders may use any one or more of the
following methods when selling shares: ordinary brokerage transactions and
transactions in which the broker-dealer solicits purchasers; block trades in
which the broker-dealer will attempt to sell the shares as agent but may
position and resell a portion of the block as principal to facilitate the
transaction; purchases by a broker-dealer as principal and resale by the
broker-dealer for its account; an exchange distribution in accordance with the
rules of the applicable exchange; privately negotiated transactions; short
sales broker-dealers may agree with the selling shareholders to sell a
specified number of such shares at a stipulated price per share;
a combination of any such methods of sale; and any other method permitted
pursuant to applicable law.

     The selling shareholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.

     Broker-dealers engaged by the selling shareholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the selling shareholders (or, if any
broker-dealer acts as agent for the purchaser of shares, from the purchaser) in
amounts to be negotiated. The selling shareholders do not expect these
commissions and discounts to exceed what is customary in the types of
transactions involved.

     The selling shareholders may from time to time pledge or grant a security
interest in some or all of the ordinary shares owned by them and, if they
default in the performance of their secured obligations, the pledgees or
secured parties may offer and sell the ordinary shares from time to time under
this prospectus, or under an amendment to this prospectus under Rule 424(b)(3)
or other applicable provision of the Securities Act of 1933 amending the list
of selling shareholders to include the pledgee, transferee or other successors
in interest as selling shareholders under this prospectus.

     The selling shareholders also may transfer the ordinary shares in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this prospectus.

     The selling shareholders and any broker-dealers or agents that are
involved in selling the ordinary shares may be deemed to be “underwriters”
within the meaning of the Securities Act in connection with such sales. In
such event, any commissions received by such broker-dealers or agents and any
profit on the resale of the ordinary shares purchased by them may be deemed to
be underwriting commissions or discounts under the Securities Act. The selling
shareholders have informed us that they do not have any agreement or
understanding, directly or indirectly, with any person to distribute the
ordinary shares.

29FORM OF WARRANT

 

EXHIBIT 4.18

Form of Warrant

     THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”) OR QUALIFIED UNDER ANY STATE OR FOREIGN SECURITIES LAW, AND
MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT COVERING THIS WARRANT
AND/OR SUCH SECURITIES, OR THE HOLDER RECEIVES AN OPINION OF COUNSEL FOR THE
HOLDER OF THE WARRANT AND/OR SUCH SECURITIES SATISFACTORY TO THE COMPANY
STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM
THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT AND
THE QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE OR FOREIGN LAW.

WARRANT TO PURCHASE ORDINARY SHARES

Radcom Ltd., an Israeli
Company (the “Company”), hereby grants to
____________________. (the “Holder”), the right to purchase from the Company
the number of Ordinary Shares of the Company, nominal value NIS 0.05 (the
“Ordinary Shares”) specified below, subject to the terms and conditions set
forth below, effective as of the date hereof (the “Effective Date”).

	1.	 	Number of Ordinary Shares Available for Purchase
	 
	 	 	This Warrant may be exercised to purchase of the Company’s
Ordinary Shares having an aggregate exercise price in the amount of
U.S. Dollars ($          ) (“Exercise
Amount”), at an exercise price per each Ordinary Share as provided in
Section 2 below, subject to adjustments under Section 8 of this Warrant
(the “Warrant Shares”);
	 
	2.	 	Exercise Price
	 
	 	 	The exercise price for each Warrant Share purchasable hereunder shall be
$2.253 subject to adjustments under Section 8 of this Warrant (the
“Warrant Price”):
	 
	3.	 	Term

 

 

	 	 	This Warrant may be exercised, in whole or in part, during the period
beginning on the Effective Date and ending on the date which is 2 years
following the Effective Date.
	 
	4.	 	Exercise of Warrant for Cash Only
	 
	 	 	This Warrant may be exercised in whole or in part on one or more
occasions during its term. The Warrant may be exercised by the surrender
of the Warrant to the Company at its principal office together with the
Notice of Exercise annexed hereto duly completed and executed on behalf
of the Holder. The Notice of Exercise must be accompanied by payment in
full of the amount of the aggregate Exercise Amount of the Warrant Shares
being purchased upon such exercise in immediately available funds.
	 
	5.	 	Issuance of Shares on Exercise
	 
	 	 	The Company agrees that the Warrant Shares so purchased shall be issued
against receipt of the Notice of Exercise and payment (as provided in
Section 4 herein) and the Holder shall be deemed the record owner of such
Warrant Shares as of and from the close of business on the date on which
this Warrant shall be surrendered, together with payment in full as
required above. In the event of a partial exercise, the Company shall
concurrently issue to the Holder a replacement Warrant on the same terms
and conditions as this Warrant, but representing the number of Warrant
Shares remaining after such partial exercise.
	 
