-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Mm5EUOaP0cMnOcyXYIfqZgsPrXavQ73akoN/jUjNuBd5a2aFbNVHeCMzUlG4OcWR Za1nnvmxVUHaR5dCywXMBw== 0000929624-98-001098.txt : 19980609 0000929624-98-001098.hdr.sgml : 19980609 ACCESSION NUMBER: 0000929624-98-001098 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19980608 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: RADA ELECTRONIC INDUSTRIES LTD CENTRAL INDEX KEY: 0000761238 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRONIC PARTS & EQUIPMENT, NEC [5065] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-51105 FILM NUMBER: 98643891 BUSINESS ADDRESS: STREET 1: MEDINAT HAYEHIDIM 12 STREET 2: P O BOX 2059 CITY: HERZLIYA ISRAEL 4612 STATE: L3 BUSINESS PHONE: 2127348340 MAIL ADDRESS: STREET 1: MEDINAT HAYEHIDIM 12 STREET 2: P O BOX 2059 CITY: HERZLIYA ISRAEL 461 STATE: L3 ZIP: 10021 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: YEUNG HOWARD P L CENTRAL INDEX KEY: 0001063260 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 2202 KODAK HOUSE II 39 HEALTHY ST STREET 2: EAST NORTH POINT CITY: HONG KONG BUSINESS PHONE: 01185225791800 MAIL ADDRESS: STREET 1: 2202 KODAK HOUSE II 39 HEALTHY ST STREET 2: EAST NORTH POINT CITY: HONG KONG SC 13D 1 SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D Under the Securities and Exchange Act of 1934 (Amendment No. )* RADA ELECTRONIC INDUSTRIES LIMITED ---------------------------------------- (Name of Issuer) Ordinary Shares, Par Value NIS .002 Per Share --------------------------------------------- (Title of Class of Securities) 750115305 ---------------------------------------- (CUSIP Number) Robert T. Burke Mandel, Buder & Verges 101 Vallejo Street San Francisco, CA 94111 (415) 781-4400 (Name, Address and Telephone Number Persons Authorized to Receive Notices and Communications) May 29, 1998 -------------------------------------------------------- (Date of Events which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b) (3) or (4), check the following box [_]. Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. * The remainder of this cover page should be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). SCHEDULE 13D - ----------------------- --------------------- CUSIP NO. 750115305 PAGE 2 OF 8 PAGES - ----------------------- --------------------- - ------------------------------------------------------------------------------ NAME OF REPORTING PERSON 1 S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS Howard P.L. Yeung - ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* 2 (a) [_] (b) [X] - ------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------ SOURCE OF FUNDS 4 PF - ------------------------------------------------------------------------------ CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO 5 ITEMS 2(d) or 2 (e) [_] - ------------------------------------------------------------------------------ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Hong Kong - ------------------------------------------------------------------------------ SOLE VOTING POWER 7 NUMBER OF 540,000 SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 0 OWNED BY ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING 540,000 PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 0 - ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 540,000 - ------------------------------------------------------------------------------ CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* 12 [X] - ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 3.63% - ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON* 14 IN - ------------------------------------------------------------------------------ *SEE INSTRUCTION BEFORE FILLING OUT! CUSIP No. 750115305 Page 3 of 8 Pages ITEM 1: SECURITY AND ISSUER - ------- ------------------- 1. Class of Securities: Ordinary Shares, par value NIS.002 per share (the "Ordinary Shares") 2. Issuer: Rada Electronic Industries Limited ("Rada") 3. Principal Address: Medinat Hayehudim 12, Herzliya-Pituach, Israel, 46120 ITEM 2: IDENTITY AND BACKGROUND - ------- ------------------------ (a) REPORTING PERSON: Howard P.L. Yeung ("Yeung") (b) Business Address: 2202 Kodak House II, 39 Healthy Street, East, North Point, Hong Kong (c) Principal Business: Investor (d) Criminal Convictions (excluding traffic violations or similar misdemeanors): None (e) Civil Adjudication of Violation of Securities Laws: None (f) Citizenship or place of organization: Hong Kong * * * * * * * * * * * * * * * * CUSIP No. 750115305 Page 4 of 8 Pages ITEM 3: SOURCE AND AMOUNT OF FUNDS - ------------------------------------ If the warrants contained in the Stock Purchase Warrants discussed in Item 5(a) below (the "Warrants") are exercised in full, the source of the purchase price for the securities of Rada, in the aggregate amount of $1,170,000, would be personal funds of Yeung. ITEM 4: PURPOSE OF TRANSACTION - ------------------------------- The Ordinary Shares of Rada to be purchased by Yeung if Yeung decides to exercise the Warrants will be acquired for investment purposes. Subject to applicable legal requirements and the factors referred to below, Yeung may purchase Ordinary Shares pursuant to the Warrants, purchase shares in the open market or in privately regulated transactions or dispose of any or all shares he may then hold. Factors that may be considered by Yeung include Rada's financial condition, business and prospects, other developments concerning Rada, price levels of the Ordinary Shares, other opportunities available to Yeung, and general political, economic and financial market conditions in the United States, Hong Kong or Israel. CUSIP No. 750115305 Page 5 of 8 Pages The Reporting Person does not have any plans or proposals which relate to or would result in any of the actions specified in clauses (a) through (j) of Item 4 of Schedule 13D. ITEM 5: INTEREST IN SECURITIES OF THE ISSUER - --------------------------------------------- (a) On May 29, 1998 (i) Rada entered into a warrant agreement, entitled Stock Purchase Warrant, pursuant to which Yeung has been granted Warrants to purchase, during the two year period following the advance of the "First Loan" referred to in the Loan Agreement described in Item 6, 120,000 Ordinary Shares at a purchase price of $1.50 per Share, 120,000 Ordinary Shares at a purchase price of $2.00 per Share, and 120,000 Ordinary Shares at a purchase price of $2.50 per Share (the "First Stock Purchase Warrant"); and (ii) Rada undertook to enter into a warrant agreement, entitled Stock Purchase Warrant, pursuant to which Yeung would be granted Warrants to purchase, during the two year period following Yeung's giving notice that he is prepared to make the "Second Loan" referred to in the Loan Agreement described in Item 6,180,000 Ordinary Shares at a purchase price of $2.50 per Share (the "Second Stock Purchase Warrant"; the First Stock Purchase Warrant and the Second Stock Purchase Warrant being together referred to herein as the "Stock Purchase Warrants"). If the Warrants are exercised in full, the 540,000 Ordinary Shares issued to Yeung would represent 3.63% of the total number of Ordinary Shares of Rada outstanding as of the date hereof (i.e.,14,864,921), which number includes the 540,000 Ordinary Shares that would be issued upon exercise of the Warrants. Yeung owns 50% of the issued and outstanding capital stock of Horsham Enterprises Limited, a British Virgin Islands corporation ("Horsham"), and, as of the date hereof, Horsham owns 2,115,715 Ordinary Shares of Rada (the "Horsham-Rada Shares"). If, by virtue of his ownership interest in Horsham, Yeung is deemed to be the beneficial owner of the Horsham-Rada Shares, then Yeung would, upon exercise of the Warrants in full, be the beneficial owner of 2,655,715 Ordinary Shares. Such 2,655,715 Ordinary Shares would represent 17.87% of the total number of Ordinary Shares of Rada outstanding as of the date hereof (including the 540,000 Ordinary Shares that would be issued upon exercise of the Warrants). The filing of this statement shall not be construed as an admission that Yeung is the beneficial owner of the Horsham-Rada Shares. (b) Except as set forth in Item 5(a) above, no transactions in the class of securities reported on were effected during the past sixty days by the Reporting Person. (c) Not applicable (d) Not applicable (e) Ownership below 5%: Not applicable ITEM 6: CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT --------------------------------------------------------------------- TO SECURITIES OF THE ISSUER --------------------------- None, except as set forth in Item 5(a) above and that certain Loan Agreement dated May 29, 1998 between Yeung and Rada, as amended by that certain Variation of Loan Agreement dated May 29, 1998 (the "Loan Agreement"), pursuant to which (i) Yeung has agreed to lend Rada the principal amount of $2,000,000 (the "First Loan") upon the terms and conditions contained in the Loan Agreement; and (ii) Yeung may lend Rada the principal amount of $1,000,000 (the "Second Loan") upon the terms and conditions contained in the Loan Agreement, provided Yeung determines in his absolute discretion that he is prepared to advance the Second Loan. The First Loan and the Second Loan will bear interest at 11% per annum. CUSIP No. 750115305 Page 6 of 8 Pages ITEM 7: EXHIBITS - ----------------- 1. Stock Purchase Warrant by and between Rada and Yeung (concerning 360,000 of the Ordinary Shares). 2. Form of Stock Purchase Warrant by and between Rada and Yeung (concerning 180,000 of the Ordinary Shares). 