SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
F O R M 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of
May 2005
RADA ELECTRONIC INDUSTRIES LIMITED
(Name of Registrant)
7 Giborei Israel Street, Netanya 42504, Israel
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will
file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]
Indicate by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]
Indicate by check mark whether by furnishing the information
contained in this Form, the registrant is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the Securities
Exchange Act of 1934.
Yes [ ] No [X]
If "Yes" is marked, indicate below the file number assigned to
the registrant in connection with Rule 12g3-2(b): 82-__________
This Form 6-K is being incorporated by reference into the Registrant's
Form F-3 Registration Statements File Nos. 333- 12074, 333-115598 and
333-117954, and Form S-8 Registration Statements File Nos. 333-12844 and
333-111437.
RADA ELECTRONIC INDUSTRIES LTD.
6-K Items
1. RADA Electronic Industries Ltd. Proxy Statement for Annual General
Meeting to be held June 8, 2005.
2. RADA Electronic Industries Ltd. Proxy Card.
ITEM 1
RADA ELECTRONIC INDUSTRIES LTD.
7 Giborei Israel Street,
Netanya 42504, Israel
--------------------------
NOTICE OF 2005 ANNUAL GENERAL MEETING OF SHAREHOLDERS
--------------------------
RADA Electronic Industries Ltd. Shareholders:
We cordially invite you to the Annual General Meeting of Shareholders to be
held at 10 a.m. on Wednesday, June 8, 2005 at our offices at 7 Giborei Israel
Street, Netanya, Israel.
The purpose of the meeting is to consider and vote upon the following
matters:
(1) The election of a Class A director for a term expiring in 2006 and a
Class C director for a term expiring in 2008;
(2) The increase of our authorized ordinary share capital and the
amendment of our Memorandum of Association and Articles of Association
to reflect such increase;
(3) The ratification of the issuance and sale of our ordinary shares and
warrants to certain investors in a private placement;
(4) The approval of an amendment to Article 109 of our Articles of
Association permitting our company to procure an insurance policy for
the liability of our office holders and directors and to indemnify our
office holders and directors pursuant to the provisions of the Israeli
Companies Law, subject to the limitations set forth therein;
(5) The approval of the terms of procurement of a directors' and officers'
liability insurance policy;
(6) The approval of an amendment to our Memorandum of Association
correcting a misstatement of the name of our company;
(7) The ratification of the appointment of Kost Forer Gabbay & Kasierer,
independent certified public accountants in Israel, a member firm of
Ernst & Young Global, as our independent auditors for the year ending
December 31, 2005 and authorization for the Board of Directors to
determine the remuneration of the auditors; and
(8) The transaction of any other business that may properly come before
the meeting.
Additionally, our Auditor's Report, Directors' Report and Consolidated
Financial Statements for the fiscal year ended December 31, 2004 will be
reviewed and discussed.
The Board of Directors recommends that you vote in favor of all of the
proposals, which are described in the attached Proxy Statement.
You can vote by proxy either by mail or in person. If voting by mail, the
proxy must be received by our transfer agent or at our registered office in
Israel at least 48 hours prior to the meeting to be validly included in the
tally of ordinary shares voted at the meeting. Detailed proxy voting
instructions are provided both in the Proxy Statement and on the enclosed proxy
card.
By Order of the Board of Directors,
/s/ Herzle Bodinger
Herzle Bodinger,
Chairman of the Board of Directors
Netanya, Israel
May 6, 2005
RADA ELECTRONIC INDUSTRIES LTD.
--------------------------
PROXY STATEMENT
--------------------------
2005 ANNUAL GENERAL MEETING OF SHAREHOLDERS
This statement is being furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of RADA Electronic Industries Ltd.
to be voted at the Annual General Meeting of Shareholders, or the Meeting, to be
held on Wednesday, June 8, 2005 at 10 a.m. and any adjournment thereof.
Shareholders will be asked to vote upon the: (i) election of a Class A director
for a term expiring in 2006 and a Class C director for a term expiring in 2008;
(ii) increase of our authorized ordinary share capital and the amendment of our
Memorandum of Association and Articles of Association to reflect such increase;
(iii) ratification of the issuance and sale of our ordinary shares and warrants
to certain investors in a private placement; (iv) approval of an amendment to
Article 109 of our Articles of Association permitting our company to procure an
insurance policy for the liability of our office holders and directors and to
indemnify our office holders and directors pursuant to the provisions of the
Israeli Companies Law, subject to the limitations set forth therein; (v)
approval of the terms of procurement of a directors' and officers' liability
insurance policy; (vi) approval of an amendment to our Memorandum of Association
correcting a misstatement of the name of our company; and (vii) ratification of
the appointment of Kost Forer Gabbay & Kasierer, independent certified public
accountants in Israel, a member firm of Ernst & Young Global, as our independent
auditors for the year ending December 31, 2005 and authorization for the Board
of Directors to determine their remuneration. Additionally, our Auditor's
Report, Directors' Report and Consolidated Financial Statements for the fiscal
year ended December 31, 2004 will be reviewed and discussed.
Our Annual Report to Shareholders for the year ended December 31, 2004,
which includes our audited financial statements for the fiscal year ended
December 31, 2004, is enclosed but is not part of the proxy solicitation
materials. The Annual Report, the proxy card and this Proxy Statement are being
mailed to shareholders on or about May 6, 2005.
Shares eligible to be voted and for which a proxy card is properly signed
and returned at least 48 hours prior to the beginning of the Meeting will be
voted as directed. If directions are not given or directions are not in
accordance with the options listed on a signed and returned proxy card, such
shares will be voted FOR the nominees for director and each proposition for
which the Board of Directors recommends a vote FOR. Unsigned or unreturned
proxies, including those not returned by banks, brokers, or other record
holders, will not be counted for quorum or voting purposes. You may revoke your
proxy at any time prior to the exercise of authority granted in the proxy by
giving a written notice of revocation to our Corporate Secretary, by submitting
a subsequently dated, validly executed proxy, or by voting in person at the
Meeting.
As of April 29, 2005, the record date for the determination of shareholders
entitled to vote at the Meeting, there were outstanding 22,356,032 ordinary
shares. Each ordinary share entitles the holder to one vote. The ordinary shares
have a par value of NIS 0.005 per share. The presence of two shareholders,
holding at least one third of our voting rights, represented in person or by
proxy at the Meeting, will constitute a quorum. If, within half an hour from the
time appointed for the holding of a general meeting, a quorum is not present,
the meeting shall stand adjourned to the same day in the next week at the same
time and place, and if, at such adjourned meeting, a quorum is not present
within half an hour from the time appointed for holding the meeting any two
shareholders present in person or by proxy shall constitute a quorum. This proxy
shall constitute notice of such adjourned meeting and no additional notice shall
be provided by us to the shareholders.
