CONSOLIDATED SHAREHOLDERS AGREEMENT
BY AND AMONG
THE ISRAEL CORPORATION,
SANDISK CORPORATION, ALLIANCE SEMICONDUCTOR CORPORATION
AND
MACRONIX INTERNATIONAL CO., LTD.
AGREEMENT (the "Agreement"), dated as of January 18, 2001, by and among the
Israel Corporation ("TIC"), SanDisk Corporation ("SanDisk"), Alliance
Semiconductor Corporation ("Alliance"), and Macronix International Co., Ltd.
(togather with its affiliates referred to as "Macronix").
RECITALS
WHEREAS, SanDisk has entered into a share purchase agreement (the "SanDisk
Share Purchase Agreement") with Tower Semiconductor Ltd. (the "Company") dated
July 4, 2000; and
WHEREAS, Alliance has entered into a share purchase agreement with the
Company dated August 29, 2000 (the "Alliance Share Purchase Agreement"); and
WHEREAS Macronix has entered into a share purchase agreement with the
Company dated December 12, 2000 (the "Macronix Share Purchase Agreement"); and
WHEREAS TIC has entered into a share purchase agreement with the Company dated
December 12, 2000; and
WHEREAS on August 13, 2000, TIC and SanDisk entered into a shareholders
agreement (the "Shareholders Agreement"); and
WHEREAS on August 29, 2000, TIC and Alliance entered
into the Shareholders Agreement; and
WHEREAS Macronix, SanDisk, Alliance and TIC have agreed to enter into this
Agreement.
1. DEFINITIONS
The following terms will have the meaning ascribed to them in this paragraph
when used in this Agreement:
(1) "Agreement" - as defined prior to the Recitals of
this Agreement.
(2) "AFFILIATE" means any other person that directly, or indirectly
through one or more intermediaries, controls, is controlled by, or is
under common control with, such specified Person. For the purposes of
this definition, "person" shall mean any individual, partnership,
firm, corporation, association, trust, unincorporated organization or
other entity.
(3) "Alliance" - as defined prior to the Recitals of this
Agreement.
(4) "Company" - as defined in the Recitals of this
Agreement.
(5) "Macronix" - as defined prior to the Recitals of this
Agreement.
(6) "SanDisk" - as defined prior to the Recitals of this
Agreement.
(7) "SanDisk Share Purchase Agreement" - as defined in the Recitals of
this Agreement.
(8) "TIC" - as defined prior to the Recitals of this
Agreement.
(9) "Shares" - Ordinary Shares, par value NIS 1.00 per share, of the
Company duly authorized and issued by the Company.
(A) "Permitted Transferee" - any entity at least the
majority of the voting rights in which is held
by the transferring shareholder, provided that
(i) such entity is or becomes a party to this
Agreement and agrees in writing to be bound by
all the provisions of this Agreement, and (ii)
such transferring shareholder shall not be
relieved of its obligations hereunder.
(B) "Equity Securities" means any securities having
voting rights in the election of the Board of
Directors of the Company not contingent upon
default, or any securities evidencing an
ownership interest in the Company, or any
securities convertible into or exercisable for
any shares of the foregoing, or any agreement or
commitment to issue any of the foregoing.
(C) "SanDisk Share Purchase Agreement" shall have the meaning ascribed to
it in the recitals to this Agreement.
(D) "Shareholders" means SanDisk, TIC, Alliance, Macronix and all their
Permitted Transferees.
(E) "Major Holder" means any Shareholder holding at least 5% of the
Company's outstanding Equity Securities and which is a party to this
Agreement. For the purpose of this definition the holdings of a
Shareholder and all its Permitted Transferees shall be calculated
together.
(F) "Closing" as defined as the closing referred to in each of the share
purchase agreements entered into by the Company with each of SanDisk,
Alliance, Macronix and TIC.
