NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR ANY OTHER APPLICABLE SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES LAWS.
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD,
PLEDGED, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR IN A TRANSACTION
WHICH IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT.
VOID AFTER TERMINATION DATE
WARRANT
To Purchase ________ Ordinary Shares of
RADA ELECTRONIC INDUSTRIES LTD.
THIS CERTIFIES that, for value received, ______________ (the "Holder") is
entitled, upon the terms and subject to the conditions set forth in this Warrant
effective as of June 30, 2002 (the "Effective Date") at any time on or after the
effective date and on or prior to the close of business on June 30, 2007 (the
"Termination Date") but not thereafter, to subscribe for and purchase from RADA
Electronic Industries Ltd., a company incorporated under the laws of the State
of Israel (the "Company"), up to ______ Ordinary Shares of the Company, nominal
value NIS 0.005 each (the "Warrant Shares") at a purchase price as detailed in
Section 2 hereof (the "Exercise Price"). The Exercise Price and the number of
shares for which the Warrant is exercisable shall be subject to adjustment as
provided herein.
1. Title to Warrant. Prior to the Termination Date and subject to
compliance with applicable laws and the provisions of Section 8 hereof, this
Warrant and all rights hereunder are transferable, in whole or in part, at the
office or agency of the Company by the holder hereof in person or by duly
authorized attorney, upon surrender of this Warrant together with the Assignment
Form annexed hereto properly endorsed.
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2. Exercise Price. During the first 36 months after the Effective Date this
Warrant shall be exercisable, in whole or in part, at an exercise price of $2
per share, and thereafter, during the following 24 month period and until the
Termination Date, this Warrant shall be exerciable, in whole or in part, at an
exercise price equal to the higher of: (i) $2 per share or (ii) 50% of the
average closing price during the ten (10) trading days prior to an exercise
date.
3. Authorization of Shares. The Company covenants that all shares issuable
upon the exercise of rights represented by this Warrant will, upon exercise of
the rights represented by this Warrant, be duly authorized and be capable of
being validly issued as fully paid and non-assessable and free from all taxes,
liens and charges in respect of the issue thereof (other than taxes in respect
of any transfer occurring contemporaneously with such issue).
4. Exercise of Warrant. Exercise of the purchase rights represented by this
Warrant may be made at any time or times in whole or in part and before the
close of business on the Termination Date by the surrender of this Warrant and
the Notice of Exercise Form annexed hereto duly executed, at the office of the
Company (or such other office or agency of the Company as it may designate by
notice in writing to the registered holder hereof at the address of such holder
appearing on the books of the Company) and upon payment of the Exercise Price of
the shares thereby purchased by wire transfer or cashier's check , whereupon the
holder of this Warrant shall be entitled to receive a certificate for the number
of Warrant Shares purchased. Certificates for Warrant Shares purchased hereunder
shall be delivered to the holder hereof within reasonable time after the date on
which this Warrant shall have been exercised as aforesaid. This Warrant shall be
deemed to have been exercised and such certificate or certificates shall be
deemed to have been issued, and Holder or any other person so designated to be
named therein shall be deemed to have become a holder of record of such shares
for all purposes, as of the date the Warrant has been exercised by payment to
the Company of the Exercise Price and all taxes required to be paid by Holder,
if any, pursuant to Section 5 prior to the issuance of such shares, have been
paid. If this Warrant shall have been exercised in part, the Company shall, at
the time of delivery of the certificate or certificates representing Warrant
Shares, deliver to Holder a new Warrant evidencing the rights of Holder to
purchase the unpurchased Warrant Shares called for by this Warrant, which new
Warrant shall in all other respects be identical with this Warrant.
5. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share that the Holder would otherwise be
entitled to purchase upon such exercise, the Company shall round the number of
Warrant Shares issuable upon such exercise to next whole number.
6. Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares
upon the exercise of this Warrant shall be made without charge to the holder
hereof for any issue or transfer tax or other incidental expense in respect of
the issuance of such certificate, all of which taxes and expenses shall be paid
by the Company, and such certificates shall be issued in the name of the holder
of this Warrant or in such name or names as may be directed by the holder of
this Warrant; provided, however, that in the event certificates are to be issued
in a name other than the name of the Holder, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the Holder hereof; and
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the Company may require, as a condition thereto, the payment of a sum sufficient
to reimburse it for any transfer tax incidental thereto.
7. Closing of Books. The Company will not close its shareholder books or
records in any manner that prevents the timely exercise of this Warrant.
