Exhibit 10.11
MEMORANDUM OF AGREEMENT
THIS MEMORANDUM OF AGREEMENT (the "MOA") is made and entered into this 23rd day
of June 2003 by and between RADA Electronic Industries Ltd. ("RADA" or the
"Company"), Xxxxxx Xxxxx and/or its affiliates ("HY"), Bank Hapoalim B.M.
("BNHP") and Bank Leumi Le-Israel B.M. ("BLL" and together with BNHP - the
"Banks"). Each of BNHP and BLL may also be referred to herein as a "Bank".
The Parties hereby agree as follows:
1. Definitions
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In this MOA the following capitalized terms shall have the meaning
ascribed to them as follows:
"Banks' Warrants" means warrants to purchase such number of Shares, which
is equal to the quotient determined by dividing the Conversion Amount by 50% of
the Base Price.
"Base Price" means the Market Price as calculated at the Closing Date.
"Business Day" means a day (other than Saturday and Sunday) on which banks
are normally fully open in Tel Aviv, London and New York for general (including
inter-bank) business.
"Closing" means two business days after the approval of the shareholders
of the Company at an Extraordinary General Meeting ("EGM") (or the adjourned
EGM, if necessary).
"Debt" means the total amount of the Company's debts to the Banks, which
is equal to approximately US$5,500,000 (Five Million and Five Hundred Thousands
US Dollars).
"Market Price" means the average daily closing per share price of the
Shares on NASDAQ during the last 90 business days prior to the date that such
price is calculated.
"Options" means the Call Option or the Put Option, as the case may be.
"Pro-rata Proportion" means a prorated allocation reflecting a 40% share
to BNHP and 60% share to BLL.
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"Shares" means the Ordinary Shares, NIS 0.05 each, of the Company.
2. Settlement of the Debt
----------------------
At the Closing:
2.1 The Company shall pay the Banks an aggregate amount of US$1,100,000
(One Million One Hundred Thousand US Dollars) (the "Cash Payment"), payable to
each in accordance with the Pro-rata Proportion.
2.2 At the Closing, simultaneously with the fulfillment of all of the
Company's obligations described in this Agreement and HY's obligations with
respect to the execution of the Options Agreement and the delivery of the
stand-by letter of credit as described in Section 3 hereof, the Banks shall
release and discharge the Company from its obligation to pay the amount of
US1,100,000 (the "Discharge"), in accordance with the Pro-Rata Proportion and
each of the Banks shall write off and reduce the principal of the Company's
debts (as described in Schedule "A" attached hereto) to it by an amount equal to
each Bank's Pro-rata Proportion of the Discharge.
2.3 An additional amount of US$1,251,000 (One Million Two Hundred
Fifty-One Thousand US Dollars) (the "Conversion Amount") shall be paid against
the issuance of the Banks' Warrants, and the Company shall deliver to each of
the Banks at the Closing warrants reflecting each Bank's share in accordance
with the Pro-rata Proportion and bearing legends as required by any applicable
law and the limitations on transfer included herein. Except as expressly
provided herein, the terms of the Banks' Warrants shall be substantially similar
to the terms of the warrant issued by the Company on June 30, 2002 (a copy of
which is attached hereto as Schedule "B"). The exercise price of the Banks'
Warrants shall be the nominal (par) value of the Shares. The Banks' Warrants
will be locked-up for a period of 21 months commencing at the Closing Date (the
"Lock-up Period"), and may not be transferred in any manner to any third party
except pursuant to the Options. The Banks' Warrant shall not be exercisable
during the Lock-up Period, unless any of the Options is exercised. Unless agreed
otherwise between the Company and the holder of the Banks' Warrants, the Banks'
Warrants shall be valid for a period of 30 months commencing at the Closing Date
2.4 The Company shall grant the Banks additional warrants to purchase an
aggregate 1,100,000 Shares, each Bank to receive its Pro-rata Proportion of such
aggregate amount, at an exercise price of US$2 per Share. Such warrants shall be
effective for 5 years and shall include terms and conditions substantially
similar to the warrant issued by the Company on June 30, 2002, a copy of which
is attached hereto as Schedule "B".
