20-F













Exhibit 4.5  



This agreement is executed this                        day of July 2008



BETWEEN 



	(1)  	RADA
Electronic Industries Ltd., a company incorporated                under
the laws of the State of Israel, with offices at 7 Giborei Israel St.,
               Netanya 42504 (“RADA”); and 






	(2)  	Faith
Content Development Limited, a company organised                under the
laws of Hong Kong having its main place of business at 1/F King Fook
               Building, 30-32 Des Voeux Road C, Hong Kong(“HY”); 






RADA and HY are each referred to
herein as a “Party” and collectively referred to herein as the
“Parties”. 



RECITALS: 



WHEREAS, the Parties have
entered into a loan agreement dated 2 July 2008 (the “Loan Agreement”),
pursuant to which HY has loaned an amount of up to US$1,500,000 to RADA; 



WHEREAS, in connection with
the Loan Agreement, the Parties have agreed to establish a special purpose vehicle (the
“JV”), to identify, develop and commercialise products for
non-military/commercial use, based on technology developed by RADA; 



WHEREAS, the JV will initially
focus on the development and commercialisation for non-military/commercial use of
RADA’s Inertial Navigation Systems technology (“INS Technology”);
and 



WHEREAS, RADA has agreed to
grant HY an exclusive license (the “License”) for the development and
commercialisation of the INS Technology for non-military/commercial use and HY has agreed
to sub-license the INS Technology to the JV, all as further detailed in this agreement. 



NOW THEREFORE, the Parties
hereby agree as follows: 



	1. 	FORMATION
OF THE JV






     	1.1.	
          The Parties hereby undertake to each other that as soon as practicable following
          the date hereof, they shall establish the JV. 


          



     	1.2.	
          The purpose of the JV shall be to identify, develop and commercialise products
          for non-military/commercial use. 


          



     	1.3.	
          The JV will be in the form of a limited liability company and will be jointly
          owned by RADA and HY or another entity controlled by Mr. Howard P.L. Yeung. RADA
          shall pledge the shares it will hold in the JV against repayment of all
          outstanding amounts due under the Loan Agreement and in this regard RADA will
          take such actions and execute and deliver such instruments and documents as will
          be necessary to create a first priority fixed charge in favour of HY, in respect
          of these shares. 


          



     	1.4.	
          The jurisdiction of the JV will be determined, among other things, based on
          local tax laws that will be applicable to the JV, as well as to its
          shareholders. 


          



     	1.5.	
          The Parties will determine, based on business efficacy, whether to use one JV
          company for the development of each technology or to establish additional JV
          companies. 


          














     	2.	
          THE JV AGREEMENT 


          



The Parties hereby undertake to each
other that immediately on the formation of the JV they shall enter into a JV agreement
which shall, inter alia, contain the following terms: 



     	2.1.	
          The JV will initially focus on the development and commercialisation of the INS
          Technology for non-military/commercial use, and subject to mutual agreement and
          receipt of all applicable consents and approvals, may in the future focus on the
          commercialisation of other technologies for non-military/commercial use. Any
          products developed for the JV will be owned solely by the JV. 


          



     	2.2.	
          The JV shall develop products, for non-military or commercial use either
          directly or by subcontracting the research and development and manufacturing to
          RADA on commercial terms or by subcontracting such work to third parties or by
          licensing third parties. 


          



     	2.3.	
          RADA shall use its good faith best efforts to obtain all necessary Israeli
          Ministry of Defence (the “IMOD”) approvals on behalf of and for
          the benefit of the JV, should any be required. RADA shall use its good faith
          best efforts to obtain any other third party approvals on behalf of and for the
          benefit of the JV, including export licenses, and corporate approvals required
          to effect the transactions described in this agreement, pursuant to applicable
          law. 


          



     	2.4.	
          All specific commercial arrangements between RADA, the JV and HY (including
          agreements between the JV and HY) will be made at arms length. As long as Mr.
          Howard P.L. Yeung is RADA’s controlling shareholder, such commercial
          arrangements will be subject to the prior approval of RADA’s Audit
          Committee, Board of Directors and shareholders, pursuant to the provisions of
          the Israeli Companies Law. RADA shall use its good faith best efforts to obtain
          any corporate approvals required to effect the commercial arrangements between
          RADA, the JV and HY pursuant to applicable law. 