3. Loan Agreement, dated May 29, 1998, by and between Rada and Yeung, and Variation of Loan Agreement dated May 29, 1998, by and between Rada and Yeung. CUSIP No. 750115305 Page 7 of 8 Pages SIGNATURE - --------- After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. /s/ Howard P.L. Yeung _____________________________________ By: Howard P.L. Yeung CUSIP No. 750115305 Page 8 of 8 Pages EXHIBIT INDEX Exhibits - -------- Exhibit 1 Stock Purchase Warrant Exhibit 2 Form of Stock Purchase Warrant Exhibit 3 Loan Agreement and Variation of Loan Agreement EX-1 2 STOCK PURCHASE WARRANT (360,000 SHARES) EXHIBIT 1 Schedule I - ---------- THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER REGULATION S PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). THIS AGREEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE SECURITIES ARE "RESTRICTED" AND MAY NOT BE RESOLD OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE 1933 ACT PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. STOCK PURCHASE WARRANT To Purchase 360,000 Shares of Common Stock of RADA ELECTRONIC INDUSTRIES, LTD. THIS CERTIFIES that, for value received, __________________________(the "Investor"), is entitled, upon the terms and subject to the conditions hereinafter set forth, at any time on or after the date hereof and on or prior to __ May, 2000, (the "Termination Date") but not thereafter, to subscribe for and purchase from RADA ELECTRONIC INDUSTRIES, LTD., an Israeli corporation with headquarters situated at 12 Medinat Hayehudim St., Herzliya-Pituah Israel 4612 (the "Company"), 360,000 Ordinary Shares of 0.02 NIS (New Israeli Shekels) each (the "Warrant Shares"). The purchase price of one Warrant Share (the "Exercise Price") under this Warrant shall be US $1.5 (one and a half US Dollars) per share for 120,000 Warrant Shares, US $2 (two US Dollars) for 120,000 Warrant Shares and US $2.5 (two and a half US Dollars) for one 120,000 Warrant Shares. This Warrant is being issued pursuant a Loan Agreement dated __ May,1998 (the "Agreement") between the Company and the Investor and is subject to its terms. In the event of any conflict between the terms of this Warrant and the Agreement, the Agreement shall prevail. 1. Interpretation and Title of Warrant. (a) In this Warrant the term ----------------------------------- "Common Stock" shall mean Ordinary Share of 0.02 NIS (New Israeli Sekels) each of the Company. (b) Prior to the expiration hereof and subject to compliance with applicable laws, 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 From annexed hereto properly endorsed. 2. Authorization of Shares. The Company covenants that all shares of ----------------------- Common Stock which may be issued 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 nonassessable and 2 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). 3. 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, before the close of business on the Termination Date, or such earlier date on which this Warrant may terminate as provided on paragraph 11 below, by the surrender of his Warrant and the Subscription From 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 older 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; whereupon the holder of this Warrant shall be entitled to receive a certificate for the number of shares of Common Stock so purchased immediately. Certificates for shares purchased hereunder shall be delivered to the holder hereof within five business days after the date on which this Warrant shall have been exercised as aforesaid. Payment of the Exercise Price of the shares may be by certified check or cashier's check or by wire transfer to an account designated by the Company in an amount equal to the Exercise Price multiplied by the number of shares being purchased. 4. No Fractional Shares or Scrip. No fractional shares or scrip ----------------------------- representing fractional shares shall be issued upon the exercise of this Warrant. 5. Charges, Taxes and Expenses. Issuance of certificates for shares of --------------------------- Common Stock 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. In the event certificates for shares of Common Stock are to be issued in a name other than the name of the holder of this Warrant, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the holder hereof, together with evidence reasonably satisfactory to the Company that such transfer or assignment is being made in compliance with all applicable US federal and state securities laws applicable to the Common Stock; and provided, that upon any such transfer or -------- assignment, the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. 6. Closing of Books. The Company will at no time close its shareholder ---------------- books or records in any manner which interferes with the timely exercise of this Warrant. 7. 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 thereof. If, however, at the time of the surrender of this Warrant and purchase the holder hereof shall be entitled to exercise this Warrant, the shares so purchased shall be and be deemed to be issued to such holder as the record owner of 3 such shares as of the close of business on the date on which this Warrant shall have been exercised. 8. Assignment and Transfer of Warrant. This Warrant may be assigned by ---------------------------------- the surrender of this Warrant and the Assignment 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); provided, however, that this Warrant may not be resold or otherwise transferred except (I) in a transaction registered under the 1933 Act, or (ii) in a transaction pursuant to an exemption under the 1933 Act, if available, from such registration and whereby, if requested by the Company, an opinion of counsel reasonably satisfactory to the Company is obtained by the holder of this Warrant to the effect that the transaction is so exempt. 9. Loss, Theft, Destruction or Mutilation of Warrant. The Company ------------------------------------------------- represents and warrants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction of any Warrant or stock 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 stock certificate, if mutilated, the company will make and deliver a new Warrant or stock certificate or like tenor and dated as of such cancellation, in lieu of this Warrant or stock certificate. 10. 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 be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not being legal holiday. 11. Effect of Certain Events. ------------------------ (a) If at any time the Company proposes (I) to sell or otherwise convey all or substantially all of its assets or (ii) to effect a transaction (by merger or otherwise) in which more than 50% of the voting power of the Company is disposed of (collectively, a "Sale or Merger Transaction"), in which the consideration to be received by the Company or its shareholders consists solely of cash, the Company shall give the holder of this Warrant thirty (30) days' notice of the proposed effective date of the transaction specifying that the Warrant shall terminate if the Warrant has not been exercised by the effective date of the transaction. (b) In case the Company shall at any time effect a Sale or Merger Transaction in which the consideration to be received by the Company or its shareholders consists in part of consideration other than cash, the holder of this Warrant shall have the right thereafter to purchase, by exercise of this Warrant and payment of the aggregate Exercise Price in effect immediately prior to such action, the kind and amount of shares and other securities and property which it would have owned or have been entitled to receive after the happening of such transaction had this Warrant been exercised immediately prior thereto. 4 12. Registration Rights. If the Company shall determine to register any ------------------- of its securities either for its own account or the account of a security holder or holders exercising their respective demand 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 reorganization or other transaction under Rule 145, or a registration on any registration form that does not permit secondary sales, then the Company shall (a) promptly give the Investor written notice thereof and (b) 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 Investor and received by the Company within ten (10) days after the written notice from the Company described in clause (a) above is received by the Investor. Such written request may specify all or a part of the Warrant Shares. In addition, the Company shall use its best efforts to qualify for registration on Form S-3 or any comparable or successor form or forms. After the Company has qualified for the use of Form S-3 or any comparable or successor form or forms, the Investor shall have the right to request, and the Company shall use its best efforts to effectuate (solely at the expense of the Company), registrations on Form S-3 (or such other form), such requests to be in writing and to state the number of Warrant Shares to be disposed of and the intended methods of disposition of such Shares by the Investor. The rights granted to the Investor under this Section 12 shall survive exercise of this Warrant and the issuance of Common Stock to the Investor in connection herewith, but shall terminate once all such Common Stock issued to the Investor pursuant hereto may immediately be sold by the Investor under Rule 144 during any ninety (90) day period. 13. Adjustments of Exercise Price and Number of Warrant Shares. 