Exhibit 4.5
This agreement is executed this day of July 2008
BETWEEN
| (1) |
RADA
Electronic Industries Ltd., a company incorporated under
the laws of the State of Israel, with offices at 0 Xxxxxxx Xxxxxx Xx.,
Xxxxxxx 00000 (“RADA”); and |
| (2) |
Faith
Content Development Limited, a company organised under the
laws of Hong Kong having its main place of business at 1/F Xxxx Xxxx
Building, 30-32 Des Voeux Road C, Hong Kong(“HY”); |
RADA and HY are each referred to
herein as a “Party” and collectively referred to herein as the
“Parties”.
RECITALS:
WHEREAS, the Parties have
entered into a loan agreement dated 2 July 2008 (the “Loan Agreement”),
pursuant to which HY has loaned an amount of up to US$1,500,000 to RADA;
WHEREAS, in connection with
the Loan Agreement, the Parties have agreed to establish a special purpose vehicle (the
“JV”), to identify, develop and commercialise products for
non-military/commercial use, based on technology developed by RADA;
WHEREAS, the JV will initially
focus on the development and commercialisation for non-military/commercial use of
RADA’s Inertial Navigation Systems technology (“INS Technology”);
and
WHEREAS, RADA has agreed to
grant HY an exclusive license (the “License”) for the development and
commercialisation of the INS Technology for non-military/commercial use and HY has agreed
to sub-license the INS Technology to the JV, all as further detailed in this agreement.
NOW THEREFORE, the Parties
hereby agree as follows:
| 1.1. |
The Parties hereby undertake to each other that as soon as practicable following
the date hereof, they shall establish the JV. |
| 1.2. |
The purpose of the JV shall be to identify, develop and commercialise products
for non-military/commercial use. |
| 1.3. |
The JV will be in the form of a limited liability company and will be jointly
owned by RADA and HY or another entity controlled by Xx. Xxxxxx X.X. Xxxxx. XXXX
shall pledge the shares it will hold in the JV against repayment of all
outstanding amounts due under the Loan Agreement and in this regard RADA will
take such actions and execute and deliver such instruments and documents as will
be necessary to create a first priority fixed charge in favour of HY, in respect
of these shares. |
| 1.4. |
The jurisdiction of the JV will be determined, among other things, based on
local tax laws that will be applicable to the JV, as well as to its
shareholders. |
| 1.5. |
The Parties will determine, based on business efficacy, whether to use one JV
company for the development of each technology or to establish additional JV
companies. |
The Parties hereby undertake to each
other that immediately on the formation of the JV they shall enter into a JV agreement
which shall, inter alia, contain the following terms:
| 2.1. |
The JV will initially focus on the development and commercialisation of the INS
Technology for non-military/commercial use, and subject to mutual agreement and
receipt of all applicable consents and approvals, may in the future focus on the
commercialisation of other technologies for non-military/commercial use. Any
products developed for the JV will be owned solely by the JV. |
| 2.2. |
The JV shall develop products, for non-military or commercial use either
directly or by subcontracting the research and development and manufacturing to
RADA on commercial terms or by subcontracting such work to third parties or by
licensing third parties. |
| 2.3. |
RADA shall use its good faith best efforts to obtain all necessary Israeli
Ministry of Defence (the “IMOD”) approvals on behalf of and for
the benefit of the JV, should any be required. RADA shall use its good faith
best efforts to obtain any other third party approvals on behalf of and for the
benefit of the JV, including export licenses, and corporate approvals required
to effect the transactions described in this agreement, pursuant to applicable
law. |
| 2.4. |
All specific commercial arrangements between RADA, the JV and HY (including
agreements between the JV and HY) will be made at arms length. As long as Xx.