8. Transfer, Division and Combination. (a) Subject to compliance with any
applicable securities laws, transfer of this Warrant and all rights hereunder,
in whole or in part, shall be registered on the books of the Company to be
maintained for such purpose, upon surrender of this Warrant at the principal
office of the Company, together with he Assignment Form attached hereto duly
executed by Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination or denominations specified in such instrument of assignment, and
shall issue to the assignor a new Warrant evidencing the portion of this Warrant
not so assigned, and this Warrant shall promptly be cancelled. A new holder for
the purchase of Warrant Shares, if properly assigned, may exercise a Warrant,
without having a new Warrant issued.
(b) This Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued, signed by Holder or its agent or attorney. Subject to compliance
with Section 8(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice.
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(c) The Company shall prepare, issue and deliver at its own expense (other
than transfer taxes) the new Warrant or Warrants under this Section 8.
9. No Rights as Shareholder until Exercise. This Warrant does not entitle
the holder hereof to any voting rights or other rights as a shareholder of the
Company prior to the exercise hereof. Upon the surrender of this Warrant and the
payment of the aggregate Exercise Price, the Warrant Shares so purchased shall
be and be deemed to be issued to such holder as the record owner of such shares
as of the close of business on the later of the date of such surrender or
payment.
10. Loss, Theft, Destruction or Mutilation of Warrant. The Company
covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any share
certificate relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (which shall
not include the posting of any bond), and upon surrender and cancellation of
such Warrant or share certificate, if mutilated, the Company will make and
deliver a new Warrant or share certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.
11. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall not be a business day including' without limitation, Saturday, Sunday or a
legal holiday in Israel or in the US, then such action may be taken or such
right may be exercised on the next succeeding day not a Saturday, Sunday or
legal holiday.
12. Adjustments of Exercise Price and Number of Warrant Shares. (a) The
number and kind of securities purchasable upon the exercise of this Warrant and
the Exercise Price shall be subject to adjustment from time to time upon the
happening of any of the following: (i) In case the Company shall declare or pay
a dividend in shares or make a distribution in shares to holders of its
outstanding Ordinary Shares, (ii) In case the Company shall subdivide its
outstanding Ordinary Shares into a greater number of shares, or (iii) combine
its outstanding Ordinary Shares into a smaller number of shares, then the number
of Warrant Shares purchasable upon exercise of this Warrant immediately prior
thereto shall be adjusted so that the holder of this Warrant shall be entitled
to receive the kind and number of Warrant Shares or other securities of the
Company which he would have owned or have been entitled to receive had such
Warrant been exercised in advance thereof. Upon each such adjustment of the kind
and number of Warrant Shares or other securities of the Company which are
purchasable hereunder, the holder of this Warrant shall thereafter be entitled
to purchase the number of Warrant Shares or other securities resulting from such
adjustment at an Exercise Price per Warrant Share or other security obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares purchasable pursuant hereto immediately prior to
such adjustment and dividing by the number of Warrant Shares or other securities
of the Company resulting from such adjustment. An adjustment made pursuant to
this paragraph shall become effective immediately after the effective date of
such event retroactive to the record date, if any, for such event.
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(b) In case the Company shall reorganize its capital, reclassify its
capital, consolidate or merge with or into another corporation (where the
Company is not the surviving corporation or where there is a change in or
distribution with respect to the Ordinary Shares of the Company), or sell,
transfer or otherwise dispose of all or substantially all its property, assets
or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, Ordinary Shares or shares of common stock of the successor or acquiring
corporation, or any cash, shares of stock or other securities or property of any
nature whatsoever (including warrants or other subscription or purchase rights)
in addition to or in lieu of common stock of the successor or acquiring
corporation ("Other Property"), are to be received by or distributed to the
holders of Ordinary Shares of the Company, then Holder shall have the right
thereafter to receive, upon exercise of this Warrant, the number of shares of
common stock of the successor or acquiring corporation or of the Company, if it
is the surviving corporation, and Other Property receivable upon or as a result
of such reorganization, reclassification, merger, consolidation or disposition
of assets by a holder of the number of Ordinary Shares for which this Warrant is
exercisable immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined in good faith by resolution of the Board of
Directors of the Company) in order to provide for adjustments of Warrant Shares
for which this Warrant is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 11. For purposes of
this Section 12, "common stock of the successor or acquiring corporation" shall
include stock of such corporation of any class which is not preferred as to
dividends or assets over any other class of stock of such corporation and which
is not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities which are convertible into or
exchangeable for any such stock, either immediately or upon the arrival of a
specified date or the happening of a specified event and any warrants or other
rights to subscribe for or purchase any such stock.