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 certain events, as hereinafter set forth: (a) In case the Company shall (i) declare or pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock or (iv) issue any shares of its capital stock in a reclassification of the Common Stock, 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. An adjustment made pursuant to this clause shall become effective immediately after the effective date of such event. (b) In case the Company shall issue rights, options or warrants to holders of its outstanding Common Stock entitling them at any time prior to the exercise of this Warrant, to subscribe for or purchase shares of Common Stock or securities convertible into or exchangeable or exercisable for Common Stock at a Price Per Share (as defined in paragraph (d) below) which is lower at the date of issuance thereof than the then Current Market Price (as defined in paragraph (e) below) per 5 share of Common Stock at such date, the number of Warrant Shares hereafter purchasable upon the exercise of this Warrant shall be determined by multiplying the number of Warrant Shares theretofore purchasable upon exercise of this Warrant by a fraction, of which the numerator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights, options or warrants plus the number of additional shares of Common Stock actually subscribed for and purchased, as a consequence of the issuance of such rights, options or warrants, and of which the denominator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights, options or warrants plus the number of shares which the aggregate Proceeds (as defined in paragraph (d) below) received by the Company on exercise of such rights, options and warrants would purchase at the Current Market Price per share of Common Stock at the date of issuance of such rights, options or warrants. Such adjustment shall be made whenever such rights, options or warrants are issued, and shall become effective on the date of distribution retroactive to the record date for the determination of stockholders entitled to receive such rights, options or warrants. (c) In case the Company shall distribute to holders of its shares of Common Stock evidences of its indebtedness or assets (excluding dividends or distributions referred to in paragraph (a) above or in the paragraph immediately following this paragraph and excluding any dividend or distribution paid out of the regained earnings of the Company) or rights, options or warrants, or convertible or exchangeable securities containing the rights to subscribe for or purchase shares of Common Stock (excluding those referred to in paragraph (b) above), then in each case the number of Warrant Shares thereafter purchasable upon the exercise of this Warrant shall be determined by multiplying the number of Warrant Shares theretofore purchasable upon the exercise of this Warrant by a fraction, of which the numerator shall be the then Current Market Price per share of Common Stock on the date of such distribution, and of which the denominator shall be such Current Market Price, less the then fair value (as determined by the Board of Directors of the company, whose determination shall be conclusive) of the portion of the assets or evidences of indebtedness so distributed or of such subscription rights, options or warrants, or of such convertible or exchangeable securities applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made, and shall become effective on the date of distribution retroactive to the record date for the determination of shareholders entitled to receive such distribution. (d) For purposes of this Section 13, "Price Per Share" shall be defined and determined according to the following formula: R P = --------- N Where P = Price Per Share, 6 R = the "Proceeds" received or receivable by the Company which (i) in the case of shares of Common Stock is the total amount received or receivable by the company in consideration for the sale and issuance of such shares; (ii) in the case of rights, options or warrants to subscribe for or purchase shares of Common Stock or of securities convertible into or exchangeable or exercisable for shares of Common Stock, is the total amount received or receivable by the company in consideration for the sale and issuance of such rights, options, warrants or convertible or exchangeable or exercisable securities, plus the minimum aggregate amount of additional consideration, other than the surrender of such convertible or exchangeable securities, payable to the company upon exercise, conversion or exchange thereof; and (iii) in the case of rights, options or warrants to subscribe for or purchase convertible or exchangeable or exercisable securities, is the total amount received or receivable by the Company in consideration for the sale and issuance of such rights, options or warrants, plus the minimum aggregate amount of additional consideration other than the surrender of such convertible or exchangeable securities, payable upon the exercise, conversion or exchange of such rights, options or warrants and upon the conversion or exchange or exercise of the convertible or exchangeable or exercisable securities; provided that in each case the proceeds -------- received or receivable by the Company shall be deemed to be the gross cash proceeds without deducting therefrom any compensation paid or discount allowed in the sale, underwriting or purchase thereof by underwriters or dealers or other performing similar services or any expenses incurred in connection therewith, and N = the "Number of Shares," which (i) in the case of Common Stock is the number of shares issued; (ii) in the case of rights, options or warrants to subscribe for or purchase shares of Common Stock or of securities convertible into or exchangeable or exercisable for shares of Common Stock, is the maximum number of shares of Common Stock initially issuable upon exercise, conversion or exchange thereof; and (iii) in the case of rights, options or warrants to subscribe for or purchase convertible or exchangeable or exercisable securities, is the maximum number of shares of Common Stock initially issuable upon conversion, exchange or exercise of the convertible, exchangeable or exercisable securities issuable upon the exercise of such rights, options or warrants. If the Company shall issue shares of Common Stock or rights, options, warrants or convertible or exchangeable or exercisable securities for a consideration consisting, in whole or in part, of property other than cash, the amount of such consideration shall be determined in good faith by the Board of Directors of the Company whose determination shall be conclusive. 7 (e) For the purpose of any computation under paragraphs (b), (c) or (d) of this Section 13, the "Current Market Price" per share of Common Stock at any date shall be the average of daily bid and asked price on Nasdaq of the Common Stock for the thirty (30) trading days commencing 30 trading days before the date of determination. (f) Whenever the number of Warrant Shares purchasable upon the exercise of this Warrant is adjusted, as herein provided, the Exercise Price per Warrant Share payable upon exercise of this Warrant shall be adjusted by multiplying such Exercise Price immediately prior to such adjustment by a fraction, of which the numerator shall be the number of Warrant Shares (to which such Exercise Price relate) purchasable upon the exercise of this Warrant immediately prior to such adjustment, and of which the denominator shall be the number of such Warrant Shares purchasable immediately thereafter, it being understood however, that no such adjustment shall increase the aggregate Exercise Price payable hereunder upon full exercise of this Warrant. (g) No adjustment in the number of Warrant Shares purchasable hereunder shall be required unless such adjustments, in the aggregate, would result in an increase or decrease of at least one percent (1%) of the Exercise Price; provided that any adjustments which by reason of this paragraph (g) are not - -------- required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations shall be made to the nearest cent or to the nearest one-thousandth of a share, as the case may be. (h) No adjustment in the number of Warrant Shares purchasable upon the exercise of this Warrant need be made under paragraph (b), (c) or (d) if the Company issues or distributes to the holder of this Warrant the shares, rights, options, warrants or convertible or exchangeable securities, or evidences of indebtedness or assets referred to in those paragraphs which the holder of this Warrant would have been entitled to receive had this Warrant been exercised prior to the happening of such event or the record date with respect thereto. In no event shall the Company be required or obligated to make any such distribution otherwise than in its sole discretion. No adjustment in the number of Warrant shares purchasable upon the exercise of this Warrant need be made for sales of Common Stock pursuant to a Company plan for reinvestment of dividends or interest. No adjustment need be made for a change in the par value of the Common Stock. (i) In the event that at any time, as a result of an adjustment made pursuant to paragraph (a) above, the holder of this Warrant shall become entitled to purchase any securities of the Company other than shares of Common Stock, 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 (h), inclusive, above. 14. Voluntary Adjustment by the Company. The Company may at its option, ----------------------------------- at any time during the term of this Warrant, reduce the then current Exercise 8 Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company. 15. Notice of Adjustment. 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, return receipt requested, to the transfer agent for the Common Stock and 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 after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth computation by which such adjustment was made. Such notice, in absence of manifest error, shall be conclusive evidence of the correctness of such adjustment. 16. Authorized Shares. The Company covenants that during the period the ----------------- Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock upon the exercise of any purchase rights under this Warrant. 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 shares of the Company's Common Stock 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 shares of Common Stock may be issued as provided therein without violation of any applicable law or regulation, or of any requirements of Nasdaq or any domestic securities exchange upon which the Common Stock may be listed. 