          



     	2.5.	
          Subject to the agreement of each Party as to specific terms, including payment
          terms, RADA’s contributions to the JV will include: products, know-how and
          ongoing technical support, development work, debugging, obtaining IMOD approvals
          (in accordance with clause 2.3 above), ensuring the JV meets Israeli export
          control requirements and product manufacture within Israel. RADA shall receive
          payment on arms-length terms, for any services that it provides to the JV,
          including any product engineering services. 


          



     	2.6.	
          Subject to the agreement of each Party as to specific terms, including payment
          terms, HY’s contributions to the JV will include: funding or procuring
          funding for the JV, management/administration, product manufacture outside
          Israel, third party product development, commercial input and connections and
          marketing. HY shall receive payment for any services that it provides to the JV,
          including managing and marketing services. 


          



     	2.7.	
          The JV will strive to pay to its shareholders dividends or other tax efficient
          payments to the extent commercially prudent. 


          



     	3.	
          THE LICENSE AND SUBLICENSE 


          



     	3.1.	
          RADA has granted HY a non-exclusive license to use non-military products and
          know-how related to the INS Technology for non-military/commercial use (the
          “License”). Pursuant to the terms of the License, in the event
          that RADA defaults on any of its obligations under the Loan Agreement, the
          License will convert to an exclusive license. The License includes the right to
          sublicense and transfer the License to the JV. HY shall sublicense the License
          to the JV (the “Sublicense”), provided that such Sublicense
          will be subject to termination in the event that RADA defaults towards HY on any
          of its obligations under the Loan Agreement. Upon satisfaction in full of all of
          RADA’s obligations and undertakings under the Loan Agreement the Sublicense
          will become irrevocable. 


          



     	3.2.	
          The License and Sublicense will allow the JV to grant non-exclusive licenses for
          the non-military/commercial use of the INS Technology to third parties, some of
          which may be affiliated to and/or funded by HY. Financial recognition may be
          provided to either of the Parties, as applicable, for the introduction of a
          licensee, as will be agreed between the Parties on a case by case basis. 


          



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     	4.	
          MISCELLANEOUS 


          



     	4.1.	
          This agreement shall be binding on and shall enure for the benefit of each
          Party’s successors and assigns. None of the Parties may, without the
          written consent of the others, assign any of their respective rights or
          obligations under this agreement provided that HY shall be permitted to assign
          or transfer any of its rights or obligations hereunder to an entity controlled
          by, controlling or under common control with the HY. 


          



     	4.2.	
          No purported variation of this agreement shall be effective unless made in
          writing and signed by all the parties. 


          



     	4.3.	
          Each of the Parties shall be responsible for its own costs incurred in
          connection herewith and the matters contemplated in this agreement. 


          



     	4.4.	
          This agreement may be entered into in any number of counterparts and by the
          Parties to it on separate counterparts each of which when executed and delivered
          shall be an original but all the counterparts shall together constitute one and
          the same instrument. 


          



     	4.5.	
          The Parties agree that this agreement is intended to govern the entire range of
          the relations between them pertaining to the subject matter hereof. The Parties
          recognise, however, that it is impractical at this stage to exhaustively and
          definitively identify all issues arising out or connected with the execution and
          implementation of this agreement, and the Parties accordingly agree that where
          during the formation of the JV and the drafting and execution of the JV
          agreement, matters are from time to time identified as requiring settlement or
          agreement, or where matters touched upon in this agreement remain to be
          clarified or expanded, the Parties will forthwith negotiate in good faith in
          order to reach settlement or agreement on such matter or matters. 


          



     	5.	
          GOVERNING LAW AND JURISDICTION 


          



     	5.1.	
          This agreement shall be governed by the laws of the State of Israel to the
          exclusion of the conflict if law rules and all disputes shall, if not resolved
          through good faith discussion, be submitted to the courts of Tel Aviv-Jaffa,
          Israel, which courts shall have exclusive jurisdiction on all disputes arising
          with respect to this agreement. 


          



IN WITNESS
whereof the Parties have executed this agreement on the day and year first before written. 



	 	 
	 	 
	 	 
	 	 
	 	 
	For: RADA Electronics Industries Ltd.  	For: Faith Content Development Limited  
	  
	By: ________________ 	By: ________________ 
	  
	Name: ______________ 	Name: ______________ 
	  
	Title:________________ 	Title:________________ 






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