	6.	 	Warrant Confers No Rights of Shareholder
	 
	 	 	Except as otherwise set forth in this Warrant, the Holder shall not have
any rights as a shareholder of the Company with regard to the Warrant
Shares prior to actual exercise resulting in the purchase of any Warrant
Shares.
	 
	7.	 	Investment Representation
	 
	 	 	Neither this Warrant nor the Warrant Shares issuable upon the exercise of
this Warrant have been registered under the Securities Act, or any other
securities laws. The Holder acknowledges by acceptance of the Warrant
that (a) it has acquired this Warrant for investment and not with a view
to distribution; (b) it has either a pre-existing personal or business
relationship with the Company, or its executive officers, or by reason of
its business or financial experience, it has the capacity to protect its
own interests in connection with the transaction; and (c) it is an
“accredited investor” as that term is defined in Regulation D promulgated
under the Securities Act, or he or she has the knowledge and experience
in business and financial matters to evaluate the risks and merits of his
or her investment, or it is not a “U.S. Peron” within the meaning of
Regulation S promulgated under the Securities Act and is not acquiring
the Warrants for the account of a U.S. Person. The Holder agrees that
any Warrant Shares issuable upon exercise of this Warrant will be
acquired for investment and not with a view to distribution, and that
such Warrant Shares may have to be held indefinitely unless they are
subsequently registered or qualified under the Securities Act and
applicable state

2

 

	 	 	securities laws, or based on an opinion of counsel reasonably
satisfactory to the Company, an exemption from such registration and
qualification is available. The Holder, by acceptance hereof, consents
to the placement of legend(s) on all securities hereunder as to the
applicable restrictions on transferability in order to ensure compliance
with the Securities Act, unless in the opinion of counsel for the Company
such legend is not required in order to ensure compliance with the
Securities Act. The Company may issue stop transfer instructions to its
transfer agent in connection with such restrictions.
	 
	8.	 	Adjustment of Warrant Price and Number of Shares
	 
	 	 	The number and kind of securities purchasable initially upon the exercise
of this Warrant and the Warrant Price shall be subject to adjustment from
time to time upon the occurrence of certain events, as follows:

	 	a.	 	Adjustment for Shares Splits and Combinations If the Company
at any time or from time to time effects a subdivision of the
outstanding Ordinary Shares, the number of Ordinary Shares issuable
upon exercise of this Warrant immediately before the subdivision
shall be proportionately increased, and conversely, if the Company
at any time or from time to time combines the outstanding Ordinary
Shares, the number of Ordinary Shares issuable upon exercise of this
Warrant immediately before the combination shall be proportionately
decreased. Any adjustment under this Section 8(a) shall become
effective at the close of business on the date the subdivision or
combination becomes effective.
	 
	 	b.	 	Adjustment for Certain Dividends and Distributions In the
event the Company at any time, or from time to time makes, or fixes
a record date for the determination of holders of Ordinary Shares
entitled to receive a dividend or other distribution payable in
additional shares of Ordinary Shares, then and in each such event
the number of Ordinary Shares issuable upon exercise of this Warrant
shall be increased as of the time of such issuance or, in the event
such a record date is fixed, as of the close of business on such
record date, by multiplying the number of Ordinary Shares issuable
upon exercise of this Warrant by a fraction: (i) the numerator of
which shall be the total number of Ordinary Shares issued and
outstanding immediately prior to the time of such issuance or the
close of business on such record date plus the number of Ordinary
Shares issuable in payment of such dividend or distribution, and
(ii) the denominator of which is the total number of shares of
Ordinary Shares issued and outstanding immediately prior to the time
of such issuance or the close of business on such record date;
provided, however, that if such record date is fixed and such
dividend is not fully paid or if such distribution is not fully made
on the date fixed thereof, the number of Ordinary Shares issuable
upon exercise of this Warrant shall be recomputed accordingly as of
the close of business on such record date and thereafter the number
of shares of Ordinary Shares issuable upon exercise of this Warrant
shall be adjusted pursuant to this Section 8(b) as of the time of
actual payment of such dividends or distributions.