An affirmative vote of the holders of a majority of the ordinary shares
represented at the Meeting, in person or by proxy, entitled to vote and voting
thereon, is required to elect a Class A director and a Class C director and to
approve Proposals 3, 5 and 7 to be presented at the Meeting. The approval of
Proposals 2, 4 and 6 require the affirmative vote of 75% of the ordinary shares
represented at the Meeting, in person or by proxy, and voting on the matter.
We will bear the cost of soliciting proxies from our shareholders. Proxies
will be solicited by mail and may also be solicited personally or by telephone
by our directors, officers and employees. We will reimburse brokerage houses and
other custodians, nominees and fiduciaries for their expenses in accordance with
the regulations of the Securities and Exchange Commission concerning the sending
of proxies and proxy material to the beneficial owners of stock.
You may vote by submitting your proxy with voting instructions by mail if
you promptly complete, sign, date and return the accompanying proxy card in the
enclosed self-addressed envelope to our transfer agent or to our registered
office in Israel at least 48 hours prior to the Meeting.
Beneficial Ownership of Securities by Certain Beneficial Owners and Management
The following table sets forth certain information as of May 2, 2005
regarding the beneficial ownership by (i) all shareholders known to us to own
beneficially more than 5% of our outstanding ordinary shares, (ii) each director
and (iii) all directors and executive officers as a group:
Number of Percentage of
Ordinary Shares Outstanding
Name of Beneficial Owner Beneficially Owned (1) Ordinary Shares (2)
------------------------ ---------------------- -------------------
Howard P.L. Yeung (3)(4)(5)....................... 20,407,861 59.32%
Kenneth Yeung (6)................................. 1,350,086 6.04%
Bank Leumi Le-Israel B.M (7) ..................... 2,929,197 11.58%
Bank Hpoalim B.M.(8) ............................. 1,952,798 8.03%
Herzle Bodinger (9) .............................. 225,000 1%
Adrian Berg (10).................................. 193,600 *
Roy Kui Chuen Chan (11)........................... 133,600 *
Hava Snir......................................... - -
Zvi Tropp......................................... - -
Benzion Gruber (12)............................... 241,582 1.07%
Michael Letchinger................................ - -
All directors as a group
(7 persons) (13).................................. 793,782 3.43%
------------------------
* Less than 1%
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. In addition, ordinary shares
relating to options currently exercisable or exercisable within 60 days of
the record date are deemed outstanding for computing the percentage of the
person holding such securities but are not deemed outstanding for computing
the percentage of any other person. Except as indicated by footnote, and
subject to community property laws where applicable, the persons named in
the table have sole voting and investment power with respect to all shares
shown as beneficially owned by them.
(2) Based on 22,356,032 ordinary shares issued and outstanding as of May 2,
2005.
(3) Of the 20,407,8561 ordinary shares 1,350,086 shares are held directly by
Horsham Enterprises Ltd., a corporation incorporated in Hong Kong. Messrs.
Howard P.L. Yeung and his brother Kenneth Yeung, are the beneficial owners,
in equal shares, of Horsham Enterprises Ltd. Accordingly, each of Mr.
Howard P. L. Yeung and Mr. Kenneth Yeung may be deemed to be the beneficial
owners of all of the ordinary shares held by Horsham Enterprises Ltd.
2
(4) Includes 8,265,306 ordinary shares issuable upon the exercise of currently
exercisable warrants issued to Mr. Howard P.L. Yeung.
(5) Includes 3,781,995 ordinary shares issuable to Mr. Howard P.L. Yeung in the
event he acquires warrants from Bank Leumi le-Israel B.M. and Bank Hapoalim
BM. by exercising a call option granted to him by such banks pursuant to an
option agreement dated September 24, 2003.
(6) All such shares are held directly by Horsham Enterprises Ltd. See note 3.
(7) Includes 660,000 ordinary shares issuable upon the exercise of currently
exercisable warrants and 2,269,197 ordinary shares issuable by exercising a
put option granted pursuant to an option agreement dated September 24,
2003.
(8) Includes 440,000 ordinary shares issuable upon the exercise of currently
exercisable warrants and 1,512,798 ordinary shares issuable by exercising a
put option granted pursuant to an option agreement dated September 24,
2003.
(9) All such ordinary shares are subject to currently exercisable options
granted under our stock option plans, at an exercise price of $1.34 per
share. The options expire in September 2013.
(10) Includes 189,000 ordinary shares subject to currently exercisable options
granted under our stock option plans, at an exercise price of $1.34 per
share. The options expire in September 2013.
(11) Includes 129,000 ordinary shares subject to currently exercisable options
granted under our stock option plans, at an exercise price of $1.34 per
share. The options expire in September 2013.
(12) Includes 204,082 ordinary shares issuable upon currently exercisable
warrants at an exercise price of $2.00 per share that were issude in
connection with the private placement of our shares in June 2002. 37,500 of
such ordinary shares are subject to currently exercisable options granted
under our stock option plans, at an exercise price of $1.34 per share. The
options expire in September 2013.
(13) Includes 204,082 ordinary shares issuable upon the exercise of currently
exercisable warrants, at an exercise price of $2 per share that were issued
in connection with a private placement of our shares in June 2002. Such
warrants expire on June 30, 2007, and 580,500 ordinary shares are subject
to currently exercisable options granted under our stock option plans, at
an exercise price of $1.34 per share. The options expire in September 2013.
ELECTION OF DIRECTORS
(Item 1 on the Proxy Card)
Our Board of Directors is divided into three classes. Generally, at each
annual meeting one class of directors will be elected for a term of three years.
In addition to these three classes of directors, we have two "outside directors"
as defined by the Israeli Companies Law, 5759-1999, or the Israeli Companies
Law, who hold office for a term of three years, which may be extended for only
one additional three year period. All the members of our Board of Directors
(except the outside directors as detailed herein) may be reelected upon
completion of their term of office.
The incumbent Class A directors and Class B directors will hold office
until the 2006 and 2007 Annual General Meetings of Shareholders, respectively,
or until their successors are duly elected and qualified. The Outside Directors
will hold office until the 2006 Annual General Meetings of Shareholders. The
term of the directors currently serving as Class C directors expires with this
Meeting.