2.5 For the avoidance of doubt it is agreed that at the Closing, all the
transactions described in this Agreement shall occur simultaneously (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).
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3. Options
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3.1 At the Closing, HY shall grant the Banks a put option (the "Put
Option"), allowing the Banks (severally and not jointly) to require HY to
purchase the Banks' Warrants held by such Bank, at the applicable Pro-rata
Proportion of an amount of US$1,251,000 (One Million, Two Hundred Fifty One
Thousand US Dollars - the " Put Option Consideration"). Such demand may be
submitted by each of the Banks only once during the period of 45 days commencing
at the first Business Day after the end of the period of 18 months commencing at
the Closing Date (including the first and last date of such period) (the "Put
Option Period"). HY's obligations under the Put Option shall be secured by
stand-by letters of credit in a such form as shall be reasonably satisfactory to
the Banks, issued to each of the Banks by an international bank reasonably
satisfactory to the Banks that shall be delivered by HY to the Banks at the
Closing.
3.2 At the Closing, the Banks (severally and not jointly) shall grant HY a
Call Option allowing HY to require each of the Banks to sell HY the Banks'
Warrants held by such Bank (the "Call Option") at a price that shall be equal to
such Bank's applicable Pro-rata Proportion of $1,251,000 (the "Call Option
Consideration"); provided, however, that if the Market Price at the date that
the Call Option is exercised (the "Effective Price") is higher than the Base
Price, HY shall pay the applicable Bank an additional amount (the "Additional
Payment") for the Banks' Warrants purchased by HY as follows:
3.2.1 In the event that the Effective Price is greater than the Base
Price and is equal to not more than 150% of the Base Price - the Additional
Payment will be equal to 25% of the difference between the Base Price and the
Effective Price (multiplied by the actual number of the purchased Banks'
Warrants), but in any event not more than $312,750 (Three Hundred Twelve
Thousand, Seven Hundred and Fifty US Dollars).
3.2.2 In the event that the Effective Price is greater than the Base
Price and is higher than 150% of the Base Price - the Additional Payment shall
be equal to $312,750 plus 16.5% of the difference between 150% of the Base Price
and the Effective Price (multiplied by the actual number of purchased Banks'
Warrants) but in any event the Additional Payment shall not be more than
$519,165 (Five Hundred Nineteen Thousand, One Hundred and Sixty Five US
Dollars).
3.2.3 In any event the Aggregate Consideration (i.e., the Call
Option Consideration plus the Additional Payment) shall not exceed the amount of
$1,770,165 (One Million Seven Hundred Seventy Thousand, One Hundred and
Sixty-Five US Dollars).
3.3 The Call Option may be exercised by HY only during a period of 18
(eighteen) months commencing at the Closing Date (including the first and the
last date of such period) and during a period of 45 days commencing on the first
Business Day
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after the termination of the Put Option Period (both periods are collectively
referred to as the "Call Option Period").
4. Financing
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4.1 Subject to Clause 4.2 below, the Banks shall xxxxx XXXX an additional
line of credit in the amount of $500,000 (Five Hundred Thousand US Dollars) (the
"Credit"). Such Credit shall be granted to the Company as of the Closing, in
accordance with each Bank's Pro-rata Proportion, and shall be repaid by the
Company within 7 months of the Closing. All current charges of the Company shall
secure the repayment of the Credit. The Company shall, at the request of the
Banks, sign such amendments of existing security documents as may be reasonably
required to give effect to the foregoing.
4.2 The terms of the Credit shall be those customary at the Banks at the
time of the granting thereof and shall be agreed between the Company and the
Banks prior to the granting of the Credit or any part thereof. The Company
shall, at the request of the Banks, sign such documents as may be reasonably
required in order to grant such Credit.
5. Deemed Payment and Balance of the Debt
--------------------------------------
The fulfillment of the Company's obligations described in this Agreement
and HY's obligations with respect to the execution of the Options Agreement and
the delivery of the stand-by letter of credit as described in Section 3 hereof
shall constitute and shall be deemed full and final payment and satisfaction of
the amount of US$3,451,000 of the Debt, being the sum of the Cash Payment, the
Discharge and the Conversion Amount (the "Settled Amount") in accordance with
the Pro-Rata Proportion, and the Banks shall have no further claims towards the
Company in connection with the Settled Amount or in relation thereto.