2. BOARD OF DIRECTORS
3. Each Shareholder hereby agrees to
attend and vote (or cause to be voted)
at general meetings of shareholders of
the Company all of its Shares (i) to
vote for the election of the following
persons to the Board of Directors of
the Company and for any other
resolution which is necessary in order
to facilitate such election and (ii) to
vote against the election of any other
person to the Board of Directors of the
Company or against any resolution the
effect of which is to prevent or impede
such election, other than in accordance
with this Agreement:
4. From the Closing and thereafter:
(1) 1 nominee designated by SanDisk, provided that in the
event that, from the date on which
SanDisk exercises the Series A-3
Additional Purchase Obligations and
thereafter, SanDisk and its Permitted
Transferees hold together in the
aggregate less than 5% of the
outstanding Shares, then SanDisk shall
not be entitled to designate any
nominee, provided further that if
subsequently SanDisk and its Permitted
Transferees become together the
holders of 5% of the outstanding
Shares then SanDisk shall again be
entitled to designate a nominee.
(2) 1 nominee designated by Alliance, provided that in
the event that, from the date on which
Alliance exercises the Series A-3
Additional Purchase Obligations and
thereafter, Alliance and its Permitted
Transferees hold together in the
aggregate less than 5% of the
outstanding Shares, then Alliance
shall not be entitled to designate any
nominee, provided further that if
subsequently Alliance and its
Permitted Transferees become together
the holders of 5% of the outstanding
Shares then Alliance shall again be
entitled to designate a nominee.
(3) 1 nominee designated by Macronix, provided that in
the event that, from the date on which
Macronix exercises the Series A-3
Additional Purchase Obligations and
thereafter, Macronix and its Permitted
Transferees hold together in the
aggregate less than 5% of the
outstanding Shares, then Macronix
shall not be entitled to designate any
nominee, provided further that if
subsequently Macronix and its
Permitted Transferees become together
the holders of 5% of the outstanding
Shares then Macronix shall again be
entitled to designate a nominee.
(4) 2 nominees designated by TIC, provided that, (i) in
the event that TIC and its Permitted
Transferees hold together in the
aggregate less than 10% of the
outstanding shares, then TIC shall be
entitled to designate only one
nominee, provided further that if
subsequently TIC and its Permitted
Transferees become together the
holders of 10% of the outstanding
shares then TIC shall again be
entitled to designate two nominees and
(ii) in the event that TIC and its
Permitted Transferees hold together in
the aggregate less than 5% of the
outstanding shares, then TIC shall not
be entitled to designate any nominee,
provided further that if subsequently
TIC and its Permitted Transferees
become together the holders of 5% of
the outstanding shares then TIC shall
again be entitled to designate a
nominee.
(5) 2 External Directors (as defined in the Israeli
Companies Law - 1999 (the "Companies
Law")) recommended by the Board of
Directors of Tower, assuming the
Company is obliged under the Companies
Law to nominate External Directors.
(6) 1 other person who shall be a member of the Company's
management, including either of the
Company's co-CEOs, provided that it is
understood that the two co-CEOs may
alternate service on the Company's
Board of Directors at intervals to be
determined by the Board (excluding the
management director). In the event
that the two co-CEOs do rotate service
on the Board, the parties agree to
cause the CEO not serving to have
observer status.
(7) Such other directors as agreed upon between TIC and
SanDisk, Alliance and Macronix.
(8) A representative of TIC (who will be one of the nominees
under clause (d) above) as Chairman of the Board.
5. Each Shareholder further agrees
that in the event that any
party that is entitled to
nominate a director under this
Agreement decides to terminate
or replace such director, then
the Shareholders shall vote (or
cause to be voted) all of his
or its Shares to cause the
termination of office or the
replacement of such director,
in accordance with the decision
of the Shareholder who
nominated such director
pursuant to the provisions of
this Section 2.1, and cause, if
required, a general meeting of
shareholders of the Company to
be held for such purpose.
2.2 Each of TIC, SanDisk, Alliance and Macronix undertakes upon itself,
for as long as it is entitled to nominate a director to the Board of
Directors, as specified above, not to nominate to the Board of
Directors of the Company a director who is an employee or consultant
of the Company.