The Board of Directors proposes the election of Mr. Ben Zion Gruber,
currently a Class C director, to serve as a Class A director, to hold office for
one year until the Annual General Meeting of Shareholders to be held in 2006.
The Board of Directors further proposes the election of Mr. Adrian Berg to
serve as a Class C director, to hold office for three years until the Annual
General Meeting of Shareholders to be held in 2008. Mr. Berg is currently
serving as a member of our Board of Directors.
Should either of the nominees be unavailable for election, the proxies will
be voted for a substitute nominee designated by our Board of Directors. Each of
the nominees is expected to be available.
3
Under the Israeli Companies Law and our Articles of Association, the
affirmative vote of the holders of a majority of the ordinary shares represented
at the Meeting, in person or by proxy, entitled to vote and voting on the
matter, will be necessary for shareholder approval of the assignment of a Class
C director to serve as a Class A director and his election for a term of one
year, and the election of a Class C director for a term of three years.
Set forth below is information about each nominee, including age,
position(s) held with our company, principal occupation, business history and
other directorships held.
Nominee for Election as Class A Director for Term Expiring in 2006
Ben Zion Gruber, 47, has served as a director since 2002, and was elected
as a designee of the shareholders (other than Howard Yeung) that participated in
our 2002 private placement. Mr. Gruber is founder and manager of several real
estate and construction companies and entrepreneur of several hi-tech companies.
Mr. Gruber is a Colonel (Res.) of the Israeli Defense Forces serving as
Brigadier Commander of Tank Battalion. Mr. Gruber holds, an M.A. degree in
Behavioral Sciences from Tel Aviv University, a B.Sc. degree in Engineering of
microcomputers from "Lev" Technology Institute and is currently studying for his
Ph.D. degree in Behavioral Sciences at the University of Middlesex, England. In
addition Mr. Gruber is a graduate of a summer course in Business Administration
at Harvard University, as well as several other courses and training in
management, finance and entrepreneurship. Mr. Gruber is a member of the Board of
Employment Service of the Government of Israel, of the Board of Directors of the
Company for Development of Efrat Ltd., of the Board of the Association of
Friends of Kefar Shaul Hospital, of the Ethics Committee of the Eitanim and
Kefar Shaul hospitals as well as of several other charitable organizations.
Nominee for Election as Class C Director for Term Expiring in 2008
Adrian Berg, 58, was elected as a director as one of two designees of
Horsham Enterprises Ltd. Since 1976, Mr. Berg has been a chartered accountant
and senior partner at the U.K. firm, Alexander & Co., Chartered Accountants. Mr.
Berg holds a B.Sc. degree in Industrial Administration from the University of
Salford and received his qualification as a fellow of the U.K. Institute of
Chartered Accountants in 1973 after he completed three years of training at
Arthur Andersen & Co.
The Board of Directors recommends a vote FOR the election of each nominee
for director named above.
Directors Continuing in Office
Herzle Bodinger, 62, joined us in May 1997 as the President of our U.S.
subsidiary, RADA Electronic Industries Inc., in charge of international
marketing activities and was appointed our President in June 1998. He has served
as Chairman of our Board of Directors since July 1998 and served as Chief
Executive Officer from June 1998 until 2002. General (Res.) Bodinger served as
the Commander of the Israeli Air Force from January 1992 through July 1996.
During the last 35 years of his service, he also served as a fighter pilot while
holding various command positions. General (Res.) Bodinger holds a B.A. degree
in Economics and Business Administration from the Bar-Ilan University and
completed the 100th Advanced Management Program at Harvard University. Mr.
Bodinger is a Class B director whose term will expire in 2007.
Michael Letchinger, 50, is a designee of Horsham Enterprises Ltd. Since
2000 Mr. Letchinger has been General Counsel and Senior Vice President-Managing
of Potomac Golf Properties, LLC, a company engaged in real estate development
and free standing golf facilities. From 1994 to 2000 Mr. Letchinger was General
Counsel and Senior Vice President-Managing of Potomac Development Associate, a
sister company of Potomac Golf Properties, LLC. Mr. Letchinger holds a B.A.
degree in economics from Brandeis University, Waltham and a JD from University
of Chicago Law School. Mr. Letchinger is a Class B director whose term will
expire in 2007.
Roy Kui Chuen Chan, 58, was elected as a director as one of two designees
of Horsham Enterprises Ltd. Since 1984 Mr. Chan has been legal consultant to
Yeung Chi Shing Estates Limited, a Hong Kong
4
holding company with major interests in hotels and real estate in Hong Kong,
China, the U.S., Canada and Australia, and its international group of companies.
Mr. Chan presently serves as legal counsel to several Hong Kong companies,
including Horsham Enterprises Ltd. Mr. Chan received his qualification as a
solicitor and has been a member of the U.K. Bar since 1979 after he completed
five years of training at Turners Solicitors. Mr. Kui Chuen Chan is a Class A
director whose term will expire in 2006.
Hava Snir, 62, has served as an outside director since November 2000. Ms.
Snir has been an attorney for over 25 years and has been self-employed since
January 1999. From June 1989 until July 1998, Ms. Snir was a prosecutor with the
Taxation and Economics Office of the Tel Aviv District Attorney, specializing in
securities laws and white-collar crimes. Ms. Snir received her qualification as
a lawyer and has been a member of the Israel Bar since 1971. She is a member of
the Taxes Committee and the Sub-Committee for V.A.T. and Customs Duty of the
Israel Bar Association and serves as Chairman of the V.A.T. and Property Tax
Appeal Committee of the Israeli Ministry of Finance and as a member of the
Ethics Committee of the Israeli Ministry of Health. Ms. Snir holds a B.A. degree
in Law from the Hebrew University of Jerusalem and spent a year at Harvard
University where she took law courses. Mrs. Snir is an outside director whose
term will expire in 2006.
Zvi Tropp, 64, has served as an outside director since November 2000. From
2001 and until June 2003 Mr. Tropp has served as Senior Vice President and CFO
of Enavis Networks Ltd., an Israeli communication company. Mr. Tropp has served
as Senior Consultant with Zenovar Consultants Ltd., an Israeli company providing
consultancy services with respect to business organization, marketing and real
estate, since May 1998. Mr. Tropp was Vice President-Finance and Business
Development of Baltimore Spice Israel Ltd., an Israeli food additives
manufacturer, from January 1994 until May 1998. Prior thereto, Mr. Tropp served
in various positions, the last of which was as Vice President-Finance, with
Caniel Ltd., an Israeli can manufacturer, for over five years. Prior to joining
the private sector, Mr. Tropp was a government employee for 20 years and held
various positions with the Israeli Ministries of Defense and Agriculture, the
last of which was as Chief Economic Adviser to the Ministry of Defense. Mr.