(c) Whenever the number of Warrant Shares or number or kind of securities
or other property purchasable upon the exercise of this Warrant or the Exercise
Price is adjusted, as herein provided, the Company shall promptly mail by
registered or certified mail, to the holder of this Warrant notice of such
adjustment or adjustments setting forth the number of Warrant Shares (and other
securities or property) purchasable upon the exercise of this Warrant and the
Exercise Price of such Warrant Shares (and other securities or property) after
such adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such adjustment was made.
Such notice, in the absence of manifest error, shall be exclusive evidence of
the correctness of such adjustment.
(d) In the event that, at any time, as a result of an adjustment made
pursuant to this Section, the holder of this Warrant shall become entitled to
purchase any securities of the Company other than Ordinary Shares, hereafter the
number of such other shares so purchasable upon exercise of this Warrant and the
Exercise Price of such shares shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as
5
practicable to the provisions with respect to the Warrant Shares contained in
paragraph (a) through (c) inclusive, of this Section 12.
13. Registration Rights; Rule 144. (a) This Warrant and the Warrant Shares
shall be restricted securities pursuant to Rule 144 of Regulation D for a period
of 12 months following the Effective Date. The Company agrees that it will
prepare and file with the Securities and Exchange Commission ("Commission"),
within ninety (90) days after the approval of its Audited Financial Statements
for the year ending December 31, 2002 a registration statement (on Form F-3, or
other appropriate registration statement form) under the Securities Act (the
"Registration Statement") covering the Warrant Shares so as to permit a non
underwritten public offering and resale of the Shares and the Warrant Shares.
The Company shall bear all expenses related the filing of the Registration
Statement. The Company shall use commercially reasonable efforts to cause such
Registration Statement to become effective on the first anniversary of the
Closing Date but in any event not later than 15 months from the Closing Date or,
in the event the Commission informs the Company that the Registration Statement
will not be reviewed by the Commission, within ninety (90) days from the filing
date, and in either event, within five (5) business days of Commission clearance
to request effectiveness (but not earlier than the first anniversary of the
Closing Date). The number of shares designated in the Registration Statement to
be registered shall include all of the Warrant Shares, and shall include
appropriate language regarding reliance upon Rule 416 to the extent permitted by
the Commission. The Company will notify the Investors of the effectiveness of
the Registration Statement within two trading days of such event.
(b) Not withstanding the above, if the Company shall determine to register
any sale or other disposition of its securities under the Securities Act, either
for its own account or the account of a security holder or holders exercising
their respective registration rights (whether or not this Warrant has been
exercised at that time), other than a registration relating solely to employee
benefit plans, or a registration relating to a corporate re-organisation or
other transaction under Rule 145, or a registration on any registration form
that does not permit secondary sales, then the Company shall (i) give the Holder
at least thirty (30) days' advance written notice thereof, and (ii) use its best
efforts, solely at the expense of the Company, to include in such registration
(and any related qualification under blue sky laws or other compliance), and in
any underwriting involved therein, all the Warrant Shares specified in a written
request made by the Holder and received by the Company within ten (10) days
after the written notice from the Company described in 13 (b) (i) above is
received by the Holder. Such written request may specify all or a part of the
Warrant Shares. The rights granted to the Holder under this Section 13 shall
survive exercise of this Warrant and the issuance of Ordinary Shares to the
Holder in connection herewith.
(c) At all times during which any Warrant Shares are outstanding, the
Company agrees to:
(i) Make and keep available adequate current public information as
described in Rule 144(c) under the Securities Act;
6
(ii) File with the U.S. Securities and Exchange Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Securities Exchange Act of 1934; and
(iii) Furnish to the Holder upon request (A) a written statement by
the Company as to its compliance with the requirements of subparagraphs (i)
and (ii) above, (B) a copy of the most recent annual report of the Company,
and (C) such other reports and documents of the Company as the Holder may
reasonably request to avail himself of Rule 144 or any similar rule or
regulation of the Securities and Exchange Commission allowing him to sell
any such securities without registration.