The terms and conditions relating to the Balance of the Debt Following the
Closing (as defined below) owed by the Company to the Banks shall be as agreed
upon by the Company and each of the Banks (severally and not jointly) and the
Company shall sign all documents reasonably required by the Banks in connection
thereto.
"Balance of the Debt Following the Closing" means the amount equal to the
Debt less the Settled Amount.
6. Final Agreement
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The parties shall enter into final agreement(s) based on the principles
and provisions set forth herein. Such agreement(s) shall include, inter alia,
customary representations of the Company and the Banks and the mechanism and
procedures regarding the Options to the Banks' full satisfaction and will be
signed not later than July 31, 2003.
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7. Closing
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7.1 The Closing of the transactions contemplated herein is subject to the
approval of the EGM of the shareholders of the Company.
7.2 Subject to the fulfillment of the condition set forth in Section 7.1
above, the Closing of the transactions contemplated herein shall take place not
later than July 31, 2003.
8. Stamp Duty
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Stamp duty, if applicable, to this Memorandum of Agreement or in respect
of any other documents referred to herein including without limitation any
documents in relation to the Credit, is to be paid by the Company forthwith upon
the Bank's first demand.
9. Miscellaneous
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9.1 For the avoidance of doubt, the Company hereby confirms that nothing
herein contained is meant to prejudice and/or limit any rights whatsoever of the
Banks pursuant to the BLL and/or the BNHP account documents, the loan documents,
guarantees signed by the Company, and/or pursuant to any other document signed
and/or to be signed by the Company and that all obligations and debts owed to
the Banks are in full force without amendment subject to the terms hereof.
9.2 The waiver by the Banks of any prior breach of, or prior non
fulfillment of one or more of the Company's obligations to the Banks, whether
contained in this Agreement or in any other document, shall not be construed as
justification or excuse for any further breach or non fulfillment of any
condition or undertaking as mentioned above.
9.3 The forbearance of the Banks from the exercise of any right granted to
it under this document or under any law shall not be construed as a waiver of
any such right.
9.4 The Company acknowledges that the Banks have agreed to the terms of
the present Agreement to settle the debts of the Company in light of the
representations of the Company contained herein and in Schedule "A " attached
hereto.
9.5 Any amendment to the terms hereof must be made in writing and must be
agreed to by all the parties hereto.
9.6 Any notice to be given by any of the parties hereto in accordance with
the terms of the present Agreement shall be given to the other parties at the
address that appears in the heading hereof, and shall be deemed to have been
given to the addressee on the date received by the addressee or on his behalf,
or if sent by registered mail to the
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above addresses, within 72 hours from the date of delivery to the post office
whichever is the sooner.
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IN WITNESS WHEREOF the parties have signed this MOA as of the date first
hereinabove set forth.
XXXXXX X. X. XXXXX BANK HAPOALIM B.M.
By: ____________________________ By: ______________________________
Name:_____________________________
Title:____________________________
RADA ELECTRONIC INDUSTRIES LTD. BANK LEUMI LE-ISRAEL B.M.
By: ____________________________ By: ______________________________
Name:___________________________ Name:_____________________________
Title:__________________________ Title:____________________________
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SCHEDULE "A"
to the Memorandum of Agreement
("the Agreement") dated June __, 2003
between Bank Leumi le-Israel B.M. ("BLL"),
Bank Hapoalim B.M. ("BNHP")
(BLL and BNHP together the "Banks")
and Rada Electronic Industries Ltd. (the "Company")
The parties hereby represent, warrant and declare as follows:
1. Indebtedness and Obligations of the Company to the Banks
--------------------------------------------------------
1.1. Indebtedness and Obligations to BLL
-----------------------------------
1.1.1. The Company hereby acknowledges and confirms that the
balance of amounts owed by the Company to BLL, as of June
18, 2003 (the "Determining Date") 2003 in respect of loans,
credits and other banking services received from BLL is as
follows:
1.1.2. The debit balance in current account no. 54700/06 ("the BLL
Account") in the amount of 88,939 NIS (Eighty-eight thousand
nine hundred and thirty nine New Israeli Shekels) including
interest, fees, bank charges and expenses as of the
Determining Date.