Tropp has lectured in Economics and Defense Economics at the Hebrew University,
Tel Aviv University and Bar Ilan University. Mr. Tropp serves as a member of the
Board of Directors of Ofek Trust Fund Ltd., an Israeli affiliate of Bank Leumi
Le-Israel B.M. whose shares trade on the Tel Aviv Stock Exchange, and of several
Israeli private companies. Mr. Tropp holds a B.Sc. degree in Agriculture and a
M.Sc. degree in Agricultural Economics, both from the Hebrew University. Mr.
Tropp is an outside director whose term will expire in 2006.
Composition of Board of Directors and Committees
Independence Standards
The Israeli Companies Law requires Israeli companies with shares that have
been offered to the public in or outside of Israel to appoint at least two
outside directors. No person may be appointed as an outside director if the
person or the person's relative, partner, employer or any entity under the
person's control has or had, on or within the two years preceding the date of
the person's appointment to serve as outside director, any affiliation with the
company or any entity controlling, controlled by or under common control with
the company. The term affiliation includes:
o an employment relationship;
o a business or professional relationship maintained on a regular basis;
o control; and
o service as an officer holder, excluding service as an outside director
of a company that is offering its shares to the public for the first
time.
No person may serve as an outside director if the person's position or
other activities create, or may create a conflict of interest with the person's
responsibilities as an outside director or may otherwise interfere with the
person's ability to serve as an outside director. If, at the time outside
directors are to be appointed, all current members of the Board of Directors are
of the same gender, then at least one outside director must be of the other
gender.
5
Outside directors are elected at our annual general meeting of
shareholders. The shareholders voting in favor of their election must include at
least one-third of the shares of the non-controlling shareholders of the company
who are present at the meeting. This minority approval requirement need not be
met if the total shareholdings of those non-controlling shareholders who vote
against their election represent 1% or less of all of the voting rights in the
company. Outside directors serve for a three-year term, which may be renewed for
only one additional three-year term. Outside directors can be removed from
office only by the same special percentage of shareholders as can elect them, or
by a court, and then only if the outside directors cease to meet the statutory
qualifications with respect to their appointment or if they violate their duty
of loyalty to the company.
Any committee of the Board of Directors must include at least one outside
director and the Audit Committee must include all of the outside directors. An
outside director is entitled to compensation as provided in regulations
promulgated under the Israeli Companies Law and is otherwise prohibited from
receiving any other compensation, directly or indirectly, in connection with
such service.
In general, under the NASDAQ Marketplace Rules promulgated pursuant to the
Sarbanes-Oxley Act of 2002, effective as of July 31, 2005, a majority of a
company's board of directors must qualify as independent directors within the
meaning of the NASDAQ Marketplace Rules. NASDAQ Marketplace Rule 4350, or Rule
4350, was recently amended to permit foreign private issuers, such as our
company, to follow certain home country corporate governance practices without
the need to seek individual exemptions from NASDAQ. Instead, a foreign private
issuer must provide NASDAQ with a letter from outside counsel in its home
country certifying that the issuer's corporate governance practices are not
prohibited by home country law. On May 5, 2005 we provided NASDAQ with a notice
of non-compliance with respect to the NASDAQ requirement to maintain a majority
of independent directors (as defined under the NASDAQ Marketplace Rules). Such
compliance is not required by Israeli law.
Audit Committee
Under the Israeli Companies Law, we are required to establish an Audit
Committee consisting of both our outside directors and a third director, who is
not: (i) the chairman of the Board of Directors; (ii) employed by the company or
provides services to the company; or (iii) a controlling shareholder or a
relative thereof. In addition, currently, we are required by the NASDAQ
Marketplace Rules to have at least two independent directors on our Board of
Directors and to establish an Audit Committee consisting of three independent
directors.
Our Audit Committee, established in accordance with Section 114 of the
Israeli Companies Law and Section 3(a)(58)(A) of the Securities Exchange Act of
1934, assists our Board of Directors in overseeing the accounting and financial
reporting processes of our company and audits of our financial statements,
including the integrity of our financial statements, compliance with legal and
regulatory requirements, our independent public accountants' qualifications and
independence, the performance of our internal audit function and independent
public accountants, finding any defects in the business management of our
company for which purpose the Audit Committee may consult with our independent
auditors and internal auditor, proposing to the Board of Directors ways to
correct such defects, approving related-party transactions as required by
Israeli law, and such other duties as may be directed by our Board of Directors.
Our Audit Committee consists of three board members, two of which satisfy
the "independence" requirements of the Securities and Exchange Commission,
NASDAQ and Israeli law for audit committee members. Our Audit Committee is
currently composed of Ms. Hava Snir and Messrs. Zvi Tropp and Adrian Berg. Ms.
Snir and Mr. Tropp qualify both as independent directors under the NASDAQ Stock
Market requirements and as outside directors under the Israeli Companies Law
requirements. Mr. Adrian Berg serves as the third member of our audit committee.
We are currently searching for a third director, which satisfies the
"independence" requirements of the Securities and Exchange Commission and
NASDAQ, to serve on our Board of Directors and Audit Committee. The Audit
Committee meets at least once each quarter. Our Board of Directors has
determined that Mr. Zvi Trop meets the definition of an audit committee
financial expert, as defined in Item 401(h) of Regulation S-K.
The responsibilities of the Audit Committee also include approving
related-party transactions as required by law. Under Israeli law, an Audit
Committee may not approve an action or a transaction with
6
a controlling shareholder, or with an office holder, unless at the time of
approval two outside directors are serving as members of the Audit Committee and
at least one of the outside directors was present at the meeting in which an
approval was granted
The Audit Committee reviewed our audited financial statements for the year
ended December 31, 2004 and members of the committee met with both management
and our external auditors to discuss those financial statements. Management and
the external auditors have represented to the Audit Committee that the financial
statements were prepared in accordance with the generally accepted accounting
principles. Members of the Audit Committee have received from and discussed with
the external auditors their written disclosure and letter regarding their
independence from our company as required by Independence Standards Board
Standard No. 1. Members of the Audit Committee also discussed with the external
auditors any matters required to be discussed by Statement on Auditing Standards
No. 61. Based upon these reviews and discussions, the Audit Committee has
recommended to the Board of Directors that the audited financial statements be
included in our Annual Report on Form 20-F for the year ended December 31, 2004.
