exv10w1



 







Exhibit 10.1




EXHIBIT A




FORM OF VOTING UNDERTAKING




     This VOTING UNDERTAKING (this “Agreement”) dated as of July 30, 2006, is entered into among
SanDisk Corporation, a Delaware corporation (the “Parent”), and the undersigned shareholder (the
“Shareholder”) of msystems Ltd., an Israeli company (the “Company”). Except as otherwise provided
herein, capitalized terms that are used but not otherwise defined herein shall have the meanings
assigned to them in the Merger Agreement (as defined below).



RECITALS




     A. Contemporaneously with the execution of this Agreement, the Company, the Parent and Project
Desert Ltd. are entering into an Agreement and Plan of Merger of even date herewith (the “Merger
Agreement”), providing for, among other things, the merger of Merger Sub with and into the Company,
pursuant to which Merger Sub will cease to exist and the Company will become a wholly-owned
subsidiary of the Parent (the “Merger”); and



     B. As a condition to their willingness to enter into the Merger Agreement, the Parent and
Merger Sub have required that the Shareholder enter into this Agreement.



AGREEMENT




     NOW, THEREFORE, in order to induce the Parent and Merger Sub to enter into the Merger
Agreement, the parties hereto, intending to be legally bound, agree as follows:



     1. Representations of Shareholder. The Shareholder represents and warrants to the
Parent that:



     (a) As of the date hereof, the Shareholder lawfully owns beneficially (as such term is defined
in Rule 13d-3 of the Exchange Act)) or of record each of the Ordinary Shares, par value NIS 0.001
per share, of the Company (the “Company Shares”), set forth on Schedule 1(a) (the “Shares”), free
and clear of all Liens (other than as set forth on Schedule 1(a) and proxies and other restrictions
in favor of the Parent and Merger Sub pursuant to this Agreement and except for such transfer
restrictions of general applicability as may be provided under securities laws, including the
Securities Act and the “blue sky” laws of the various states of the United States) and, except for
this Agreement and as set forth on Schedule 1(a), there are no options, warrants or other rights,
agreements, arrangements or commitments of any character to which the Shareholder is a party
relating to the pledge, disposition or Voting (as defined below) of any shares of capital stock of
the Company and there are no Voting trusts or Voting agreements with respect to such Shares;



     (b) as of the date hereof, other than as set forth on Schedule 1(a), the Shareholder does not
beneficially own (as such term is used in Rule 13d-3 of the Exchange Act, but ignoring the 60-day
limitation set forth therein) any Company Shares other than the Shares and does not have any
options, warrants or other rights to acquire any additional shares of capital stock of the Company
or any security exercisable for or convertible or exchangeable into shares of capital stock of the
Company;



 









 





     (c) the Shareholder has full power and authority and has taken all actions necessary to enter
into, execute and deliver this Agreement and to perform fully the Shareholder’s obligations
hereunder;



     (d) this Agreement has been duly executed and delivered by the Shareholder and constitutes the
legal, valid and binding obligation of the Shareholder enforceable against the Shareholder in
accordance with its terms, subject to the Bankruptcy and Equity Exception;



     (e) other than filings under the Exchange Act and other than such as, if not made, obtained or
given, would not reasonably be expected to prevent or materially delay the performance by
Shareholder of any of its obligations under this Agreement, no notices, reports or other filings
are required to be made by the Shareholder with, nor are any consents, registrations, approvals,
permits or authorizations required to be obtained by the Shareholder from, any Governmental Entity
or any other Person or entity, in connection with the execution and delivery of this Agreement by
the Shareholder;



     (f) the execution, delivery and performance of this Agreement by the Shareholder does not, and
the consummation by the Shareholder of the transactions contemplated hereby will not, result in a
violation or breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation, modification or acceleration)
(whether after the giving of or the passage of time of both) under any contract, agreement,
arrangement or commitment to which the Shareholder is a party or which is binding on it, him or her
or its, his or her assets and will not result in the creation of any Lien on any of the assets or
properties of the Shareholder (other than the Shares), except for such violations, breaches,
defaults, terminations, cancellations, modifications, accelerations or Liens as would not
reasonably be expected to prevent or materially delay the performance by Shareholder of any of its
obligations under this Agreement; and



     (g) upon delivery by the Shareholder to Parent of the Profit pursuant to Section 6, Parent
will receive good and valid title to the assets constituting such Profit, free and clear of all
security interests, liens, claims, pledges, options, rights or first refusal, agreements, charges
and other encumbrances of any nature whatsoever (except any security interest created by Parent).