17. Miscellaneous. ------------- (a) Issue Date. The provisions of this Warrant shall be construed and ---------- shall be given effect in all respects as if it had been issued and delivered by the Company on the date hereof. This Warrant shall be binding upon any successors or assigns of the Company. This Warrant shall be governed by and construed according to the laws of England and Wales and the Company and the Investor hereby irrevocably submit to the jurisdiction of the English Courts save that the Investor reserves the right to commence any proceedings, suit and/or actions in any legal jurisdiction in order to assert, defend and/or enforce its rights, obligations and/or remedies whether hereunder or otherwise. Without limiting the generality of the foregoing, it is agreed and understood that the Investor may elect to commence any proceedings, suits and/or actions in the federal or state courts located in the State of New York in order to assert, defend and/or enforce its rights, obligations and/or remedies under the provisions hereof relating to the United States securities laws, and the Company hereby irrevocably submits to the jurisdiction of such courts in connection with any such proceeding, suit or action. (b) Restrictions. The holder hereof acknowledges that the Common Stock ------------ acquired upon the exercise of this Warrant, if not registered, may have restrictions upon its resale imposed by state and federal securities laws. 9 (c) Modification and Waiver. This Warrant and any provisions hereof may be ----------------------- changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought. (d) Notices. Any notice, request or other document required or permitted ------- to be given or delivered to the holders hereof or the Company shall be delivered or shall be sent by certified or registered mail, postage prepaid, to each such holder at its address as shown on the books of the Company or to the Company at the address set forth in the Agreement. (e) Recovery of Attorney's Fees. Should any party bring an action to --------------------------- enforce the terms of this Agreement then, if Investor prevails in such action, it shall be entitled to recovery of its attorney's fees from the company and, if the Company prevails in such action, it shall be entitled to recovery of its attorney's fees from the Purchaser. IN WITNESS WHEREOF, the Company has caused this Warrant to be executed as a Deed by its officers thereunto duly authorized. Executed as a deed by RADA ELECTRONIC INDUSTRIES LTD. Acting by two of its officers /s/ Meir Shariv /s/ Meir Hermel - --------------------------- --------------------------------- By: MEIR SHARIV By: MEIR HERMEL Title: Director and Officer Title: CFO 10 NOTICE OF EXERCISE - ------------------ (1) The undersigned hereby elects to purchase ________________ shares of Common Stock of RADA ELECTRONIC INDUSTRIES, LTD. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price in full, together with all applicable transfer taxes, if any. (2) Please issue a certificate of certificates representing said shares of Common Stock in the name of the undersigned or in such other name as specified below: Name: ____________________ Address: ____________________ ____________________ 11 ASSIGNMENT FORM --------------- (To assign the foregoing warrant, execute this form and supply required information. Do not use this form to purchase shares.) FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to ________________________________ whose address is _________________________ ____________________________________________. _____________________________________________________ Dated:_______________ , 199_. 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. EX-2 3 STOCK PURCHASE WARRANT (180,000 SHARES) EXHIBIT 2 Schedule 2 - ---------- THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER REGULATION S PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). THIS AGREEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE SECURITIES ARE "RESTRICTED" AND MAY NOT BE RESOLD OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE 1933 ACT PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. STOCK PURCHASE WARRANT To Purchase 180,000 Shares of Common Stock of RADA ELECTRONIC INDUSTRIES, LTD. THIS CERTIFIES that, for value received, __________ (the "Investor"), is entitled, upon the terms and subject to the conditions hereinafter set forth, at any time on or after the date hereof and on or prior to ______ , 200____, (the "Termination Date") but not thereafter, to subscribe for and purchase from RADA ELECTRONIC INDUSTRIES, LTD., an Israeli corporation with headquarters situated at 12 Medinat Hayehudim St., Herzliya-Pituah Israel 4612 (the "Company"), 180,000 Ordinary Shares of 0.02 NIS (New Israeli Shekels) each (the "Warrant Shares"). The purchase price of one Warrant Share (the "Exercise Price") under this Warrant shall be US $2.5 (two and a half US Dollars) per share. This Warrant is being issued pursuant a Loan Agreement dated ____ May, 1998 (the "Agreement") between the Company and the Investor and is subject to its terms. In the event of any conflict between the terms of this Warrant and the Agreement, the Agreement shall prevail. 1. Interpretation and Title of Warrant. (a) In this Warrant the term ----------------------------------- "Common Stock" shall mead Ordinary Share of 0.02 NIS (New Israeli Sekels) each of the Company. (b) Prior to the expiration hereof and subject to compliance with applicable laws, 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 From annexed hereto properly endorsed. 2. Authorization of Shares. The Company covenants that all shares of ----------------------- Common Stock which may be issued 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 nonassessable and 2 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). 3. 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, before the close of business on the Termination Date, or such earlier date on which this Warrant may terminate as provided on paragraph 11 below, by the surrender of his Warrant and the Subscription From 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; whereupon the holder of this Warrant shall be entitled to receive a certificate for the number of shares of Common Stock so purchased immediately. Certificates for shares purchased hereunder shall be delivered to the holder hereof within five business days after the date on which this Warrant shall have been exercised as aforesaid. Payment of the Exercise Price of the shares may be by certified check or cashier's check or by wire transfer to an account designated by the Company in an amount equal to the Exercise Price multiplied by the number of shares being purchased. 4. No Fractional Shares or Scrip. No fractional shares or scrip ----------------------------- representing fractional shares shall be issued upon the exercise of this Warrant. 5. Charges, Taxes and Expenses. Issuance of certificates for shares of --------------------------- Common Stock 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. In the event certificates for shares of Common Stock are to be issued in a name other than the name of the holder of this Warrant, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the holder hereof, together with evidence reasonably satisfactory to the Company that such transfer or assignment is being made in compliance with all applicable US federal and state securities laws applicable to the Common Stock; and provided, that upon -------- any such transfer or assignment, the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. 6. Closing of Books. The Company will at no time close its shareholder ---------------- books or records in any manner which interferes with the timely exercise of this Warrant. 7. 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 thereof. If, however, at the time of the surrender of this Warrant and purchase the holder hereof shall be entitled to exercise this Warrant, the shares so purchased shall be and be deemed to be issued to such holder as the record owner of 3 such shares as of the close of business on the date on which this Warrant shall have been exercised 8. Assignment and Transfer of Warrant. This Warrant may be assigned by ---------------------------------- the surrender of this Warrant and the Assignment 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); provided, however, that this Warrant may not be resold or otherwise transferred except (I) in a transaction registered under the 1933 Act, or (ii) in a transaction pursuant to an exemption under the 1933 Act, if available, from such registration and whereby, if requested by the Company, an opinion of counsel reasonably satisfactory to the Company is obtained by the holder of this Warrant to the effect that the transaction is so exempt. 9. Loss, Theft, Destruction or Mutilation of Warrant. The Company ------------------------------------------------- represents and warrants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction of any Warrant or stock 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 stock certificate, if mutilated, the company will make and deliver a new Warrant or stock certificate or like tenor and dated as of such cancellation, in lieu of this Warrant or stock certificate. 10. 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 be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not being legal holiday. 