3

 

	 	c.	 	Adjustments for Other Dividends and Distributions. In the
event the Company at any time or from time to time makes, or fixes a
record date for the determination of holders of Ordinary Shares
entitled to receive a dividend or other distribution payable in
securities of the Company other than Ordinary Shares, then in each
such event provision shall be made so that the Holder shall receive
upon exercise of this Warrant, in addition to the number of Ordinary
Shares receivable thereupon, the amount of securities of the Company
that the Holder would have received had this Warrant been exercised
for Ordinary Shares immediately prior to such event (or the record
date for such event) and had the Holder thereafter, during the
period from the date of such event to and including the date of
exercise, retained such securities receivable by it as aforesaid
during such period, subject to all other adjustments called for
during such period under this Section and the Company’s Articles of
Association with respect to the rights of the Holder.
	 
	 	d.	 	Adjustment for Reclassification, Exchange and Substitution
If the Ordinary Shares issuable upon the exercise of this Warrant
are changed into the same or a different number of shares of any
class or classes of shares, whether by recapitalization,
reclassification or otherwise (other than a subdivision or
combination of shares or shares dividend or a reorganization,
merger, consolidation or sale of assets, provided for elsewhere in
this Section), then and in any such event the Holder shall have the
right thereafter to exercise this Warrant into the kind and amount
of shares and other securities receivable upon such
recapitalization, reclassification or other change, by holders of
the number of shares of Ordinary Shares for which this Warrant might
have been exercised immediately prior to such recapitalization,
reclassification or change, all subject to further adjustment as
provided herein and under the Company’s Articles of Association.
	 
	 	e.	 	Reorganization, Mergers, Consolidations or Sales of Assets
If at any time from time to time there is a capital reorganization
of the Ordinary Shares (other than a recapitalization, subdivision,
combination, reclassification or exchange of shares provided for
elsewhere in this Subsection) or a merger or consolidation of the
Company with or into another corporation, or the sale of all or
substantially all of the Company’s properties and assets to any
other person, then, as a part of such reorganization, merger,
consolidation or sale, provision shall be made so that the Holder
shall thereafter be entitled to receive upon exercise of this
Warrant, the number of shares or other securities or property of the
Company, or of the successor corporation resulting from such merger
or consolidation or sale, to which a holder of Ordinary Shares
deliverable upon conversion would have been entitled on such capital
reorganization, merger, consolidation or sale. In any such case
(except to the extent any cash or property is received in such
transaction), appropriate adjustment shall be made in the
application of the provisions of this Subsection and the Company’s
Articles of Association with respect to the rights of the Holder
after the reorganization, merger, consolidation or sale to the end
that the provisions of this Subsection and the Company’s Articles of
Association

4

 

	 	 	 	(including adjustment of the number of shares of Ordinary Shares
issuable upon exercise of this Warrant) shall be applicable after
that event and be as nearly equivalent to the provisions hereof as
may be practicable.
	 
	 	f.	 	Adjustment of Warrant Price. Upon each adjustment in the
number of Ordinary Shares purchasable hereunder, the Warrant Price
shall be proportionately increased or decreased, as the case may be,
in a manner that is the inverse of the manner in which the number of
Ordinary Shares purchasable hereunder shall be adjusted.
	 
	 	g.	 	Notice of Adjustments. Whenever the Warrant Price or the
number of Ordinary Shares purchasable hereunder shall be adjusted
pursuant to Section 8 hereof, the Company shall prepare a
certificate signed by the chief financial officer of the Company
setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such
adjustment was calculated, and the Warrant Price and the number of
Ordinary Shares purchasable hereunder after giving effect to such
adjustment, and shall cause copies of such certificate to be mailed
(by first class mail, postage prepaid) to the Holder.

	9.	 	Transfer of This Warrant or Securities Issuable on Exercise Hereof
	 
	 	     With respect to any offer, sale or other disposition of this Warrant or
securities into which such Warrant may be exercised, the Holder will give
written notice to the Company prior thereto, describing briefly the manner
thereof, together with, if requested by the Company, a written opinion of
such Holder’s counsel, to the effect that such offer, sale or other
distribution may be effected without registration or qualification (under
any federal or state law then in effect). Such opinion letter and all such
transferees must warrant and represent that they are an “accredited”
investor as that term is defined under Regulation D of the Securities Act.
Upon receiving such written notice and opinion and warranties and
representations, if so requested, the Company, as promptly as practicable,
shall deliver to the Holder one or more replacement Warrant certificates on
the same terms and conditions as this Warrant for delivery to the
transferees. Each Warrant thus transferred and each certificate representing
the securities thus transferred shall bear legend(s) as to the applicable
restrictions on transferability in order to ensure compliance with the
Securities Act, unless in the opinion of counsel for the Company such legend
is not required in order to ensure compliance with the Securities Act.
	 