14. Notice of Corporate Action. If at any time:
(a) the Company shall take a record of the holders of its Ordinary Shares
for the purpose of entitling them to receive a dividend or other distribution,
or any right to subscribe for or purchase any evidences of its indebtedness, any
shares of stock of any class or any other securities or property, or to receive
any other right, or
(b) there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the share capital of the Company or any
consolidation or merger of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of the
Company to, another corporation or,
(c) there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder (i) at
least 14 days' prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, liquidation or winding up, and (ii)
in the case of any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, dissolution, liquidation or winding up, at least 14
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause also shall specify (i) the date
on which any such record is to be taken for the purpose of such dividend,
distribution or right, the date on which the holders of Common Stock shall be
entitled to any such dividend, distribution or right, and the amount and
character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Ordinary Shares shall be
entitled to exchange their shares for securities or other property deliverable
upon such disposition, dissolution, liquidation or winding up. Each such written
notice shall be sufficiently given if addressed to Holder at the last address of
Holder appearing on the books of the Company and delivered in accordance with
this Warrant.
15. Authorized Shares. The Company covenants that within 180 days of the
Effective Day, it will reserve from its authorized and unissued Ordinary Shares,
and keep available free from preemptive rights, a sufficient number of Ordinary
Shares to provide for the
7
issuance of the Warrant Shares upon the exercise of any purchase rights under
this Warrant and will, at its expense, procure such listing of such Ordinary
Shares (subject to issuance or notice of issuance) as then may be required on
all stock exchanges on which the Ordinary Shares are then listed or on NASDAQ.
The Company further covenants that its issuance of this Warrant shall constitute
full authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the Warrant
Shares upon the exercise of the purchase rights under this Warrant. The Company
will take all such reasonable action as may be necessary to assure that such
Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of all stock exchanges upon
which the Ordinary Shares may be listed or on NASDAQ.
The Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such actions as may be necessary or appropriate to protect the rights of Holder
against impairment.
16. Miscellaneous.
(a) Jurisdiction. This Warrant shall be binding upon any successors or
assigns of the Company. This Warrant shall constitute a contract under the laws
of State of Israel without regard to its conflict of law, principles or rules,
and be subject to the exclusive jurisdiction of the competent court in Tel Aviv.
(b) Restrictions. The holder hereof acknowledges that the Warrant Shares
acquired upon the exercise of this Warrant, if not registered, will have
restrictions upon resale imposed by state and federal securities laws.
(c) Waiver. No course of dealing or any delay or failure to exercise any
right hereunder on the part of Holder shall operate as a waiver of such right or
otherwise prejudice Holder's rights, powers or remedies, notwithstanding all
rights hereunder terminate on the Termination Date.
(d) Limitation of Liability. No provision hereof, in the absence of
affirmative action by Holder to purchase Warrant Shares, and no enumeration
herein of the rights or privileges of Holder hereof, shall give rise to any
liability of Holder for the purchase price of any Ordinary Share or as a
shareholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.
(e) Successors and Assigns. Subject to applicable securities laws, this
Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors
and permitted assigns of Holder. The provisions of this Warrant are intended to
be for the benefit of all Holders from time to time of this Warrant and shall be
enforceable by any such Holder or holder of Warrant Shares and all references to
the "Holder" shall include a reference to his assigns, personal representatives
and successors in title.
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(f) Amendment. This Warrant may be modified or amended or the provisions
hereof waived with the written consent of the Company and the Holder.
(g) Severability. Wherever possible, each provision of this Warrant shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Warrant shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Warrant.
(h) Headings. The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.
(i) Definition of Ordinary Shares. For the purpose of this Warrant the term
"Ordinary Shares" shall mean the ordinary shares of 0.005 NIS (New Israeli
Shekels) of the Company.
REMAINDER OF PAGE IS INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its officer thereunto duly authorized.
Dated: September __, 2002
RADA Electronic Industries Ltd.
By:_______________________________________
Herzle Bodinger, President and Chairman
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NOTICE OF EXERCISE
To: RADA Electronic Industries Ltd.
(1) The undersigned hereby elects to purchase ________ Ordinary Shares
(the "Shares"), of RADA Electronic Industries Ltd. pursuant to the terms of the
attached Warrant, and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing said
Shares in the name of the undersigned or in such other name as is specified
below:
----------------------------------------
(Name)
----------------------------------------
(Address)
Dated:
------------------------------
Signature
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to
_______________________________________________ whose address is
---------------------------------------------------------------.
---------------------------------------------------------------
Dated: ______________, _______
Holder's Signature: _____________________________
Holder's Address: _____________________________
-----------------------------
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