11. Effect of Certain Events: ------------------------- (a) If at any time the Company proposes (I) to sell or otherwise convey all or substantially all of its assets or (ii) to effect a transaction (by merger or otherwise) in which more than 50% of the voting power of the Company is disposed of (collectively, a "Sale or Merger Transaction"), in which the consideration to be received by the Company or its shareholders consists solely of cash, the Company shall give the holder of this Warrant thirty (30) days' notice of the proposed effective date of the transaction specifying that the Warrant shall terminate if the Warrant has not been exercised by the effective date of the transaction. (b) In case the Company shall at any time effect a Sale or Merger Transaction in which the consideration to be received by the Company or its shareholders consists in part of consideration other than cash, the holder of this Warrant shall have the right thereafter to purchase, by exercise of this Warrant and payment of the aggregate Exercise Price in effect immediately prior to such action, the kind and amount of shares and other securities and property which it would have owned or have been entitled to receive after the happening of such transaction had this Warrant been exercised immediately prior thereto. 4 12. Registration Rights. If the Company shall determine to register any of ------------------- its securities either for its own account or the account of a security holder or holders exercising their respective demand 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 reorganization or other transaction under Rule 145, or a registration on any registration form that does not permit secondary sales, then the Company shall (a) promptly give the Investor written notice thereof and (b) 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 Investor and received by the Company within ten (10) days after the written notice from the Company described in clause (a) above is received by the Investor. Such written request may specify all or a part of the Warrant Shares. In addition, the Company shall use its best efforts to qualify for registration on Form S-3 or any comparable or successor form or forms. After the Company has qualified for the use of Form S-3 or any comparable or successor form or forms, the Investor shall have the right to request, and the Company shall use its best efforts to effectuate (solely at the expense of the Company), registrations on Form S-3 (or such other form), such requests to be in writing and to state the number of Warrant Shares to be disposed of and the intended methods of disposition of such Shares by the Investor. The rights granted to the Investor under this Section 12 shall survive exercise of this Warrant and the issuance of Common Stock to the Investor in connection herewith, but shall terminate once all such Common Stock issued to the Investor pursuant hereto may immediately be sold by the Investor under Rule 144 during any ninety (90) day period. 13. Adjustments of Exercise Price and Number of Warrant Shares. 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 certain events, as hereinafter set forth: (a) In case the Company shall (i) declare or pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock or (iv) issue any shares of its capital stock in a reclassification of the Common Stock, 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. An adjustment made pursuant to this clause shall become effective immediately after the effective date of such event. (b) In case the Company shall issue rights, options or warrants to holders of its outstanding Common Stock entitling them at any time prior to the exercise of this Warrant, to subscribe for or purchase shares of Common Stock or securities convertible into or exchangeable or exercisable for Common Stock at a Price Per Share (as defined in paragraph (d) below) which is lower at the date of issuance thereof than the then Current Market Price (as defined in paragraph (e) below) per 5 share of Common Stock at such date, the number of Warrant Shares hereafter purchasable upon the exercise of this Warrant shall be determined by multiplying the number of Warrant Shares theretofore purchasable upon exercise of this Warrant by a fraction, of which the numerator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights, options or warrants plus the number of additional shares of Common Stock actually subscribed for and purchased, as a consequence of the issuance of such rights, options or warrants, and of which the denominator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights, options or warrants plus the number of shares which the aggregate Proceeds (as defined in paragraph (d) below) received by the Company on exercise of such rights, options and warrants would purchase at the Current Market Price per share of Common Stock at the date of issuance of such rights, options or warrants. Such adjustment shall be made whenever such rights, options or warrants are issued, and shall become effective on the date of distribution retroactive to the record date for the determination of stockholders entitled to receive such rights, options or warrants. (c) In case the Company shall distribute to holders of its shares of Common Stock evidences of its indebtedness or assets (excluding dividends or distributions referred to in paragraph (a) above or in the paragraph immediately following this paragraph and excluding any dividend or distribution paid out of the regained earnings of the Company) or rights, options or warrants, or convertible or exchangeable securities containing the rights to subscribe for or purchase shares of Common Stock (excluding those referred to in paragraph (b) above), then in each case the number of Warrant Shares thereafter purchasable upon the exercise of this Warrant shall be determined by multiplying the number of Warrant Shares theretofore purchasable upon the exercise of this Warrant by a fraction, of which the numerator shall be the then Current Market Price per share of Common Stock on the date of such distribution, and of which the denominator shall be such Current Market Price, less the then fair value (as determined by the Board of Directors of the company, whose determination shall be conclusive) of the portion of the assets or evidences of indebtedness so distributed or of such subscription rights, options or warrants, or of such convertible or exchangeable securities applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made, and shall become effective on the date of distribution retroactive to the record date for the determination of shareholders entitled to receive such distribution. (d) For purposes of this Section 13, "Price Per Share" shall be defined and determined according to the following formula: R P = --------- N Where P = Price Per Share, 6 R = the "Proceeds" received or receivable by the Company which (i) in the case of shares of Common Stock is the total amount received or receivable by the company in consideration for the sale and issuance of such shares; (ii) in the case of rights, options or warrants to subscribe for or purchase shares of Common Stock or of securities convertible into or exchangeable or exercisable for shares of Common Stock, is the total amount received or receivable by the company in consideration for the sale and issuance of such rights, options, warrants or convertible or exchangeable or exercisable securities, plus the minimum aggregate amount of additional consideration, other than the surrender of such convertible or exchangeable securities, payable to the company upon exercise, conversion or exchange thereof; and (iii) in the case of rights, options or warrants to subscribe for or purchase convertible or exchangeable or exercisable securities, is the total amount received or receivable by the Company in consideration for the sale and issuance of such rights, options or warrants, plus the minimum aggregate amount of additional consideration other than the surrender of such convertible or exchangeable securities, payable upon the exercise, conversion or exchange of such rights, options or warrants and upon the conversion or exchange or exercise of the convertible or exchangeable or exercisable securities; provided that in each case the proceeds -------- received or receivable by the Company shall be deemed to be the gross cash proceeds without deducting therefrom any compensation paid or discount allowed in the sale, underwriting or purchase thereof by underwriters or dealers or other performing similar services or any expenses incurred in connection therewith, and N = the "Number of Shares," which (i) in the case of Common Stock is the number of shares issued; (ii) in the case of rights, options or warrants to subscribe for or purchase shares of Common Stock or of securities convertible into or exchangeable or exercisable for shares of Common Stock, is the maximum number of shares of Common Stock initially issuable upon exercise, conversion or exchange thereof; and (iii) in the case of rights, options or warrants to subscribe for or purchase convertible or exchangeable or exercisable securities, is the maximum number of shares of Common Stock initially issuable upon conversion, exchange or exercise of the convertible, exchangeable or exercisable securities issuable upon the exercise of such rights, options or warrants. If the Company shall issue shares of Common Stock or rights, options, warrants or convertible or exchangeable or exercisable securities for a consideration consisting, in whole or in part, of property other than cash, the amount of such consideration shall be determined in good faith by the Board of Directors of the Company whose determination shall be conclusive. 