Compensation
The following table sets forth all compensation we paid with respect to all
of our directors and executive officers as a group for the year ended December
31, 2004.
Salaries, fees, Pension, retirement
commissions and bonuses and similar benefits
----------------------- ---------------------
All directors and executive officers as a group,
consisting then of 11 persons... $707,910 $274,340
During the year ended December 31, 2004, we paid each of our outside
directors a per meeting attendance fee of NIS 1,000 ($232) plus an annual fee of
NIS 18,000 ($4,178).
As of March 31, 2005, our directors and executive officers as a group,
consisting of eleven persons, held options to purchase an aggregate of 1,354,450
ordinary shares, at exercise prices ranging from $0.69 to $6.25 per share,
vesting over three years. These options expire between 2009 and 2013. Of such
options 144,000 options were issued under our 1999 employee stock option plan
and 1,210,450 options were issued under our 2003 employee stock option plan. In
2004, 31,250 options were exercised and 43,750 forfeited.
Stock Option Plans
1996 Stock Option Plan
Our 1996 Stock Option Plan, or the 1996 Plan, authorizes the issuance of
options to key employees and consultants, including officers and directors of
our company and its subsidiaries, to purchase an aggregate of 5,600 ordinary
shares, who, in the judgment of the Board of Directors or, if appointed in the
future, a committee which will administer the 1996 Plan, are in position to
contribute significantly to our success. The Board of Directors or the committee
will determine the number of shares covered by each option, and the formulation,
within the limitations of the 1994 Plan, of the form of option.
Options granted under the 1996 Plan may be for a maximum term of ten years
from the date of grant. The exercise price of an option granted to an employee
may not be less than 60% of the fair market value of our ordinary shares on the
date of grant of the option. The exercise price of an option to a non-employee
director or consultant may not be less than 80% of the fair market value of our
ordinary shares on the date of grant of the option. If any option expires
without having been fully exercised, the shares with respect to which such
option has not been exercised will be available for future grants.
Options may not be transferable by the optionee otherwise than by will or
the laws of descent and distribution and during the optionee's lifetime are
exercisable only by the optionee. Options terminate before their expiration
dates one year after the optionee's death while in our employ, three months
after the optionee's retirement for reasons of age or disability or involuntary
termination of employment other than for cause, and immediately upon voluntary
termination of employment or involuntary termination of employment for cause.
7
Our Board of Directors may, at its discretion, modify, revise or terminate
the 1996 Plan at any time, except that the aggregate number of shares issuable
pursuant to options may not be increased (except in the event of certain changes
in our capital structure), the eligibility provisions and minimum option price
may not be changed, or the permissible maximum term of options may not be
increased without the consent of our shareholders.
The 1996 Plan also contained provisions protecting optionees against
dilution of the value of their options in the case of stock splits, stock
dividends or other changes in our capital structure, in the event of any
proposed reorganization or merger involving our company or in the event of any
spin-off or distribution of assets to our shareholders.
As of March 31, 2005, options to purchase 4,400 ordinary shares had been
granted to two employees and directors at an average exercise price of $3.84 per
share. All of such options are currently exercisable. No options have been
exercised to date.
1999 Stock Option Plan
Our 1999 Stock Option Plan, or the 1999 Plan, provides for the issuance of
stock options to purchase an aggregate of 325,200 of our ordinary shares.
Options under the 1999 Plan may be issued to key employees and consultants,
including officers and directors of our company and its subsidiaries who, in the
judgment of the Board of Directors or, if appointed in the future, a committee
which will administer the 1999 Plan, are in a position to contribute
significantly to our success. The terms of the 1999 Plan are substantially the
same as those of the 1996 Plan. As of March 31, 2005, options to purchase
259,200 ordinary shares had been granted to 12 employees at an average exercise
price of $4.55 per share. Of such options, options to purchase 259,200 ordinary
shares are currently exercisable.
2003 Stock Option Plan
Our 2003 Stock Option Plan, or the 2003 Plan, provides for the issuance of
stock options to purchase an aggregate of 2,000,000 of our ordinary shares.
Options under the 2003 Plan may be issued to employees including officers and
directors of our company and its subsidiaries who, in the judgment of the Board
of Directors based on the recommendation of our compensation committee, are in a
position to contribute significantly to our success. The provisions of our 2003
Plan are designated to allow for the tax benefits promulgated under the Israeli
Income Tax Ordinance [New Version]. Our Board of Directors has resolved that all
options that will be granted to Israeli residents under the 2003 Plan will be
taxable under the "capital gains path." Pursuant to this path the profit
realized by the employee is taxed as a capital gain (25%) if the options or
shares are held by a trustee for at least 24 months from the end of the tax year
in which such options were granted. If the shares are sold before the lapse of
said 24 months period, the profit is re-characterized as ordinary income. The
company is not allowed a corresponding salary expense, even in the event the
profit is taxed as ordinary income. Otherwise, the terms of the 2003 Plan are
substantially the same as those of the 1996 Plan. As of May 2, 2005 options to
purchase 1,984,433 ordinary shares had been granted. Of such options, 106,003
options have been exercised and 196,364 have been cancelled or forfeited.
Options to purchase 1,604,933 ordinary shares are currently exercisable.
INCREASE IN THE NUMBER OF AUTHORIZED ORDINARY SHARE CAPITAL AND
AMENDMENT TO OUR MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATION
(Item 2 on the Proxy Card)
Our current authorized and registered ordinary share capital is NIS
225,000, divided into 45,000,000 ordinary shares of NIS 0.005 par value each. As
a result of the issuance of ordinary shares and warrants to the shareholders
that participated in our last private placement, we have increased our issued
share capital to 22,356,032 ordinary shares and are required to reserve an
additional 2,224,797 shares for issuance pursuant to our stock option and
purchase plans and 20,452,774 shares for issuance pursuant to securities
exercisable or exchangeable for, or convertible into, ordinary shares. Our Board
of Directors has unanimously adopted a resolution recommending that our
shareholders increase our authorized ordinary share capital by NIS 12,500
divided into 2,500,000 ordinary shares of NIS 0.005 par value each, and amend
our Memorandum of Association and Articles of Association to reflect such
increase.