     2. Voting. From the date hereof until any termination of this Agreement in accordance
with its terms, Shareholder hereby agrees that at any meeting of the shareholders of the Company,
however called, and in any written action by consent of shareholders of the Company, Shareholder
shall cause to be counted as present thereat for purposes of establishing a quorum and shall Vote,
or cause to be Voted, any and all of the Shares (or, with respect to New Shares (as defined in
Section 3), owned hereafter) as follows:



     (a) FOR the adoption and approval of the Merger Agreement and the Transactions contemplated
thereby, including the Merger;



     (b) AGAINST any action or agreement that would compete with, or materially impede, or
interfere with or that would reasonably be expected to discourage the Transactions; or inhibit the
timely consummation of the Transactions, and



     (c) except for the Merger, AGAINST any Acquisition Proposal, or merger, consolidation,
business combination, reorganization, recapitalization, liquidation or sale or



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transfer of any material assets of the Company or its Subsidiaries not permitted pursuant to
Section 4.1 of the Merger Agreement.


For purposes of this Agreement, “Vote” includes voting in person or by proxy in favor of or against
any action, otherwise consenting or withholding consent in respect of any action. “Voting” shall
have a correlative meaning.




     3. Proxy. In furtherance of the Shareholder’s agreement in Section 2 above, the
Shareholder hereby appoints Eli Harari and Charles Van Orden and each of them as his, her or its
proxies, with power of substitution and resubstitution, to Vote all of the Shares and all Company
Shares which the Shareholder purchases or otherwise of which the Shareholder acquires beneficial
ownership (as such term is used in Rule 13d-3 of the Exchange Act, but ignoring the 60-day
limitation set forth therein, and excluding any Company Shares that may be deemed to be
beneficially owned by the Shareholder as a result of the grant to the Shareholder of proxies in
connection with the Company General Meeting) after the execution of this Agreement (“New Shares”)
in the manner described by Section 2 above.



     This proxy (this “Proxy”) applies to any Vote (i) at any meeting of the shareholders of the
Company, and any adjournment or postponement thereof, at which the matters described above are
considered, including the Company General Meeting, and (ii) in connection with any written consent
of the shareholders of the Company. THIS PROXY IS COUPLED WITH AN INTEREST, REVOKES ALL PRIOR
PROXIES GRANTED BY THE SHAREHOLDER AND IS IRREVOCABLE (to the fullest extent permitted by Israeli
law and the Company Charter Documents) until such time as this Agreement terminates in accordance
with its terms, at which time this Proxy shall expire.



     4. No Voting Trusts. From the date hereof until any termination of this Agreement in
accordance with its terms, the Shareholder will not, nor will the Shareholder permit any entity
under the Shareholder’s control to, deposit any of the Shares or New Shares in a Voting trust or
subject any of the Shares or New Shares to any arrangement with respect to the Voting of such
Shares or New Shares other than agreements entered into with the Parent.



     5. No Proxy Solicitations. From the date hereof until any termination of this
Agreement in accordance with its terms, the Shareholder will not, nor will the Shareholder permit
any entity under the Shareholder’s control, to:



     (a) solicit, initiate, or take an action intended to encourage or induce the making,
submission or announcement of any Acquisition Proposal;



     (b) take an action intended to, directly or indirectly, encourage, or initiate or cooperate
in, a shareholders’ Vote or action by consent of the Company’s shareholders in opposition to or in
competition with the consummation of the Transactions, including the Merger; or



     (c) become a member of a “group” (as such term is used in Section 13(d) of the Exchange Act)
with respect to any voting securities of the Company for the purpose of opposing or competing with
the consummation of the Transactions, including the Merger.