Xxxxxx X.X. Xxxxx is XXXX’x controlling shareholder, such commercial
arrangements will be subject to the prior approval of RADA’s Audit
Committee, Board of Directors and shareholders, pursuant to the provisions of
the Israeli Companies Law. RADA shall use its good faith best efforts to obtain
any corporate approvals required to effect the commercial arrangements between
RADA, the JV and HY pursuant to applicable law. |
| 2.5. |
Subject to the agreement of each Party as to specific terms, including payment
terms, RADA’s contributions to the JV will include: products, know-how and
ongoing technical support, development work, debugging, obtaining IMOD approvals
(in accordance with clause 2.3 above), ensuring the JV meets Israeli export
control requirements and product manufacture within Israel. RADA shall receive
payment on arms-length terms, for any services that it provides to the JV,
including any product engineering services. |
| 2.6. |
Subject to the agreement of each Party as to specific terms, including payment
terms, HY’s contributions to the JV will include: funding or procuring
funding for the JV, management/administration, product manufacture outside
Israel, third party product development, commercial input and connections and
marketing. HY shall receive payment for any services that it provides to the JV,
including managing and marketing services. |
| 2.7. |
The JV will strive to pay to its shareholders dividends or other tax efficient
payments to the extent commercially prudent. |
| 3. |
THE LICENSE AND SUBLICENSE |
| 3.1. |
RADA has granted HY a non-exclusive license to use non-military products and
know-how related to the INS Technology for non-military/commercial use (the
“License”). Pursuant to the terms of the License, in the event
that RADA defaults on any of its obligations under the Loan Agreement, the
License will convert to an exclusive license. The License includes the right to
sublicense and transfer the License to the JV. HY shall sublicense the License
to the JV (the “Sublicense”), provided that such Sublicense
will be subject to termination in the event that RADA defaults towards HY on any
of its obligations under the Loan Agreement. Upon satisfaction in full of all of
RADA’s obligations and undertakings under the Loan Agreement the Sublicense
will become irrevocable. |
| 3.2. |
The License and Sublicense will allow the JV to grant non-exclusive licenses for
the non-military/commercial use of the INS Technology to third parties, some of
which may be affiliated to and/or funded by HY. Financial recognition may be
provided to either of the Parties, as applicable, for the introduction of a
licensee, as will be agreed between the Parties on a case by case basis. |
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| 4.1. |
This agreement shall be binding on and shall enure for the benefit of each
Party’s successors and assigns. None of the Parties may, without the
written consent of the others, assign any of their respective rights or
obligations under this agreement provided that HY shall be permitted to assign
or transfer any of its rights or obligations hereunder to an entity controlled
by, controlling or under common control with the HY. |
| 4.2. |
No purported variation of this agreement shall be effective unless made in
writing and signed by all the parties. |
| 4.3. |
Each of the Parties shall be responsible for its own costs incurred in
connection herewith and the matters contemplated in this agreement. |
| 4.4. |
This agreement may be entered into in any number of counterparts and by the
Parties to it on separate counterparts each of which when executed and delivered
shall be an original but all the counterparts shall together constitute one and
the same instrument. |
| 4.5. |
The Parties agree that this agreement is intended to govern the entire range of
the relations between them pertaining to the subject matter hereof. The Parties
recognise, however, that it is impractical at this stage to exhaustively and
definitively identify all issues arising out or connected with the execution and
implementation of this agreement, and the Parties accordingly agree that where
during the formation of the JV and the drafting and execution of the JV
agreement, matters are from time to time identified as requiring settlement or
agreement, or where matters touched upon in this agreement remain to be
clarified or expanded, the Parties will forthwith negotiate in good faith in
order to reach settlement or agreement on such matter or matters. |
| 5. |
GOVERNING LAW AND JURISDICTION |
| 5.1. |
This agreement shall be governed by the laws of the State of Israel to the
exclusion of the conflict if law rules and all disputes shall, if not resolved
through good faith discussion, be submitted to the courts of Tel Aviv-Jaffa,
Israel, which courts shall have exclusive jurisdiction on all disputes arising
with respect to this agreement. |
IN WITNESS
whereof the Parties have executed this agreement on the day and year first before written.
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| For: RADA Electronics Industries Ltd. |
For: Faith Content Development Limited |
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| By: ________________ |
By: ________________ |
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| Name: ______________ |
Name: ______________ |
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| Title:________________ |
Title:________________ |
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