8
It is proposed that at the Meeting the shareholders adopt the following
resolution, which our Board of Directors believes to be in the best interests of
us and of our shareholders:
"RESOLVED, that our Memorandum of Association and Articles of
Association be amended to increase our authorized and registered ordinary
share capital to 47,500,000 ordinary shares of NIS 0.005 par value each."
The Board believes that the proposed increase of our authorized ordinary
share capital will enable us to fulfill our current obligations to all of the
holders of our options and securities exercisable or exchangeable for, or
convertible into, ordinary shares.
The affirmative vote of the holders of 75% of the ordinary shares
represented at the Meeting in person or by proxy and entitled to vote will be
necessary to approve the increase of the authorized share capital of the company
and the amendment of the Memorandum of Association and Articles of Association
to reflect the same.
The Board of Directors recommends a vote FOR the increase of the authorized
share capital of the company.
RATIFICATION OF THE ISSUANCE AND SALE OF OUR ORDINARY SHARES AND
WARRANTS TO INVESTORS IN A PRIVATE PLACEMENT
(Item 3 on the Proxy Card)
We entered into a securities purchase agreement dated April 6, 2005 with
certain institutional investors, or the Purchase Agreement. Pursuant to the
Purchase Agreement, the investors purchased 965,934 of our ordinary shares at
$1.13 per share and exercised previously issued additional investment rights to
purchase 909,066 of our ordinary share at $2.10 per share, or an average price
per share of $1.60, approximately the market price of our ordinary shares on
such date. In addition, such investors were issued warrants to purchase up to an
additional 1,875,000 ordinary shares. Such warrants will be valid for 24 months
from the date of the ratification of the issuance of the securities by our
shareholders, and will be exercisable from October 6, 2005 at an exercise price
of $2.10 per share. The warrants contain certain anti-dilution provisions that
could reduce the exercise price of the warrants in the event that we issue
securities at a price below $1.64. Pursuant to the Purchase Agreement, we have
undertaken to file a registration statement with the Securities Exchange
Commission, to register the resale of the ordinary shares issued to the
investors and the ordinary shares issuable upon exercise of the warrants. We
also agreed to seek shareholder ratification of the issuance of the securities
under the Purchase Agreement.
It is therefore proposed that at the Meeting the shareholders adopt the
following resolution:
"RESOLVED, that the issuance and sale of 965,934 of our ordinary
shares at $1.13 per share and warrants to purchase up to 1,875,000 of our
ordinary shares at $2.10 per share under a securities purchase agreement
dated April 6, 2005 with certain institutional investors, be and hereby is
approved."
The affirmative vote of the holders of a majority of the ordinary shares
represented at the Meeting in person or by proxy and entitled to vote and voting
thereon will be necessary for shareholder approval of the foregoing resolution.
The Board of Directors recommends a vote FOR the ratification of the
issuance and sale of our ordinary shares and warrants to investors in a private
placement.
APPROVAL OF AN AMENDMENT TO ARTICLE 109 OF OUR ARTICLES OF
ASSOCIATION, PERMITTING OUR COMPANY TO PROCURE AN INSURANCE POLICY
FOR THE LIABILITY OF OUR OFFICE HOLDERS AND DIRECTORS AND TO INDEMNIFY
OUR OFFICE HOLDERS AND DIRECTORS PURSUANT TO THE PROVISIONS OF THE
ISRAELI COMPANIES LAW, AND SUBJECT TO THE LIMITATIONS SET FORTH THEREIN
(Item 4 on the Proxy Card)
Currently, the provisions of Article 109, which controls our ability to
purchase directors' and officers' liability insurance policy and to indemnify
our office holders and directors are limited in their scope to the
9
extent such insurance and indemnification were permitted under the Israeli
Companies Ordinance [New Version] 5843-1963, which has been replaced by the
Israeli Companies Law. The Israeli Companies Law, as amended, expanded the
matters that can be covered by directors' and officers' liability insurance
policy and allows the possibility of indemnifying our Office Holders and
Directors.
The Israeli Companies Law provides that a company may, if permitted by its
articles of association, enter into a contract for the insurance of the
liability of any of its office holders with respect to an act performed by him
or her in his or her capacity as an office holder, for: (i) a breach of his or
her duty of care to us or to another person; (ii) breach of his or her duty of
loyalty to us, provided that the office holder acted in good faith and had
reasonable cause to assume that his or her act would not prejudice our
interests; or (iii) a financial liability imposed upon the office holder in
favor of another person.
The Israeli Companies Law provides that a company may not enter into a
contract for the insurance of its office holders for: (a) a breach by the office
holder of his or her duty of loyalty, unless the office holder acted in good
faith and had a reasonable basis to believe that such act would not prejudice
the company; (b) a breach by the office holder of his or her duty of care if the
breach was committed intentionally or recklessly; (c) any act or omission
committed with the intent to unlawfully yield a personal profit; or (d) any fine
imposed on the office holder.
In addition, under the Israeli Companies Law, the shareholders of a company
may amend a company's articles of association to allow for either of the
following:
o a provision authorizing the company to grant in advance an undertaking
to indemnify an office holder, provided that such undertaking is
limited to specified classes of events which the Board of Directors
deems foreseeable at the time of grant and is limited to an amount
determined by the Board of Directors to be reasonable under the
circumstances, or
o a provision authorizing the company to retroactively indemnify an
office holder.
Further, pursuant to the provisions of the Israeli Companies Law, a company
may not exonerate an office holder from liability with respect to a breach of
his duty of loyalty, but may exonerate in advance an office holder from his
liability to the company, in whole or in part, with respect to a breach of his
duty of care, except for a breach of a duty of care in the event of distribution
of dividends and repurchase of the company's shares and securities.
The Board believes that the proposed change in our Articles of Association
will enable us to attract and retain outstanding officers, and directors.
It is therefore proposed that at the Meeting the shareholders adopt the
following resolution:
"RESOLVED, that Article 109 of our Articles of Association be amended
to read as follows :
"109.
(1) Subject to the provisions of the Companies Law, 5759-1999 (the
"Companies Law"), the Company may enter into an agreement to insure an
Office Holder (as such term is defined in the Companies Law) for any
liability that may be imposed on such Office Holder in connection with
an act performed by such Office Holder by virtue of his or her office,
with respect to each of the following:
(a) breach of the duty of care of the Office Holder towards the
Company or towards another person;
(b) breach of the fiduciary duty against the Company, provided that
the Office Holder acted in good faith and had reasonable cause to
assume that his or her act would not prejudice our interests; or
(c) a financial liability imposed upon the office holder in favor of
another person.