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     6. Payment with Respect to Certain Profits. If (a) (x) after the date hereof the
Merger Agreement shall have been terminated (i) pursuant to Section 7.1(b) of the Merger Agreement
under the circumstances described in the second proviso to Section 7.1(b) of the Merger Agreement,
(ii) pursuant to Section 7.1(d) of the Merger Agreement under the circumstances described in the
proviso to Section 7.1(d) of the Merger Agreement, (iii) pursuant to Section 7.1(f) of the Merger
Agreement under the circumstances described in the second proviso to Section 7.1(f) of the Merger
Agreement, (iv) pursuant to Section 7.1(h) of the Merger Agreement or (v) pursuant to Section
7.1(i) of the Merger Agreement (clauses (i) through (iii) each a “Tail Termination Event,” and
clauses (iv) and (v) each a “Non-Tail Termination Event”), and (y) as a result of any such
termination descried in clauses (i) through (v), a Termination Fee shall have become payable by the
Company to the Parent pursuant to Section 7.1(b), Section 7.1(d), Section 7.1(f), Section 7.1(h) or
Section 7.1(i) of the Merger Agreement (in the case of Section 7.1(b), 7.1(d) or 7.1(f), a “Tail
Triggering Event”), and (b) in the case of a Non-Tail Termination Event, concurrently with or at
any time within 12 months after the date of such termination (such 12-month period being referred
to herein as the “Covered Period”), the Company consummates an Acquisition Transaction with an
Person or group (other than an Affiliate of Parent) (a “Non-Tail Triggering Event”), then the
Shareholder shall, within five Business Days after the consummation of such Tail Triggering Event
or Non-Tail Triggering Event, as applicable, if such Tail Termination Event or Tail Triggering
Event results in the payment of consideration to the Shareholder pursuant to an Acquisition
Transaction, pay to the Parent an amount equal to 50% of the aggregate Profit (as hereinafter
defined) received by the Shareholder, if any, in such Acquisition Transaction. As used in this
Section, the “Profit” shall be calculated on a per Share basis and shall mean an amount equal to
the excess, if any, of (A) the Current Market Value attributable to each Share upon consummation of
the applicable Acquisition Transaction over (B) the product of (1) the closing sale price for
Parent Common Stock on the Nasdaq National Market on the date of the relevant termination of the
Merger Agreement multiplied by (2) the Exchange Ratio (as adjusted to reflect any stock dividend,
split-up, merger, recapitalization, combination, exchange of shares or similar transaction after
the date hereof). Such 50% of the Profit received by the Shareholder shall be paid to the Parent
in the same form and in the same proportion as was received by the Shareholder, and the value of
any non-cash consideration shall be its Current Market Value. The “Current Market Value” shall
equal (x) with respect to securities traded on any national securities exchange or by any
registered securities association, a value based on the closing sale price or asked price for such
securities on their principal trading market on the date of the Tail Triggering Event or Non-Tail
Triggering Event, as applicable, and (y) with respect to other consideration, the value ascribed to
such consideration by the proponent of such Acquisition Transaction, or if no such value is
ascribed, a value determined in good faith by the Board of Directors of Parent.



     7. Transfer and Encumbrance. On or after the date hereof and during the term of this
Agreement, the Shareholder agrees not to (a) directly or indirectly, sell, offer, contract or grant
any option to sell (including without limitation any short sale), pledge, transfer, establish an
open “put equivalent position” within the meaning of Rule 16a-1(h) under the Exchange Act or
otherwise dispose of any of the Shares or the New Shares, (b) publicly announce an intention to do
any of the foregoing, or (c) enter into any swap or other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic consequences of ownership of
any Shares or New Shares, whether any such swap or transaction is to be settled by delivery of
Shares, New Shares or other securities, in cash or otherwise encumber any of the Shares or New
Shares. Notwithstanding the foregoing, the Shareholder may (i) sell Shares or New Shares



4









 







pursuant to the terms of a trading plan adopted pursuant to Rule 10b5-1 under the Exchange Act
in effect prior to the date hereof, and (ii) sell New Shares acquired pursuant to the exercise of
Company Stock Options after the date hereof consistent with the Shareholder’s past practice
relating to the sale of Company Shares after exercise of Company Stock Options.



     8. Shareholder Capacity. To the extent that the Shareholder is an officer or director
of the Company, nothing in this Agreement shall be construed as preventing or otherwise affecting
any actions taken by the Shareholder in his or her capacity as an officer or director of the
Company or any of its Subsidiaries or from fulfilling the obligations of such office (including the
performance of obligations required by the fiduciary duties of the Shareholder acting solely in his
or her capacity as an officer or director) , including, without limitation, participating in any
such capacity in any discussions or negotiations in accordance with Section 5.6 of the Merger
Agreement.