7 (e) For the purpose of any computation under paragraphs (b), (c) or (d) of this Section 13, the "Current Market Price" per share of Common Stock at any date shall be the average of daily bid and asked price on Nasdaq of the Common Stock for the thirty (30) trading days commencing 30 trading days before the date of determination. (f) Whenever the number of Warrant Shares purchasable upon the exercise of this Warrant is adjusted, as herein provided, the Exercise Price per Warrant Share payable upon exercise of this Warrant shall be adjusted by multiplying such Exercise Price immediately prior to such adjustment by a fraction, of which the numerator shall be the number of Warrant Shares (to which such Exercise Price relate) purchasable upon the exercise of this Warrant immediately prior to such adjustment, and of which the denominator shall be the number of such Warrant Shares purchasable immediately thereafter, it being understood however, that no such adjustment shall; increase the aggregate Exercise Price payable hereunder upon full exercise of this Warrant. (g) No adjustment in the number of Warrant Shares purchasable hereunder shall be required unless such adjustments, in the aggregate, would result in an increase or decrease of at least one percent (1%) of the Exercise Price; provided that any adjustments which by reason of this paragraph (g) are not - -------- required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations shall be made to the nearest cent or to the nearest one-thousandth of a share, as the case may be. (h) No adjustment in the number of Warrant Shares purchasable upon the exercise of this Warrant need be made under paragraph (b), (c) or (d) if the Company issues or distributes to the holder of this Warrant the shares, rights, options, warrants or convertible or exchangeable securities, or evidences of indebtedness or assets referred to in those paragraphs which the holder of this Warrant would have been entitled to receive had this Warrant been exercised prior to the happening of such event or the record date with respect thereto. In no event shall the Company be required or obligated to make any such distribution otherwise than in its sole discretion. No adjustment in the number of Warrant shares purchasable upon the exercise of this Warrant need be made for sales of Common Stock pursuant to a Company plan for reinvestment of dividends or interest. No adjustment need be made for a change in the par value of the Common Stock. (i) In the event that at any time, as a result of an adjustment made pursuant to paragraph (a) above, the holder of this Warrant shall become entitled to purchase any securities of the Company other than shares of Common Stock, 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 (h), inclusive, above. 14. Voluntary Adjustment by the Company. The Company may at its option, ----------------------------------- at any time during the term of this Warrant, reduce the then current Exercise 8 Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company. 15. Notice of Adjustment. 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, return receipt requested, to the transfer agent for the Common Stock and 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 after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth computation by which such adjustment was made. Such notice, in absence of manifest error, shall be conclusive evidence of the correctness of such adjustment. 16. Authorized Shares. The Company covenants that during the period the ----------------- Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock upon the exercise of any purchase rights under this Warrant. 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 shares of the Company's Common Stock 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 shares of Common Stock may be issued as provided therein without violation of any applicable law or regulation, or of any requirements of Nasdaq or any domestic securities exchange upon which the Common Stock may be listed. 17. Miscellaneous. ------------- (a) Issue Date. The provisions of this Warrant shall be construed and ---------- shall be given effect in all respects as if it had been issued and delivered by the Company on the date hereof. This Warrant shall be binding upon any successors or assigns of the Company. This Warrant shall be governed by and construed according to the laws of England and Wales and the Company and the Investor hereby irrevocably submit to the jurisdiction of the English Courts save that the Investor reserves the right to commence any proceedings, suit and/or actions in any legal jurisdiction in order to assert, defend and/or enforce its rights, obligations and/or remedies whether hereunder or otherwise. Without limiting the generality of the foregoing, it is agreed and understood that the Investor may elect to commence any proceedings, suits and/or actions in the federal or state courts located in the State of New York in order to assert, defend and/or enforce its rights, obligations and/or remedies under the provisions hereof relating to the United States securities laws, and the Company hereby irrevocably submits to the jurisdiction of such courts in connection with any such proceeding, suit or action. (b) Restrictions. The holder hereof acknowledges that the Common Stock ------------ acquired upon the exercise of this Warrant, if not registered, may have restrictions upon its resale imposed by state and federal securities laws. 9 (c) Modification and Waiver. This Warrant and any provisions hereof may ----------------------- be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought. (d) Notices. Any notice, request or other document required or permitted ------- to be given or delivered to the holders hereof or the Company shall be delivered or shall be sent by certified or registered mail, postage prepaid, to each such holder at its address as shown on the books of the Company or to the Company at the address set forth in the Agreement. (e) Recovery of Attorney's Fees. Should any party bring an action to --------------------------- enforce the terms of this Agreement then, if Investor prevails in such action, it shall be entitled to recovery of its attorney's fees from the company and, if the Company prevails in such action, it shall be entitled to recovery of its attorney's fees from the Purchaser. IN WITNESS WHEREOF, the Company has caused this Warrant to be executed as a Deed by its officers thereunto duly authorized. Executed as a deed by RADA ELECTRONIC INDUSTRIES LTD. Acting by two of its officers _______________ _______________ By: By: Title: Title: 10 NOTICE OF EXERCISE - ------------------ (1) The undersigned hereby elects to purchase ___________ shares of Common Stock of RADA ELECTRONIC INDUSTRIES, LTD. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price in full, together with all applicable transfer taxes, if any. (2) Please issue a certificate of certificates representing said shares of Common Stock in the name of the undersigned or in such other name as specified below: Name: _____________________ Address: _____________________ _____________________ 11 ASSIGNMENT FORM --------------- (To assign the foregoing warrant, execute this form and supply required information. Do not use this form to purchase shares.) FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to ___________________________________ whose address is____________________________ ___________________________________ ___________________________________ Dated:_______ , 199_. 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. EX-3 4 LOAN AGREEMENT 1 LOAN AGREEMENT -------------- Made this 29 day of May, 1998 By and Between HOWARD PING LEUNG YEUNG ("HY") OF 2202 Kodak House 11, 39 Healthy Street, North Point, Hong Kong (the "Lender"); and RADA ELECTRONIC INDUSTRIES Ltd., an Israeli company with headquarters located at 12 Medinat Hayehudim st, Herzliya-Pituch, Israel 4612 (the "Borrower"). RECITALS - -------- (1) Borrower desires to receive a loan from the Lender, and the Lender desires to extend a loan to the Borrower, in the principal amount of two million US dollars (US $2,000,000), on the terms and conditions more fully set forth in this Agreement; and (2) Borrower further desires to receive a further loan from the Lender in the principal amount of One Million US Dollars (US $1,000,000) if HY exercises his option to advance such further sum, on the terms and conditions more fully set forth in this Agreement. OPERATIONAL PROVISIONS - ---------------------- 1. The Loan. - -- -------- 1.1. Subject to the terms and conditions hereof, the Lender shall lend to the Borrower, and the Borrower shall borrow from the Lender, the principal amount of two million dollars ($2,000,000) (the "First Loan"). 1.2. Subject to the terms and conditions hereof the Lender shall lend to the Borrower and the Borrower shall borrow from the Lender the principal amount of One Million Dollars (US $1,000,000) (the "Second Loan") if, at any time within a period of two years following the date of the advance of the First Loan, the Lender determines, at his absolute discretion, that he is prepared to advance the Second Loan to the Borrower pursuant to the terms of this Agreement. 1.3. For the purpose of this Agreement the term the "Loan" shall mean the aggregate principal amounts of the First Loan and Second Loan as shall have been advanced from time by the Lender to the Borrower and which remains outstanding from the Borrower to the Lender. 2 1.4. If the Lender determines that he is prepared to advance the Second Loan to the Borrower pursuant to the terms of this Agreement he shall serve a notice in writing on the Borrower to that affect. 2. Advance. - -- ------- 2.1. The full principal amount of the First Loan shall be advanced to the Borrower concurrently with the execution of this Agreement. 2.2. The full principal amount of the Second Loan shall be advanced to the Borrower forthwith after the date (falling within the period of two years after the advance of the First Loan) on which the Lender exercises his discretion to advance the Second Loan to the Borrower. 2.3. Subject to Clause 1.2, nothing set out in this Agreement shall in any way oblige the Lender to advance the Second Loan to the Borrower either within the said period of two years after the date of the advance of the First Loan or otherwise. 2.4. Monies advanced pursuant to the First Loan and the Second Loan are to be used by the Borrower as working capital. 