(2) Subject to the provisions of the Companies Law, the Company may
indemnify an Officer Holder of the Company retrospectively, or may
also undertake in advance to indemnify an
10
Office Holder of the Company, provided the undertaking is limited to
events of a kind which the Board believes can be anticipated at the
time of such undertaking in light of the Company's actual activities,
and in an amount or criteria that the Board determines is reasonable
under the circumstance, and provided further that such events, amounts
and criteria shall be specified in such undertaking.
(3) The Company may, to the extent permitted by the Israeli Companies
Law, release an Office Holder of the Company, in advance, from his or
her liability, in whole or in part, for damages resulting from the
breach of his or her duty of care towards the Company."
The affirmative vote of the holders of 75% of the ordinary shares
represented at the Meeting in person or by proxy and entitled to vote will be
necessary to approve the amendment of the Articles of Association.
The Board of Directors recommends a vote FOR the proposal to amend Article
109 of the Company's Articles of Association.
APPROVAL OF TERMS OF PROCUREMENT OF A DIRECTORS' AND OFFICERS'
LIABILITY INSURANCE POLICY
(Item 5 on the Proxy Card)
Our current directors' and officers' liability insurance policy coverage is
limited to $5,000,000 and is due to expire in February 2006. We intend to enter
into a new directors' and officers' liability insurance policy to replace it.
Our Audit Committee and Board of Directors have recommended that the new
directors' and officers' liability insurance policy provide for a maximum
coverage of up to $10,000,000. We intend to negotiate with certain insurance
companies in order to obtain the most cost effective policy.
Our Audit Committee and Board of Directors believe that the proposed
increase in directors' and officers' liability insurance policy coverage will
enable us to attract and retain outstanding officers, and directors.
The Israeli Companies Law provides that a company may, if permitted by its
articles of association, enter into a contract for the insurance of the
liability of any of its office holders with respect to an act performed by him
or her in his or her capacity as an office holder, for: (i) a breach of his or
her duty of care to us or to another person; (ii) breach of his or her duty of
loyalty to us, provided that the office holder acted in good faith and had
reasonable cause to assume that his or her act would not prejudice our
interests; or (iii) a financial liability imposed upon the office holder in
favor of another person.
The Israeli Companies Law provides that a company may not enter into a
contract for the insurance of its office holders for: (a) a breach by the office
holder of his or her duty of loyalty, unless the office holder acted in good
faith and had a reasonable basis to believe that such act would not prejudice
the company; (b) a breach by the office holder of his or her duty of care if the
breach was committed intentionally or recklessly; (c) any act or omission
committed with the intent to unlawfully yield a personal profit; or (d) any fine
imposed on the office holder.
Our current articles of association, as further amended in the Meeting,
provide that, subject to any restrictions imposed by applicable law, we may
procure, insurance covering any officer or Office Holder against any liability
which he or she may incur in such capacity, including insurance covering us for
indemnifying such office holder, to the maximum extent permitted by law.
Pursuant to the Israeli Companies Law, the procurement of insurance
coverage for an office holder requires the approval of our Audit Committee and
our Board of Directors, and if the beneficiary is a director, also of our
shareholders.
It is therefore proposed that at the Meeting the shareholders adopt the
following resolution:
"RESOLVED, that the purchase by RADA Electronic Industries Ltd. of a
directors' and officers' liability insurance policy, with maximum coverage
of $10,000,000 for the benefit of all of our officers and directors, from
time to time, is and hereby be approved; and that the management of the
company be, and it is hereby is, authorized and directed to negotiate and
11
execute in the name and on behalf of the company, contracts for such
insurance, upon the terms and conditions so negotiated; provided that the
annual premium shall not exceed $150,000 ; and
"RESOLVED FURTHER, any renewal, extension and/or purchase of a new
insurance policy for all directors and officers of ADA Electronic
Industries Ltd., who may serve the company from time to time, is hereby
approved; and that the management of the company be, and it hereby is,
authorized and directed to negotiate and execute in the name and on behalf
of the company, contracts for such renewal, extension and/or purchase of
insurance, upon the terms and conditions so negotiated; provided that any
such renewal, extension or purchase is conditioned upon (i) further
approval by the Audit Committee and the Board of Directors and (ii) the
annual premium will not exceed $150,000; it being hereby clarified that no
further approval of the shareholders of the Company will be required in
connection with any renewal and/or extension and/or the purchase of any
such insurance policy in accordance with these resolutions."
Under the Israeli Companies Law, the affirmative vote of the holders of a
majority of the ordinary shares represented at the Meeting, in person or by
proxy, entitled to vote and voting thereon, is required for shareholder approval
of the foregoing resolution.
The Board of Directors recommends a vote FOR the proposal to approve the
terms of procurement of a directors' and officers' liability insurance policy.
APPROVAL OF AN AMENDMENT OF OUR MEMORANDUM OF ASSOCIATION
CORRECTING A MISSTATEMENT OF THE NAME OF OUR COMPANY
(Item 6 on the Proxy Card)
We have found a misstatement in the name of our company in our Memorandum
of Association that should be corrected.
It is therefore proposed that at the Meeting the shareholders adopt the
following resolution:
"RESOLVED, that the name of our company in the Memorandum of
Association be amended to state the correct name of our company, RADA
Electronic Industries Ltd."
The affirmative vote of the holders of 75% of the ordinary shares
represented at the Meeting in person or by proxy and entitled to vote will be
necessary to approve the amendment of the Memorandum of Association.
The Board of Directors recommends a vote FOR the proposal to amend the
Memorandum of Association.
APPOINTMENT OF AUDITORS
(Item 7 on the Proxy Card)
Our Board of Directors first appointed Luboshitz Kasirer, independent
certified public accountants in Israel, then a member firm of Arthur Andersen,
as our auditors in 1999 and has reappointed the firm, which was merged into Kost
Forer Gabbay & Kasierer, and is now a member firm of Ernst & Young Global, as
our auditors since such time. Kost Forer Gabbay & Kasierer has no relationship
with us or any of our affiliates except as auditors. As a result of Kost Forer
Gabbay & Kasierer's knowledge of our operations, our Audit Committee and Board
of Directors are convinced that such firm has the necessary personnel,
professional qualifications and independence to act as our auditors. Our Board
of Directors has again recommended, pursuant to the recommendation of our Audit
Committee, that Kost Forer Gabbay & Kasierer be selected as our auditors for the
fiscal year ending December 31, 2005 and recommends that the shareholders ratify
and approve the selection. The remuneration of Kost Forer Gabbay & Kasierer will
be determined by our Board of Directors pursuant to the recommendation of our
Audit Committee.