2.3 In the event that the number of nominees to the Board of Directors
which a party is entitled to nominate is decreased or terminated as
per Section 2.1 above, the respective Shareholder who nominated such
director agrees to lawfully cause such director to immediately resign
from the Board of Directors and in the absence of such resignation
within 24 hours of such decrease or termination, all the Shareholders
agree to take such action as is necessary to cause a general meeting
of shareholders of the Company to be assembled, and to vote all their
Shares in order to remove such director from the Board of Directors.
In each such case the number of members of the Board of Directors
shall decrease accordingly.
3. RESTRICTIONS ON TRANSFER OF EQUITY
---------------------------------------------
Securities.
3.1 From the date of this Agreement and until the end of three years from
the Closing (the "Initial Restricted Period") neither TIC, SanDisk,
Alliance, Macronix and any of their Permitted Transferees shall sell,
assign, transfer, pledge, hypothecate, or otherwise encumber or
dispose of in any way (hereinafter referred to as "Transfer"), all or
any part of or any interest in the Equity Securities now or hereafter
owned or held by such parties.
3.1.1Notwithstanding Section 3.1 hereof, during the Initial
Restricted Period each Major Holder and any of its Permitted
Transferees, to the extent it holds in excess of 2.7 million
Shares, may transfer up to an aggregate of 1,200,000 Shares in
excess of its holding of 2.7 million shares, subject to the
following restrictions: (a) any Transfer made other than in
accordance with clause (b) shall be effected only after
compliance with Sections 4, 5 and 6 hereof; and (b) any Transfer
made by a sale of Shares in the public markets pursuant to and
in accordance with Rule 144 under the Securities Act (a "Public
Sale") shall be effected only after the Shareholder offering to
effect the Public Sale shall have given the other Major Holders,
at least two business days prior to the proposed Public Sale,
written notice setting forth its intention to Transfer, the
number of Shares proposed to be Transferred and the manner of
disposition; the other Major Holders may, by written notice to
the Shareholder proposing to make the Public Sale served on such
Shareholder at least 12 hours prior to the Public Sale, exercise
a right of first refusal to purchase their respective pro rata
share of all or any part of the Shares proposed to be
Transferred in the Public Sale at a price per share equal to the
average closing price of the Shares in the seven trading days
preceding the date of the notice. Each Major Holder's pro rata
share of the Shares proposed to be Transferred in the Public
Sale shall be a fraction of the Shares proposed to be
Transferred in the Public Sale, of which the number of Shares
owned by such Major Holder on the date of the above written
notice shall be the numerator and the total number of Shares
held by all such Major Holders (excluding the Shareholder
offering to effect the Public Sale) on the date of the above
written notice shall be the denominator. Any Shares with respect
to which the other Major Holders have not exercised such right
of first refusal, may be Transferred in accordance with such
notice of Public Sale within a period of 45 days after the date
of the notice of Public Sale at such price per share as
determined by the Shareholder effecting such Public Sale.
3.1.2From the end of the Initial Restricted Period any Transfer by
any Major Holder and/or any of their Permitted Transferees may
only be made pursuant to the provisions of Sections 4, 5 and 6
below.
3.1.3In addition to the Major Holders' right to sell up to an
aggregate of 1,200,000 Shares pursuant to Section 3.1.1 , the
restrictions on the Major Holders' transfer of Equity Securities
pursuant to this Section 3 shall not apply to an amount of the
Company's share capital held by such Major Holder in excess of
5.4 million shares. In addition, in the event that for any
reason SanDisk does not exercise any series of Additional
Purchase Obligations by its prescribed exercise date, TIC's
restriction on the transfer of shares shall be decreased by an
equivalent amount of shares represented by such non-exercised
Additional Purchase Obligations.