3. Maturity Date - -- ------------- 3.1. The Borrower shall repay to the Lender without setoff, deduction or any form of withholding (in whatever form) the full outstanding principal amount of the First Loan, together with all interest and expenses accrued thereon, on April ___ 2000 (the "First Maturity Date"). The Borrower shall have the right to repay the outstanding principal amount of the First Loan together with all interest accrued thereon at any time prior to the First Maturity Date. If the Borrower shall repay either in whole or in part the outstanding principal amount of the First Loan prior to the First Maturity Date, the Borrower shall upon making any such payment pay all interest accrued thereon to the Lender. 3.2. The Borrower shall repay to the Lender without set off, deduction or any form of withholding (in whatever form) the full outstanding principal amount of the Second Loan, together with all interest and expenses accrued thereon, on the second anniversary of the date upon which the Second Loan is advanced from the Lender to the Borrower (the "Second Maturity Date"). The Borrower shall have the right to repay the outstanding principal amount of the Second Loan together with all interest accrued thereon at any time prior to the Second Maturity Date. If the Borrower shall repay either in whole or in part the outstanding principal of the Second Loan prior to the Second Maturity Date the Borrower shall upon making any such payment pay all interest accrued thereon to the Lender. 3 4. Interest. - -- -------- 4.1. Rate; Computation. Interest shall accrue on the outstanding ----------------- principal amount of the Loan at the rate of 11% per annum, based on a year of 365 days, for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest is payable. Subject to Clause 3.1, the Borrower shall pay all accrued interest and expenses to the Lender on and in respect of the First Loan on the First Maturity Date. Subject to Clause 3.2, the Borrower shall pay accrued interest and expenses to the Lender on and in respect of the Second Loan on the Second Maturity Date. "Business Day" shall mean a day on which banks are not required or authorized to close in London, England. 4.2. Arrears Rate. Anything herein to the contrary notwithstanding, any ------------ payment of principal, interest or expenses hereunder that is not made when due shall bear interest, from the date on which such amount is due until such amount is paid in full, payable on demand, at a rate per annum equal to 4% above the rate otherwise in effect hereunder. 5. Payments. - -- -------- 5.1. Place and Time. The Borrower shall make all payments hereunder not -------------- later than 11:00 A.M., London, England time, on the date when due, in U.S. Dollars to the Lender at its address as set forth in Clause 9.5 below, in same day funds. 5.2. Taxes. ----- 5.2.1. All payments by the Borrower hereunder shall be made free and clear of, and without any deduction for, any and all present or future taxes, including levies, deductions, charges and withholdings, and all liabilities with respect thereto, excluding taxes imposed on the income of the Lender by England or any political subdivision thereof ("Taxes"). In the event that the Borrower shall be required by law to deduct any Taxes from any payment hereunder, the sum payable shall be increased as may be necessary so that after making all required deductions, the Lender shall receive the sum it would have received had no such deductions been made. 5.2.2. In addition, the Borrower will pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from the execution, delivery, registration of this Agreement, from any payment hereunder, or otherwise with respect hereto ("Other Taxes"). 4 5.2.3. The Borrower will indemnify the Lender for the full amount of any Taxes or Other Taxes imposed on the Lender and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. 5.3. Expenses. All expenses incurred by the Lender in relation to the -------- collection of the amounts payable to it pursuant to this agreement, including but not limited to costs of court proceedings and legal fees, will be reimbursed by the Borrower to the Lender on a fully indemnity basis and will be considered part of the principal amount of the Loan. 5.4. Allocation. The Lender has the sole and exclusive discretion to ---------- allocate every amount received from the Borrower (whether or not the date of the payment for such amount has arrived) to the account of interest, and/or repayment of principal and/or expenses, and/or other payments to which the Lender is entitled hereunder. 5.5. No Set-off. The Borrower shall not be entitled to deduct or set- ---------- off, against any payment hereunder, any present or future claims or obligations which may be owing to it from the Lender. 6. Warrants. - -- -------- 6.1. The Borrower shall issue to the Lender, upon the execution of this Agreement, warrants in the form set out in Schedule 1 to purchase three hundred and sixty thousand (360,000) Ordinary Shares of 0.02 NIS (New Israeli Shekels) of the Borrower exercisable at any time during the period of two years following the date of the advance of the First Loan at the following exercise price. Options to purchase one hundred and twenty thousand shares at an exercise price of one and a half US Dollars (US $1.5) per share. Options to purchase one hundred and twenty thousand shares at an exercise price of two dollars ($2) per share. Options to purchase one hundred and twenty thousand shares at an exercise price of two and a half dollars ($2.5) per share. 6.2. If within the period of two years following the date of the advance of the First Loan the Lender serves a notice on the Borrower pursuant to Clause 1.4 by which he states that he is prepared to advance the Second Loan, then the Borrower shall issue to the Lender, within five Business Days after service of the said notice, a warrant in the form set out in Schedule 2 to purchase One Hundred and Eighty Thousand (180,000) Ordinary Shares of 0.02 NIS (New Israeli Shekels) of the Borrower exercisable at any time during the period of two years after the date of the advance of the Second Loan at an exercise price of Two and a half US Dollars ($2.50) per Share. The "Termination Date" (as defied in the form of the said warrant set out in Schedule 2) shall be the date falling two years after the date upon which the Lender serves the aforesaid notice on the Borrower pursuant to Clause 1.4. 5 7. Negative Covenants. So long as any amount of the Loan including interest - -- ------------------ and expenses payable thereon remains outstanding, the Borrower shall not, without the prior consent of the Lender: 7.1. Debt. Create or suffer to exist, or permit any of its subsidiaries ---- to create or suffer to exist, any Debt if, immediately after giving effect to such Debt and the receipt and application of any proceeds thereof, the ratio of the consolidated Debt of the Borrower and its subsidiaries to the aggregate consolidated tangible assets of the Borrower and its subsidiaries would be greater than 1:1. "Debt" means (i) indebtedness for money borrowed (ii) obligations evidenced by bonds, debentures, notes or similar instruments, (iii) obligations to pay the deferred purchase price of property or services, (iv) obligations as lessee under leases which should be, in accordance with generally accepted accounting principles, be recorded as capital leases and (v) obligations under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clauses (i) through (iv) above. 7.2. Liens, etc. Create or suffer to exist, or permit any of its ---------- subsidiaries to create or suffer to exist, any lien, security interest or other charge or encumbrance, or any other type of preferential arrangement, upon or with respect to any of its properties, whether now owned or hereafter acquired, or assign, or permit any of its subsidiaries to assign, and right to receive income, in each case to secure or provide for the payment of any Debt of any person, other than (i) purchase money liens or purchase money security interests upon or in any property acquired or held by the Borrower or any subsidiary in the ordinary course of business to secure the purchase price of such property or to secure indebtedness incurred solely for the purpose of financing the acquisition of such property, or (ii) liens or security interests existing on such property at the time of its acquisition (other than any such lien or security interest created in contemplation of such acquisition), provided, that the aggregate outstanding principal amount of the indebtedness secured by the liens or security interests referred to in clauses (i) and (ii) above shall not exceed US $15,000,000 at any time. 7.3. Dividends, etc. Declare or make any dividend payment of cash, on -------------- account of any shares of any class of capital stock of the Borrower in excess of US $2,000,000 in a year for any financial year of the Borrower in which the Loan is outstanding. 8. Events of Default - -- ----------------- 8.1. "Event of Default" means any of the following: 6 8.1.1. If the Borrower shall fail to pay any principal or, interest on, the Loan when the same becomes due and payable, 8.1.2. If any representation or warranty made by the Borrower herein or by the Borrower (or any of its officers) in connection with this Agreement shall prove to have been incorrect in any material respect when made, 8.1.3. If the Borrower shall fail to perform or observe any term, covenant or agreement contained in this Agreement on its part and such failure shall remain unremedied for ten (10) days after written notice thereof shall have been given to the Borrower by the Lender. 8.1.4. If any event shall occur or condition shall exist under any agreement or instrument relating to any other Debt of the Borrower or its subsidiaries, the effect of which is to accelerate, or to permit the acceleration of, the maturity of such Debt, or any such Debt shall be declared to be due and payable, or required to be prepaid, prior to the stated maturity thereof. 