	10.	 	Representations and Warranties.
	 
	 	 	The Company represents and warrants to the Holder as follows:

	 	a.	 	This Warrant has been duly authorized and executed by the
Company and is a valid and binding obligation of the Company
enforceable in accordance with its terms, subject to laws of general
application relating to bankruptcy, insolvency and the relief of
debtors, and to general equity principles.

5

 

	 	b.	 	The Warrant Shares are duly authorized and reserved for
issuance by the Company and, when issued in accordance with the
terms hereof, will be validly issued, fully paid and nonassessable
and not subject to any preemptive rights.
	 
	 	c.	 	The execution and delivery of this Warrant are not, and the
issuance of the Warrant Shares upon exercise of this Warrant in
accordance with the terms hereof will not be, inconsistent with the
Company’s Articles of Association, do not and will not contravene
any law, governmental rule or regulation, judgment or order
applicable to the Company, and, except for consents that have
already been obtained by the Company, do not and will not conflict
with or contravene any provision of, or constitute a default under,
any indenture, mortgage, contract or other instrument of which the
Company is a party or by which it is bound or require the consent or
approval of, the giving of notice to, the registration with or the
taking of any action in respect of or by, any Federal, state or
local government authority or agency or other person.

	11.	 	Expenses
	 
	 	 	The Company will pay the Israeli Stamp Duty on the issuance of the
Warrant Shares, and will notify the Israeli Companies Registrar of such
issuance within the time period required by law.
	 
	12.	 	Loss, Theft, Destruction or Mutilation of Warrant
	 
	 	 	Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of any Warrant or Shares
certificate, and in case of loss, theft or destruction, of indemnity, or
security reasonably satisfactory to it, and upon reimbursement to the
Company of all reasonable expenses incidental thereto, and upon surrender
and cancellation of such Warrant or Shares certificate, if mutilated, the
Company will make and deliver a new Warrant or Shares certificate of like
tenor and dated as of such cancellation, in lieu of such Warrant or
Shares certificate.
	 
	13.	 	Notices
	 
	 	 	Any notice or other communication hereunder shall be in writing and shall
be deemed to have been given upon delivery, if personally delivered or
three business days after deposit if deposited in the mail for mailing by
certified mail, postage prepaid, and addressed as follows:

	 	 	 	 	 
	 

	 	If to Holder:
	 	                                      .

                                      

                                      

                                      

6

 

	 	 	 	 	 
	

	 	If to Company:
	 	Radcom Ltd.

	

	 	 	 	24 Raoul Wallenberg Street
	

	 	 	 	Tel Aviv 69719, Israel
	

	 	 	 	Fax: +972-3-6474681
	

	 	 	 	Attention: Chief Financial Officer

	 	 	Each of the above addressees may change its address for paragraph.
purposes of this paragraph by giving to the
other addressees notice of such new address in
conformance with this paragraph.
	 
	14.	 	Applicable Law; Jurisdiction
	 
	 	 	This Warrant shall be governed by and construed in accordance with the
laws of the State of Israel as applicable to contracts between two
residents of the State of Israel entered into and to be performed
entirely within the State of Israel. Any dispute arising under or in
relation to this Warrant shall be resolved exclusively in the competent
court for Tel Aviv-Jaffa district, and each of the parties hereby submits
irrevocably to the exclusive jurisdiction of such court.
	 
	16.	 	Entire Agreement
	 
	 	 	This Warrant constitutes the entire agreement between the parties hereto
with regard to the subject matters hereof, and supercedes any prior
communications, agreements and/or understandings between the parties
hereto with regard to the subject matters hereof.
	 
	 	 	Dated:              
     , 2004
	 
	 	 	RADCOM LTD.
	 
	 	 	By:       David Zigdon
	 
	 	 	Title:    Chief Financial Officer

7

 

NOTICE OF EXERCISE

To:

	1.	 	The undersigned hereby elects to
purchase           shares of Ordinary
Shares of           , pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price for such shares in full.
	 
	2.	 	In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of Ordinary Shares are being acquired solely
for the account of the undersigned and not as a nominee for any other
party, or for investment, and that the undersigned will not offer, sell or
otherwise dispose of any such shares of Ordinary Shares except under
circumstances that will not result in a violation of the Securities Act of
1933, as amended, or any state securities laws.
	 
	3.	 	Please issue a certificate representing said shares of Ordinary Shares in
the name of the undersigned.
	 
	4.	 	Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned.

	 	 	 
	                                      

	 	                                      
	(Date)

	 	(Print Name)
	 
	 	 
	

	 	                                      
	

	 	(Signature)

8

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