     9. Specific Performance. The parties acknowledge that there may be no adequate remedy
at law for a breach of this Agreement and that money damages may not be an appropriate remedy for
breach of this Agreement. Therefore, the parties agree that each party has the right to seek
injunctive relief and specific performance of this Agreement in the event of any breach hereof in
addition to any rights it may have for damages. The remedies set forth in this Section 9 are
cumulative and shall in no way limit any other remedy any party hereto has at law, in equity or
pursuant hereto.



     10. Entire Agreement; Amendment; Waiver. This Agreement (including the schedule
hereto) contains the entire agreement between the parties hereto with respect to the subject matter
hereof and thereof and supersedes all prior agreements and understandings, oral or written, with
respect to such matters. Any provision of this Agreement may be amended or waived if, and only if,
such amendment or waiver is in writing and signed, in the case of an amendment, by the parties, or
in the case of a waiver, by the party against whom the waiver is to be effective. No failure or
delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.



     11. Notices. All notices, claims, demands and other communications hereunder shall be
in writing and shall be deemed given when delivered personally or by internationally recognized
overnight courier (providing proof of delivery), or sent via telecopy (receipt confirmed) to the
parties at the following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):



	 	 	 	 	 	 	 	 	 
	 	 	To the Parent:
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Sandisk Corporation
	 	 	 	 	601 McCarthy Boulevard
	 	 	 	 	Milpitas, CA 95035
	 	 	 	 	Telecopy No.: + 1 408 801 8504
	 	 	 	 	Attention: General Counsel






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	 	 	with a copy (which shall constitute notice) to :
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	O’Melveny & Myers LLP
	 	 	 	 	2765 Sand Hill Road
	 	 	 	 	Menlo Park, California 94025
	 	 	 	 	USA
	 	 	 	 	Telecopy No.: +1 650.473.2601
	 	 	 	 	Attention:	 	Timothy R. Curry
	 

	 	 	 	 	 	 	 	Steve L. Camahort
	 
	 	 	 	 	 	 	 	 
	 	 	and a copy (which shall not constitute notice) to :
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Naschitz, Brandes & Co.
	 	 	 	 	 	 	5 Tuval Street
	 	 	 	 	 	 	Tel-Aviv 67897
	 	 	 	 	 	 	Israel
	 	 	 	 	 	 	Telecopy No.: +972.3.623.5106
	 	 	 	 	 	 	Attention: Sharon A. Amir






     If to the Shareholder, to the address or facsimile number set forth for the Shareholder on the
signature page hereof:



	 	 	 	 	 	 	 
	 	 	with a copy to :
	 
	 	 	 	 	 	 
	 	 	 	 	Weil, Gotshal & Manges LLP
	 	 	 	 	767 Fifth Avenue
	 	 	 	 	New York, New York 10153 USA
	 	 	 	 	Telecopy No.: +1 212 310 8007
	 

	 	 	 	Attention:
	 	Howard Chatzinoff
	 

	 	 	 	 	 	Malcolm Landau
	 
	 	 	 	 	 	 
	 

	 	 	 	and:	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	Meitar Liquornik Geva & Leshem Brandwein
	 	 	 	 	16 Abba Hillel Silver Rd.
	 	 	 	 	Ramat Gan 52506, Israel
	 	 	 	 	Telecopy No.: +972 3 610 3111
	 	 	 	 	Attention: Dan Geva






     12. Miscellaneous.



     (a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY OTHER CHOICE OF LAW OR
CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR OTHERWISE) THAT WOULD CAUSE
THE APPLICATION OF THE LAWS OF ANY JURISDICTION, OTHER THAN THE STATE OF NEW YORK; PROVIDED,
HOWEVER, THAT



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PROVISIONS THAT ARE REQUIRED UNDER ISRAELI LAW TO BE GOVERNED BY ISRAELI LAW WILL BE SO
GOVERNED.