8.1.5. If the Borrower or any of its subsidiaries shall not be able to pay its debts when due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors, or any proceeding shall be instituted by or against the Borrower or any of is subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for the relief or the appointment of a receiver, administrator, trustee, or other similar official for it or for any part of its property, or the Borrower or any of its subsidiaries shall take any corporate action to authorize any of the action set forth in this subsection. 8.1.6. If any judgment or order for the payment of money in excess of $500,000 (five hundred thousand US Dollars) shall be rendered against the Borrower or any of its subsidiaries and either (i) enforcement proceedings shall have been commenced by any creditor upon which a stay of enforcement of such judgement or order, by reason of a pending appeal or otherwise, shall not be in effect. 8.1.7. If any material adverse change occurs in the financial condition, results of operations of business of the Borrower, which in the reasonable opinion of 7 the Lender creates a suspicion that Borrower will not be able to fulfill all its payment obligation under this Agreement. 8.1.8. If the Borrower and/or KST Corp. commit a material breach of the Joint Venture Agreement dated 11th October 1996 made between the Borrower (1), the Lender (2), New Reef Holdings Limited (3), KST Corp (4) and Horsham Enterprises Limited (5) as amended and supplemented by a Deed of Amendment dated 9th July 1997 made between such parties and a Second Amendment dated 16 March 1998 between such parties. 8.2. In any Event of Default should occur and be continuing, the Lender may, by notice to the Borrower, declare the principal amount of the Loan, all interest and expenses thereon, and all other amount payable under this Agreement to be immediately due and payable, whereupon the same shall become immediately due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower. 9. Miscellaneous - -- ------------- 9.1. Further Assurances. Each of the parties hereto shall perform such ------------------ further acts and execute such further documents as may reasonably be necessary to carry out and give full effect to the provisions of this Agreement and the intentions of the parties as reflected thereby. 9.2. Governing Law; Jurisdiction. This Agreement shall be governed by --------------------------- and construed according to the laws of England and Wales and the parties hereby irrevocably submit to the jurisdiction of the English Courts save that the Lender reserves the right to commence any proceedings, suit and/or actions in any legal jurisdiction in order to assert, defend and enforce its rights, obligations and/or remedies whether hereunder or otherwise. 9.3. Successors and Assigns; Assignment. Except as otherwise expressly ---------------------------------- limited herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators of the parties hereto. None of the rights, privileges, or obligations set forth in, arising under, or created by this Agreement may be assigned or transferred by the Borrower without the prior consent in writing of the Lender. 9.4. Entire Agreement; Amendment and Waiver. This Agreement together -------------------------------------- with and the Schedules and Exhibits hereto and thereto, constitute the full and entire understanding and agreement between the parties with regard to the subject matters hereof and thereof. Any term of this Agreement may be amended and the observance of any term hereof may 8 be waived (either prospectively or retroactively and either generally or in a particular instance) only with the written consent of all of the parties of this Agreement. 9.5. Notices, etc. All notices and other communications required or ------------- permitted hereunder to be given to a party to this Agreement shall be in writing and shall be faxed or mailed by registered or certified mail, potage prepaid, or otherwise delivered by hand or by messenger, addressed to such party's address as set forth below or at such other address as the party shall have furnished to each other party in writing in accordance with this provision: if to the Lender: Roy K.C. Chan 2202 Kodak House II, 39 Healthy Street, North Point Hong Kong Fax: ____________________ if to the Borrower: Rada Electronic Industries Ltd. 12 Medinat Hayehudim St. Herzliya- Pituch, Israel 4612 Fax: ____________________ or such other address with respect to a party as such party shall notify each other party in writing as above provided. Any notice sent in accordance with this section shall be effective (i) if mailed, seven (7) business days after mailing, (ii) if sent by messenger, upon delivery, and (iii) if sent by fax, upon transmission and electronic confirmation of receipt or (if transmitted and received on a non-Business Day) on the first Business Day following transmission and electronic confirmation of receipt. 9.6. Delays or Omissions. No delay or omission to exercise any right, -------------------- power, or remedy accruing to any party upon any breach or default under this Agreement, shall be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver permit, consent, or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any of the parties, shall be cumulative and not alternative. 9.7. Severability. If any provision in this Agreement shall be found or ------------ be held to be invalid or unenforceable under applicable law, then the meaning of said provision shall be construed, to the extent feasible, so as to render the provision enforceable, and if no feasible interpretation would save such provision, it shall be severed from the remainder 9 of this Agreement which shall remain in full force and effect unless the severed provision is essential and material to the rights or benefits received by any party hereto. In such event, the parties shall use best efforts to negotiate, in good faith, a substitute, valid and enforceable provision which most nearly effects the parties' intent in entering into this Agreement. 9.8. Counterparts. This Agreement may be executed in any number of ------------ counterparts, each of which shall be deemed an original and enforceable against the parties actually executing such counterpart, and all of which together shall constitute one and the same instrument. 9.9. Reference to Clauses and Schedules are references to Clauses and Schedules of this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as a deed as of the day and year first above written. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as a deed as of the day and year first above written. Signed and Delivered As a Deed by HOWARD PING LEUNG YEUNG in the presence of: Signed and Delivered As a Deed by RADA ELECTRONIC INDUSTRIES LTD. Acting by two of its officers /s/ Meir Shariv /s/ Meir Hermel ____________________________ ____________________________ By: Meir Shariv By: Meir Hermel Title: Director and Officer Title: CEO 10 VARIATION OF LOAN AGREEMENT --------------------------- Made this 29 day of May 1998 By and Between HOWARD PING LEUNG YEUNG ("HY") of 2202 Kodak House II, 39 Healthy Street, North Point, Hong Kong (the "Lender"); and RADA ELECTRONIC INDUSTRIES LTD., an Israeli company with headquarters located at 12 Medinat Hayehudim St, Herzliya-Pituch, Israel 4612 (the "Borrower"). RECITALS - -------- (1) This Agreement is supplemental to the Loan Agreement (the "Agreement") made on the 29 day of May 1998 between the parties hereto (2) The parties have agreed to vary certain terms of the Agreement, but otherwise confirm all the other terms of the Agreement OPERATIONAL PROVISIONS - ---------------------- 1. The Variations - -- -------------- 1.1. The following variations shall apply forthwith and take effect as if they had been original terms of the Agreement: 1.1.1. In Clause 2.4 of the Agreement the words "working capital" shall be deleted and replaced by the words "for repaying loans and credit lines from Banks and other financial institutions." 1.1.2. The wording of Clause 4.1 of the Agreement shall be deleted and replaced by the following wording: "4.1 Rate: Computation: Payment Interest shall accrue on the ---------------------------- outstanding principal amount of the Loan at the rate of 11% per annum, based on a year of 365 days, for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest is payable. The Borrower shall pay all accrued interest and expenses to the Lender on and in respect of the First Loan quarterly in arrear on the first Business Day in each 11 of June, September, December and March in each year the first payment to be made on the first applicable Business Day next following the date of making the First Loan. The Borrower shall pay accrued interest and expenses to the Lender on and in respect of the Second Loan quarterly in arrear on the first Business Day in each of June, September, December and March in each year the first payment to be on the first applicable Business Day next following the date of advance of the Second Loan. "Business Day" shall mean a day on which banks are not required or authorised to close in London, England." 2. Counterparts - -- ------------ This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and enforceable against the parties actually executing such counterpart, and all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed as a deed as of the day and year first above written. Signed and Delivered As a Deed by HOWARD PING LEUNG YEUNG in the presence of: Signed and Delivered As a Deed by RADA ELECTRONIC INDUSTRIES LTD. Acting by two of its officers /s/ Meir Shariv /s/ Haim Nissenson ____________________________ _______________________________ By: Meir Shariv By: Haim Nissenson Title: Director and Officer Title: President & CEO -----END PRIVACY-ENHANCED MESSAGE-----