M-SYSTEMS FLASH DISKPIONEERS LIMITED

 

ORDINARY SHARESPURCHASE AGREEMENT

 

May 1, 2003

 

To: Dr. Hans Wagner

 

Dear Dr. Wagner,

 

M-Systems FlashDisk Pioneers Limited (the "Company"), proposes to sell to you (the"Purchaser") 500,000 shares (collectively, the "Shares") of theCompany`s Ordinary Shares, nominal value 0.001 New Israeli Shekel per share, ata purchase price per share of $8.21 (based on the lowest price of the Company`sOrdinary Shares as quoted on the date hereof on NASDAQ) for an aggregate investmentamount of $4,105,000 (the "Purchase Price"). In connection with and inconsideration for the sale and purchase of the Shares, the Company and thePurchaser agree to abide by the mutual covenants contained herein. 

 

1.**  **Saleand Purchase of the Shares. On the basis of the representations, warrantiesand agreements contained in, and subject to the terms and conditions of thisShare Purchase Agreement (the "Agreement"), and after receiving theapproval of both the Audit Committee and the Board of Directors of the Company,the Company agrees to sell to the Purchaser, and the Purchaser agree topurchase from the Company, the Shares.  

 

2.  Closing; Delivery and Payment; Stock Certificate.The closing of the transactions contemplated hereby (the "Closing") shall takeplace on a date to be agreed by the Company and the Purchaser, which will notbe later than 60 days from the date hereof. At the Closing, the Purchaser willpay to the Company the Purchase Price and the Company shall deliver the Sharesto the Purchaser. Payment of the Purchase Price shall be made as designated bythe Company. The Company shall issue to the Purchaser, as soon as practicableafter the Closing, a stock certificate (bearing the legend set forth in Section5(d) below) covering the Shares purchased hereunder.

 

3.  Offeringof Shares.  The Shares will be offered and sold to the Purchaserwithout being registered under the Securities Act of 1933, as amended (the"Securities Act"), in reliance on the exemption therefrom provided bySection 4(2) of the Securities Act.  

 

4.  Representations and Warranties of the Company.  TheCompany hereby represents and warrants to the Purchaser as follows:

 

(a)  The Company has been duly incorporated and is validlyexisting under the laws of the State of Israel. 

 

(b)  All necessary corporate action has been duly and validlytaken to authorize the execution, delivery and performance of this Agreement bythe Company.  This Agreement has been duly and validly authorized,executed and delivered by the Company and constitutes the legal, valid andbinding obligation of the Company enforceable against the Company in accordancewith its terms, except as the enforceability thereof may be limited bybankruptcy, insolvency, reorganization, moratorium or other similar lawsaffecting the enforcement of creditors' rights generally and by generalequitable principles.  

 

5.**  **Representationsand Warranties of the Purchaser.  The Purchaser represents andwarrants to Company that:

 

(a)  ThisAgreement constitutes a valid and legally binding obligation of the Purchaser,enforceable against the Purchaser in accordance with its terms, except as theenforceability thereof may be limited by bankruptcy, insolvency,reorganization, moratorium or other similar laws affecting the enforcement ofcreditors' rights generally and by general equitable principles.

 

(b)  TheShares to be received by the Purchaser will be acquired for investment for thePurchaser's own account, and not with a view to the distribution of any partthereof.  The Purchaser has no present intention of selling, grantingany participation in, or otherwise distributing the same.  ThePurchaser does not have any contract, undertaking, agreement or arrangementwith any person to sell, transfer, or grant participation to such person or toany third person, with respect to any of the Shares.

 

(c)  ThePurchaser understands that the Shares may not be sold, transferred, orotherwise disposed of without registration under the Securities Act, or anexemption therefrom, and that in the absence of an effective registrationstatement covering the Shares or an available exemption from registration underthe Securities Act, the Shares must be held indefinitely.  In theabsence of an effective registration statement covering the Shares, thePurchaser will sell, transfer, or otherwise dispose of the Shares only in amanner consistent with its representations and agreements set forth herein.

 

(d)  The Purchaser understands that until the Shares areregistered under the Securities Act, the certificates evidencing the Shares maybear substantially the following legends:

 

(i) "THESECURITIES EVIDENCED HEREBY WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROMREGISTRATION UNDER SECTION 5 OF THE SECURITIES ACT OF 1933 (THE"SECURITIES ACT") AND APPLICABLE STATE LAW, AND MAY NOT BE OFFERED,SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR ANAPPLICABLE EXEMPTION THEREFROM (IN EACH CASE BASED UPON DOCUMENTATIONSATISFACTORY TO THE COMPANY, INCLUDING AN OPINION OF COUNSEL SATISFACTORY TO ITTHAT REGISTRATION UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE LAWS IS NOTREQUIRED) OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THESECURITIES ACT."

 

(ii) Any legendrequired by any applicable law.

 

(e)  ThePurchaser is an "accredited investor" as such term is defined in Rule501(a)(1) promulgated pursuant to the Securities Act.

 

(f)  ThePurchaser's financial condition is such that it is able to bear the risk ofholding the Shares for an indefinite period of time.

 

(g)  ThePurchaser has such knowledge and experience in financial and business mattersand in making high risk investments of this type and is capable of evaluatingthe merits and risks of the purchase of the Shares.

 

(h) ThePurchaser acknowledges that the Company will rely upon the truth and accuracyof the foregoing acknowledgments, representations and agreements and agreesthat, if any of the acknowledgments, representations and agreements are nolonger accurate, it shall promptly notify the Company, and the Companyacknowledges that the representations and the agreements of the Purchaserherein are without prejudice to the representations and warranties of theCompany contained in Section 4 above. 

 

6.  Miscellaneous.  

 

(a) This Agreement has been and is made for the benefit of the Purchaserand the Company, and their respective successors and assigns, and no otherperson shall acquire or have any right under or by virtue of this Agreement.  

 

(b) All notices and communications hereunder shall be in writing andmailed or delivered or by telephone or telegraph if subsequently confirmed inwriting, (a) if to the Purchaser, to 8 Devonhurs Place, Heathfield Terrace,London W4 4JD, UK and (b) if to the Company, to 7 Atir Yeda St., Kfar Saba, Israel44425 (Attn: Ronit Maor, CFO) 

** **

(c) This Agreement shall be governed by and construed in accordance withthe laws of the State of Israel, without regard to any conflicts or choice oflaw principles which would cause the application of the internal laws of anyjurisdiction other than the State of Israel.

 

(d) ThisAgreement may be signed in any number of counterparts, each of which shall bean original, with the same effect as if the signatures thereto and hereto wereupon the same instrument.

** **

**IN WITNESS WHEREOF**, theparties have caused this Agreement to be duly executed: 

 
| M-Systems  Flash Disk Pioneers Limited | Dr.  Hans Wagner |
|----------------------------------------|------------------|
| By:_______________                     | _______________  |
| Its:________________                   |             |

 

 

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