1.1.3. The unpaid balance in the amount of $ 3,462,744 (Three
million four hundred and sixty-two thousand seven hundred
and forty-four US dollars) in respect of the loan in the
amount of $3,451,000 (Three million four hundred and
fifty-one US dollars) that was granted to the Company on May
28, 2003 ("the Balance of the Existing BLL Loan").
1.1.4. Interest, fees and expenses set out in the banking documents
signed by the Company in favor of BLL in connection with the
operation of the BLL Account not reflected above will be
added to amounts stated in clauses 1.1.2 and 1.1.3.
1.2. Indebtedness and Obligations to BNHP
------------------------------------
1.2.1. The Company hereby acknowledges and confirms that the
balance of amounts owed by the Company to BNHP, as of the
Determining Date in respect of loans, credits and other
banking services received from BNHP is as follows:
1.2.2. The line of credit in NIS current account no. 21118 ("xxx
XXXX I Account") in the amount of 1,250,000 NIS (one
million, two hundred and fifty thousand New Israeli Shekels)
including interest, fees, bank charges and expenses as of
the Determining Date.
1.2.3. The debit balance in NIS current account no. 415955 ("xxx
XXXX II Account") in the amount of 2,199,982 NIS (two
million, one hundred ninety nine thousand nine hundred and
eighty two New Israeli Shekels) including interest, fees,
bank charges and expenses as of the Determining Date.
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1.2.4. The debit balance in foreign currency current account no.
415955 ("xxx XXXX III Account") in the amount of $ 1,000,000
(one million $US) including interest, fees, bank charges and
expenses as of the Determining Date. It is hereby agreed
that upon the Closing the line of credit applicable in the
BNHP III Account shall be cancelled.
The BNHP I Account, BNHP II Account and BNHP III Account
together the "BNHP Accounts"
1.2.5. The unpaid balance in the amount of $410,484 (four hundred
and ten thousand, four hundred and eighty four $US) in
respect of the loan in the amount of $ 455,000 (four hundred
fifty five thousands $US) that was granted to the Company on
January 2, 2003 ("the Balance of the Existing BNHP Loan").
1.2.6. Interest, fees and expenses set out in the banking documents
signed by the Company in favor of BNHP in connection with
the operation of the BNHP Accounts and the Existing BNHP
Loan, not reflected above will be added to amounts stated in
clauses 1.2.2 -1.2.5 (inclusive) above.
1.2.7. Furthermore BNHP has issued at the Company's request, bank
guarantees in favor of third parties in the amount of
$1,501,000 (one million five hundred and one thousand $US)
plus an amount of 76,173 Euro (seventy six thousand, one
hundred seventy three Euro) plus an amount of 7,212,648 NIS
(seven millions two hundred and twelve thousand, six hundred
and forty eight New Israeli Shekels), as of June 18, 2003
(The amounts set out in clauses 1.1 and 1.2 above and the interest, fees
and expenses described above shall be referred to as the "Balance of the
Debt").
1.3. For the avoidance of doubt, the forgoing shall be without prejudice
and shall not in any way derogate from any rights of the Banks in
respect of any debt, guarantee, and/or obligation whatsoever, not
described above, in the event it is determined that such debt
exists.
2. Confirmation of the Accuracy of the Accounts and Waiver of Claims
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2.1. The Company hereby confirms that the balances in all of the
Company's accounts and deposits of any type whatsoever, including
savings plans and securities deposits, with the Banks and every
credit or loan ever received by the Company from the Banks, and all
activities, transfers, payments, debits and credits or other
activity in the aforesaid accounts and deposits have been verified
by the Company and the Company confirms that it has no claim and
shall not have any claim whatsoever in respect of the Balance of the
Debt and/or with respect to the aforesaid activities.