     (b) Venue; Waiver of Jury Trial. In addition, each of the parties (a) consents to
submit itself to the personal jurisdiction of any Federal court (and if such Federal court finds
that it can not exercise jurisdiction any Delaware state court) sitting in Newcastle County in the
State of Delaware and higher courts sitting in other locations with jurisdiction with respect to
any appeals from such courts, if any dispute arises out of this Agreement, (b) agrees that it will
not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from
any such court, including (i) any claim that it is not personally subject to the jurisdiction of
the above-named courts for any reason other than the failure to lawfully serve process, (ii) that
it or its property is exempt or immune from jurisdiction of any such court or from any legal
process commenced in such courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise), (iii) to the
fullest extent permitted by applicable law, that (1) the suit, action or proceeding in any such
court is brought in an inconvenient forum, (2) the venue of such suit, action or proceeding is
improper and (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such
courts and (c) agrees that it will not bring any action relating to this Agreement in any court
other than a Federal court (or if such Federal court finds that it can not exercise jurisdiction)
such Delaware state court sitting in Newcastle County in the State of Delaware. EACH OF THE PARENT
AND THE SHAREHOLDER IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT
OF OR RELATING TO THIS AGREEMENT, THE NEGOTIATION OR ENFORCEMENT HEREOF. Each party to this
Agreement hereby agrees that in connection with any such action process may be served in the same
manner as notices may be delivered under Section 11 and irrevocably waives any defenses or
objections it may have to service in such manner



     (c) Severability. If any term or other provision of this Agreement or the application
hereof is invalid, illegal or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in full force and
effect. If the final judgment of a court of competent jurisdiction or other authority declares
that any term or provision hereof is invalid, void or unenforceable, the parties agree that the
court making such determination shall have the power to and shall, subject to the discretion of
such court, reduce the scope, duration, area or applicability of the term or provision, to delete
specific words or phrases, or to replace any invalid, void or unenforceable term or provision with
a term or provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision.



     (d) Binding Effect and Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but, except as otherwise specifically provided herein, neither
this Agreement nor any of the rights, interests or obligations of the parties hereto may be
assigned or delegated by either of the parties without prior written consent of the other.



     (e) Counterparts. This Agreement may be executed in one or more counterparts, all of
which shall be considered (whether delivered by telecopy or otherwise) one and the same agreement
and shall become effective when one or more counterparts have been signed by each




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of the parties
and delivered to the other parties, it being understood and agreed that all parties need not sign
the same counterpart.



     (f) Termination. This Agreement shall terminate upon the earliest to occur of (i) the
Closing and (ii) the termination of the Merger Agreement in accordance with its terms; provided
that, if a Non-Tail Termination Event or a Tail Termination Event shall have occurred, then
Sections 6, 9, 10, 11 and 12 of this Agreement shall survive such termination until the later of
(x) in the event of a Non-Tail Termination Event, the expiration of the Covered Period and (y) the
completion by Shareholder of its obligations pursuant to Section 6, whereupon such Sections shall
also terminate; provided, further, that termination of this Agreement shall not relieve any party
from breach of its obligations hereunder prior to such termination.



     (g) Further Assurances. Each party hereto shall execute and deliver such additional
instruments and other documents and shall take such further actions as may be necessary or
desirable to effectuate, carry out and comply with all of the terms of this Agreement and the
transactions contemplated hereby.



     (h) Headings. The heading references herein hereof are for convenience purposes only,
and shall not be deemed to limit or affect any of the provisions hereof.



     (i) THIRD PARTY BENEFICIARIES. NOTHING IN THIS AGREEMENT, EXPRESS OR IMPLIED, IS
INTENDED TO CONFER UPON ANY PERSON OTHER THAN THE PARENT, THE SHAREHOLDER AND THEIR RESPECTIVE
SUCCESSORS AND ASSIGNS, ANY RIGHTS OR REMEDIES UNDER OR BY REASON OF THIS AGREEMENT.



     (j) Rules of Construction. The parties hereto agree that they have been represented
by counsel during the negotiation and execution of this Agreement and, therefore, waive the
application of any law, regulation, holding or rule of construction providing that ambiguities in
an agreement or other document will be construed against the party drafting such agreement or
document. Section 8.6 of the Merger Agreement shall be applicable to this Agreement as if set forth
herein.



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EXHIBIT A




     The parties hereto have executed and delivered this Agreement as of the date first written
above.



	 	 	 	 	 	 	 
	 	 	SANDISK CORPORATION
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	SHAREHOLDER
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Address:	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Facsimile:	 	 







 









 








Schedule 1(a)




Shareholder: 




Shares Held of Record:




Shares Beneficially Owned:




Options and Other Rights:




Liens:




1(a)