3.2 From the end of the Initial Restricted Period and until the end of
five years from the Closing (the "Subsequent Restricted Period")
SanDisk, Alliance, Macronix and any of their Permitted Transferees
agree not to Transfer, the amount of Equity Securities exceeding the
product of (a) the cumulative number of quarters commencing with the
first day of the Subsequent Restricted Period multiplied by (b) 6%
(six percent) of the aggregate number of shares of the Company held
by such Shareholder and any of its Permitted Transferees on the last
day of the Initial Restricted Period ("the Committed Minimum
Shareholdings").
3.2.1From the end of the Initial Restricted Period and until the end
of the Subsequent Restricted Period, TIC shall not hold less
than 2,100,000 (two million one hundred thousand) Ordinary
Shares of the Company.
3.2.2 For the removal of doubt, any Equity Securities purchased by
TIC, SanDisk, Alliance and Macronix and any of their Permitted
Transferees, other than pursuant to the SanDisk Share Purchase
Agreement, the Alliance Share Purchase Agreement and the
Macronix Share Purchase Agreement, respectively, and the B-1 to
B-5 Additional Purchase Obligations pursuant to the Additional
Purchase Obligation Agreement entered into between SanDisk and
the Company shall not be included among the Committed Minimum
Shareholdings.
4 RIGHTS OF FIRST OFFER.
4.1 TRANSFER NOTICE. Subject to the provisions of Sections 3 and 5, if at
any time, any Shareholder proposes to Transfer Equity Securities (a
"Proposal"), then such Shareholder (a "Selling Shareholder") shall
give the Company and each of the Major Holders, a written notice (the
"Transfer Notice"), which Transfer Notice shall include (i) a
description of the Equity Securities to be transferred ("Offered
Shares") and (ii) the consideration and the material terms and
conditions upon which the Proposal is to be made. Notwithstanding the
foregoing, in the event that any Selling Shareholder proposes to
pledge Shares to a banking institution, such pledge shall be
permitted only if such Selling Shareholder effects the pledge subject
to the provisions of Section 4 hereof, furnishes to the other parties
hereto a written representation of the Selling Shareholder confirming
that, and evidence which is reasonably satisfactory to indicate that,
such pledge is subject to Section 4 and ensures that no voting rights
with respect to the Shares are granted to the banking institution.
4.2 MAJOR HOLDERS' OPTION. Each Major Holder shall have an option for a
period of thirty (30) days from its receipt of the Transfer Notice to
elect to purchase its respective pro rata share of the Offered
Shares, and in the event that any other Major Holder does not
exercise its right hereunder, its pro rata share of such Offered
Shares not purchased by the other Major Holders (the "Excess Offered
Shares"), at the same price and subject to the same terms and
conditions as described in the Transfer Notice. Each Major Holder may
exercise such purchase option and, thereby, purchase all or any
portion of its pro rata share of the Offered Shares, and in the event
that any Major Holder does not exercise its right hereunder, its pro
rata share of the Excess Offered Shares, by notifying the Selling
Shareholder and the Company in writing, before expiration of the
thirty (30) day period as to the number of Offered Shares and Excess
Offered Shares, if any, which it wishes to purchase (the "Purchase
Notice"). Failure to respond to the Transfer Notice (a) within the
applicable period will be considered a waiver of the right to
exercise the right set forth in this Section 4.2; and (b) within
forty-five (45) days after receipt of the Transfer Notice will be
considered a waiver of the right of co-sale set forth in Section 6.1
provided that the Transfer Notice clearly references such right of
co-sale. Each Major Holder's pro rata share of the Offered Shares, or
of the Excess Offered Shares, as the case may be, shall be a fraction
of the Offered Shares, or of the Excess Offered Shares, as the case
may be, of which the number of Shares owned by such Major Holder on
the date of the Transfer Notice shall be the numerator and the total
number of Shares held by all such Major Holders (excluding the
Selling Shareholder) on the date of the Transfer Notice shall be the
denominator.