The following resolution will be offered by the Board of Directors at the
Meeting:
"RESOLVED, that the appointment of Kost Forer Gabbay & Kasierer,
independent certified public accountants in Israel, a member firm of Ernst
& Young Global, as the
12
independent auditors of the Company to conduct the annual audit of our
financial statements for the year ending December 31, 2005, and the
authorization of the Board of Directors to determine their remuneration
pursuant to the recommendation of our Audit Committee is ratified,
confirmed and approved."
The affirmative vote of the holders of a majority of the ordinary shares
represented at the Meeting in person or by proxy and entitled to vote and voting
thereon will be necessary for shareholder approval of the foregoing resolution.
The Board of Directors recommends a vote FOR the foregoing resolution.
Fees Paid to Independent Public Accountants
The following table sets forth, for each of the last two fiscal years, fees
paid to our independent public accountants.
Year Ended December 31, Year Ended December 31,
2004 2003
----------------------- -----------------------
Audit Fees.............. $66,000 $50,000
Audit-Related Fees...... - -
Tax Fees................ - -
All other Fees.......... - -
------- -------
Total ............. $66,000 $50,000
Audit Committee Pre-Approval Policies and Procedures
Our Audit Committee has adopted a policy and procedures for the
pre-approval of audit and non-audit services rendered by our independent public
accountants, Kost Forer Gabbay & Kasierer, a member firm of Ernst & Young
Global. Pre-approval of an audit or non-audit service may be given as a general
pre-approval, as part of the Audit Committee's approval of the scope of the
engagement of our independent auditor, or on an individual basis. The policy
prohibits retention of the independent public accountants to perform the
prohibited non-audit functions defined in Section 201 of the Sarbanes-Oxley Act
or the rules of the SEC, and also requires the Audit Committee to consider
whether proposed services are compatible with the independence of the public
accountants.
REVIEW AND DISCUSSION OF OUR AUDITOR'S REPORT, DIRECTORS' REPORT, AND
THE CONSOLIDATED FINANCIAL STATEMENTS
At the Meeting, our Auditor's Report, Directors' Report, and the
Consolidated Financial Statements for the year ended December 31, 2004 will be
presented. We will hold a discussion with respect to the financial statements at
the Meeting. This item will not involve a vote of the shareholders.
THE COMPANY'S ANNUAL REPORT TO SHAREHOLDERS FOR THE YEAR ENDED DECEMBER 31, 2004
IS ENCLOSED HEREWITH. ADDITIONAL COPIES OF THE ANNUAL REPORT WILL BE MAILED
WITHOUT CHARGE TO ANY SHAREHOLDER ENTITLED TO VOTE AT THE MEETING, UPON WRITTEN
REQUEST TO: RADA ELECTRONIC INDUSTRIES LTD., 7 GIBOREI ISRAEL STREET, POLEG
INDUSTRIAL ZONE, NETANYA, ISRAEL, ATTENTION: ELAN SIGAL, CHIEF FINANCIAL
OFFICER.
By Order of the Board of Directors,
/s/Herzle Bodinger
Herzle Bodinger,
President and Chairman of the Board of Directors
Dated: May 6, 2005
13
ITEM 2
RADA ELECTRONIC INDUSTRIES LIMITED
7 GIBOREI ISRAEL STREET
NETANYA 42504, ISRAEL
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) Herzle Bodinger and Sarit Molcho, or
either of them, attorneys or attorney of the undersigned, for and in the name(s)
of the undersigned, with power of substitution and revocation in each to vote
any and all ordinary shares, par value NIS 0.005 per share, of RADA Electronic
Industries Limited (the "Company"), which the undersigned would be entitled to
vote as fully as the undersigned could if personally present at the Annual
General Meeting of Shareholders of the Company to be held on Wednesday, June 8,
2005 at 10:00 a.m. at the principal offices of the Company, 7 Giborei Israel
Street, Netanya 42504, Israel, and at any adjournment or adjournments thereof,
and hereby revoking any prior proxies to vote said shares, upon the following
items of business more fully described in the notice of and proxy statement for
such Annual General Meeting (receipt of which is hereby acknowledged):
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED FOR (i) THE ELECTION OF THE NOMINEES FOR
DIRECTOR AND (ii) PROPOSALS 2 THROUGH 7 SET FORTH ON THE REVERSE.
(Continued and to be signed on the reverse side)
ANNUAL GENERAL MEETING OF SHAREHOLDERS OF
RADA ELECTRONIC INDUSTRIES LIMITED
June 8, 2005
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
Please detach along perforated line and mail in the envelope provided.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND
"FOR" PROPOSALS 2 THROUGH 7.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR
VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
--------------------------------------------------------------------------------
1. To elect a Class A and a Class C Director for terms expiring in 2006 and
2008, respectively.
[ ] FOR ALL NOMINEES NOMINEES:
( )BEN ZION GRUBER (CLASS A NOMINEE)
[ ] WITHHOLD AUTHORITY FOR ALL NOMINEES ( ) ADRIAN BERG (CLASS C NOMINEE)
[ ] FOR ALL EXCEPT
(See instructions below)
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
------------ "FOR ALL EXCEPT" and fill in the circle next to each nominee you
wish to withhold, as shown here: (X)
2. To increase our authorized ordinary share capital and to amend of our
Memorandum of Association and Articles of Association to reflect such
increase.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To ratify of the issuance and sale of our ordinary shares and warrants to
certain investors in a private placement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To approve the terms of procurement of a directors' and officers' liability
insurance policy.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To approve the amendment of Article 109 of our Articles of Association to
allow us to grant, in addition to the indemnification currently provided
for in Article 109(2), an undertaking to indemnify our officers and
directors in advance.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. To approve an amendment to our Memorandum of Association correcting a
misstatement of the name of our company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
7. To ratify the appointment of Kost Forer Gabbay & Kasierer, independent
certified public accountants in Israel, a member firm of Ernst & Young
Global, as our independent auditors for the year ending December 31, 2005
and to authorize the Board of Directors to determine the remuneration of
the auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method. [ ]
Signature of Shareholder__________ Date _____
Signature of Shareholder__________ Date _____
Note:Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as
such. If the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Rada Electronic Industries Ltd.
(Registrant)
By: /s/Herzle Bodinger
------------------
Herzle Bodinger, Chairman
Date: May 12, 2005