2.2. The Company confirms that every debit and/or credit of interest,
linkage differentials, exchange rate differentials, fees, handling
charges, expenses etc. that have been incurred or made in the
accounts and deposits of the Company maintained by the Company in
the Banks, of any type whatsoever, at any time, including
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debitory accounts, chequing accounts, savings plans, securities
deposits, loans and any other deposit or account of the Company with
the Banks have been verified by the Company and found to be accurate
and that there are no and shall be no claims whatsoever in respect
of the various interest rates, rates of index linked differentials
and/or foreign currency, and/or other rates, fees, handling charges,
and/or expenses, and/or other debits and/or credits whatsoever made
in the Company's aforesaid accounts and deposits, the dates of
modification, the calculation, the manner and time of notice in
respect of same, the manner of charging same and the debit and/or
repayment of credits and/or loans ever granted to the Company.
2.3. The Company confirms that any account, cash or other deposit,
savings plan or securities deposit, existing or that was existing
with the Banks in the name of the Company, alone or with others,
(the "Aforementioned Deposits") were opened at the request of the
Company in accordance with the Company's own motives, and that the
opening thereof was not a condition to the granting of credit,
service or asset whatsoever by the Banks to the Company or to any
corporate entity related to the Company in any way and/or to any
third party whatsoever, and it was never stated or inferred by the
Banks, or on behalf of the Banks, to anyone that the opening of the
Aforementioned Deposits is such a condition, and that if the Banks
or anyone on their behalf agreed or undertook, to grant to the
Company and/or to a corporate entity and/or to a third party as
mentioned above, credit, services or assets whatsoever including
credit, services or assets that were supposed to be granted before,
after or concurrently with the opening of the Aforementioned
Deposits), the abovementioned agreement and/or undertaking - and the
performance thereof , if performed, was granted or performed by the
Banks without any connection or relation whatsoever, to the opening
of the Aforementioned Deposits.
2.4. The Company hereby provides BLL with irrevocable instructions to
immediately prepay the Balance of the Existing BLL Loans and to
debit the Company's BLL Account in the amount of the Balance of the
Existing BLL Loans together with breakage costs and penalties
payable pursuant to the prepayment of the Balance of the BLL
Existing Loans.
2.5. The Company hereby provides BNHP with irrevocable instructions to
immediately prepay the Balance of the Existing BNHP Loans and to
debit the Company's BNHP Account in the amount of the Balance of the
BNHP Existing Loans together with breakage costs and penalties
payable pursuant to the prepayment of the Balance of the BNHP
Existing Loans.
3. Additional Security
-------------------
3.1. The full and exact repayment of the amounts due, and becoming
due or that may become due to the Banks from the Company, in
any way whatsoever and for any reason whatsoever, including
without derogating from the generality of the foregoing, on
account of, or in relation to, the Balance of the Debt and/or
the Credit shall be secured by the following collateral:
3.1.1. The existing Floating Charge Debenture granted to each of
the Banks;
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3.1.2. All other collateral security signed by the Company in favor
of each of the Banks;
The Company undertakes to sign all documents that may be reasonably
required by the Banks, in the form that will be provided to the Company by
the Banks and to furnish all certificates and/or documents required in
connection with the abovementioned security and undertakings.
4. Definitions
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4.1 Unless otherwise defined in this Schedule, all capitalized terms in
this Schedule shall have the meaning set forth in the Agreement.
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AND THE PARTIES HAVE SIGNED
BANK HAPOALIM B.M. BANK LEUMI LE-ISRAEL B.M.
By:________________________________ By:________________________________
Name:______________________________ Name:______________________________
Date:______________________________ Date:______________________________
RADA ELECTRONIC INDUSTRIES LTD.
By:________________________________
Name:______________________________
Date:______________________________
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SCHEDULE B TO THE MEMORANDUM OF AGREEMENT
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.
1. 2. Exercise Price. [INTENTIONALLY DELETED]
2. 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
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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.
3. 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.
4. 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 the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.
5. 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.
6. 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
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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.
(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.
7. 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.
8. 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.
9. 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.
10. 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
3
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.
(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.
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11. (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.
12. (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
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.
13. (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
5
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;
(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. 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
6
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. 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 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. 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.
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(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.
(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
9
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.