4.3 If Major Holder(s) give the Selling Shareholder(s) Purchase Notice(s)
pursuant to Section 4.2 above with respect to all and not part of the
Offered Shares, then such Major Holder(s) shall purchase their
respective pro rata share of the Offered Shares, on the terms
aforementioned and then payment for the Offered Shares shall be by
check or wire transfer to a bank account to be designated by the
Selling Shareholder, against delivery of the Offered Shares to be
purchased at a place agreed upon between the parties and at the time
of the scheduled closing therefor, which shall be no later than forty
five (45) days after the Selling Shareholders' receipt of the
Purchase Notice.
4.4 If the Major Holder(s) do not give the Selling Shareholder(s)
Purchase Notice(s) pursuant to Section 4.2 above with respect to all
of the Offered Shares, then the Major Holder(s) shall not be entitled
to purchase the Offered Shares, and the Selling Shareholder, at the
expiration of the aforementioned thirty (30) day period, shall be
entitled to transfer all (but not less than all) of the Offered
Shares, provided, however, that in no event shall the Selling
Shareholder transfer any of the Offered Shares to any transferee on
terms more favorable to such transferee(s) than those stated in the
Transfer Notice, and provided further than any of the Offered Shares
not transferred within forty-five (45) days after the expiration of
such thirty (30) day period shall again be subject to the provisions
of this Section 4.
4.5 Each Major Holder shall be entitled to apportion Offered Shares to be
purchased among its Permitted Transferees, provided that such
Purchaser notifies the Selling Shareholder of such allocation.
5. RIGHT OF FIRST REFUSAL.
----------------------
5.1 Transfer Notice. Subject to the provisions of Section 3, if at any
time, any Shareholder proposes to Transfer Equity Securities to one
or more of the parties set forth in Annex A hereto or any of their
Affiliatespursuant to a proposed understanding with such third
parties (a "Limited Proposal"), then such Shareholder (a "Limited
Shareholder") shall give the Company and each of the Major Holders, a
written notice (the "Limited Transfer Notice"), with Limited Transfer
Notice shall include (i) a description of the Equity Securities to be
transferred ("Offered Limited Shares"), (ii) the identity of the
prospective transferees(s) and (iii) the consideration and the
material terms and conditions upon which the Limited Proposal is to
be made. The Limited Transfer Notice shall certify that the Limited
Shareholder has received a firm offer from prospective transferee(s)
and in good faith believes a binding agreement for the Transfer is
obtainable on the terms set forth in the Limited Transfer Notice. The
Limited Transfer Notice shall also include a copy of any written
proposal, term sheet or letter of intent or other agreement related
to the proposed sale. Notwithstanding the foregoing, (a) in the event
that a Shareholder is wholly merged with or is wholly acquired by any
company headquartered in Taiwan, ROC or any Affiliate of such company
headquartered in Taiwan, ROC, the provisions of this Section 5 shall
not apply and/or (b) in the event that any Limited Shareholder
proposes to pledge Shares to a banking institution, such pledge shall
be permitted only if such Selling Shareholder effects the pledge
subject to the provisions of Sections 4, 5 and 6 hereof, furnishes to
the other parties hereto a written representation of the Selling
Shareholder confirming that, and evidence which is reasonably
satisfactory to indicate that, such pledge is subject to Sections 4,
5 and 6 and ensures that no voting rights with respect to the Shares
are granted to the banking institution.
5.2 Major Holders' Option. Each Major Holder shall have an option for a
period of thirty (30) days from its receipt of the Limited Transfer
Notice to elect to purchase its respective pro rata share of the
Offered Limited Shares, and in the event that any other Major Holder
does not exercise its right hereunder, its pro rata share of such
Offered Limited Shares, and in the event that any other Major Holder
does not exercise its right hereunder, its pro rata share of such
Offered Limited Shares not purchased by the other Major Holders (the
"Excess Limited Offered Shares"), at the same price and subject to
the same terms and conditions as described in the Limited Transfer
Notice. Each Major Holder may exercise such purchase option and
thereby, purchase all or any portion of its pro rata share of the
Offered Limited Shares, and in the event that any Major Holder does
not exercise its right hereunder, its pro rata share of the Excess
Limited Offered Shares, by notifying the Limited Shareholder and the
Company in writing, before expiration of the thirty (30) day period
as to the number of Offered Shares and Excess Limited Offered Shares,
if any, which it wishes to purchase (the "Limited Purchase Notice").
Failure to respond to the Limited Transfer Notice within (a) the
applicable period will be considered a waiver of the right to
exercise the right set forth in this Section 5.2, and (b) within
forty-five (45) days after receipt of the Limited Transfer Notice
will be considered a Waiver of the right of co-sale set forth in
Section 6.1, provided that the Limited Transfer Notice clearly
references such right of co-sale. Each Major Holder's pro rata share
of the Offered Limited Shares, or of the Excess Limited Offered
Shares, as the case may be, shall be a fraction of the Offered
Limited Shares, or of the Excess Limited Offered shares, as the case
may be, of which the number of Shares owned by such Major Holder on
the date of the Transfer Limited Notice shall be the numerator and
the total number of Shares held by all such Major Holders (excluding
the Selling Shareholder) on the date of the Limited Transfer Notice
shall be the denominator.
5.3 If Major Holder(s) give the Limited Shareholder(s) Limited Purchase
Notice(s) pursuant to Section 5.2 above with respect to all and not
part of the Offered Limited Shares, then the Limited Shareholder
shall not effect the sale of shares to the third party transferee
rather to the Major Holder(s) exercising their right of first refusal
and then payment for the Offered Limited Shares shall be by check or
wire transfer to a bank account to be designated by the Limited
Shareholder, against delivery of the Offered Limited Shares to be
purchased at a place agreed upon between the parties and at the time
of the scheduled closing therefor, which shall be no later than
forty-five (45) days after the Limited Shareholders' receipt of the
Limited Purchase Notice.
5.4 If the Major Holder(s) do not give the Limited Shareholder(s) Limited
Transfer Notice(s) pursuant to Section 5.2 above with respect to all
of the Offered Limited Shares, then the Major Holder(s) shall not be
entitled to purchase the Offered Limited Shares, and the Limited
Shareholder, at the expiration of the aforementioned thirty (30) day
period, shall be entitled to transfer all (but not less than all) of
the Offered Limited Shares, provided, however, that in no event shall
the Limited Shareholder transfer any of the Offered Limited Shares to
any transferee on terms more favorable to such transferee(s) than
those stated in the Transfer Notice, and provided further than any of
the Offered Shares not transferred within forty-five (45) days after
the expiration of such thirty (30) day period shall again be subject
to the provisions of this Section 5.4.
5.5 Each Major Holder shall be entitled to apportion Offered Limited
Shares to be purchased among its Permitted Transferees, provided that
such Purchaser notifies the Limited Shareholder of such allocation.
6. Right of Co-Sale.
6.1 To the extent the Major Holders do not exercise their right of first
refusal in respect of all of the Offered Shares pursuant to Section 4
above or their right of first refusal in respect of all of the
Limited Offered Shares pursuant to Section 5 above (for purposes of
this Section 6, Offered Shares or Offered Limited Shares shall be
referred to as "Offered Shares"), then each Major Holder (a "Co-Sale
Holder" for purposes of this Section 6) shall be entitled to notify
the Selling Shareholder or the Limited Shareholder, as the case may
be (for purposes of this Section 6, a Selling Shareholder or a
Limited Shareholder shall be referred to as a "Selling Shareholder")
in writing and shall have the right to participate in the Disposition
pursuant to Section 4 above or the Limited Proposal pursuant to
Section 5 above on the same terms and conditions as specified in the
Transfer Notice or the Limited Transfer Notice, as the case may be
(for purposes of this Section 6, a Transfer Notice or a Limited
Transfer Notice shall be referred to as a "Transfer Notice"), subject
to the provisions of this Section 6. Such selling Co-Sale Holder's
notice to the Selling Shareholder shall indicate the number of shares
of Equity Securities the Co-Sale Holder wishes to sell under its
right to participate.
6.2 The respective co-sale rights of the Selling Shareholder and each
Co-Sale Holder shall be as follows: (A) the Selling Shareholder may
sell all or any part of that number of Offered Shares equal to the
product obtained by multiplying (i) the aggregate number of Offered
Shares by (ii) a fraction, the numerator of which is 200% of the
number of Shares owned by such Selling Shareholder on the date of the
Transfer Notice and the denominator of which is the total number of
Shares owned by all of the Co-Sale Holders (excluding the Selling
Shareholder) and 200% of the number of Shares owned by the Selling
Shareholder and (B) each Co-Sale Holder (excluding the Selling
Shareholder) may sell all or any part of that number of Offered
Shares equal to the product obtained by multiplying (i) the aggregate
number of Offered Shares by (ii) a fraction, the numerator of which
is the number of Shares owned by such Co-Sale Holder on the date of
the Transfer Notice and the denominator of which is the total number
of Shares owned by all of the Co-Sale Holders (excluding the Selling
Shareholder) and 200% of the number of Shares owned by the Selling
Shareholder on the date of the Transfer Notice (the "Co-Sale
Shares"). The number of Co-Sale Shares to be sold shall be rounded to
the nearest whole share, with one-half share or more being rounded
up.
6.3 Each Co-Sale Holder shall effect its participation in the sale by
promptly delivering to the Selling Shareholder for Transfer to the
prospective purchaser one or more transfer deeds, properly executed
for Transfer, which represent the number of Offered Shares which such
Co-Sale Holder elects to sell. The transfer deeds that the Co-Sale
Holder delivers to the Selling Shareholder as provided above shall be
transferred to the prospective purchaser upon consummation of the
sale of the Offered Shares pursuant to the terms and conditions
specified in the Transfer Notice, and the Selling Shareholder shall
concurrently therewith remit to such Co-Sale Holder that portion of
the net sale proceeds to which such Selling Holder is entitled by
reason of its participation in such sale. To the extent that any
prospective purchaser or purchasers prohibits such assignment or
otherwise refuses to purchase shares or other securities from a
Co-Sale Holder exercising its rights of co-sale hereunder, the
Selling Shareholder shall not sell to such prospective purchaser or
purchasers any Offered Shares unless and until, simultaneously with
such sale, the Selling Shareholder shall purchase such shares or
other securities from such Selling Holder for the same consideration
and on the same terms and conditions as the proposed transfer
described in the Transfer Notice.
6.4 NON-EXERCISE OF RIGHTS. To the extent that the Major Holders have not
exercised in full their rights to purchase all the Offered Shares
within the time periods specified in Sections 4.2 and 5.2, as the
case may be, the Selling Shareholder shall have a period of ninety
(90) days from the expiration of the 45 day period set forth in
Sections 4.2 and 5.2, as the case may be (the "Ninety Day Period") to
sell the Offered Shares and the Co-Sale Shares, if any, upon terms
and conditions (including the purchase price) no more favorable than
those specified in the Transfer Notice to the third-party
transferee(s) identified in the Transfer Notice. The third-party
transferee(s) shall, as a condition to such transfer, become a party
to Section 2 of this Agreement and become subject to all the
provisions included therein unless waived by Major Holders, holding
in the aggregate 75% of the aggregate number of shares of the Company
held at such time by all Major Holders. In the event that the Selling
Shareholder and the third-party transferee remain desirous of
consummating the sale or disposition of the Offered Shares and the
Co-Sale Shares, if any, yet due to a delay resulting from failure to
obtain third party approvals, the sale or disposition of the Offered
Shares and the Co-Sale Shares, if any, cannot be consummated within
the Ninety Day Period, the Ninety Day Period shall be extended by a
further period of up to ninety (90) days (the "Second Ninety
Period"). Notwithstanding the aforesaid in the previous sentence, in
the event that the Selling Shareholder does not consummate the sale
or disposition of the Offered Shares and the Co-Sale Shares, if any,
within the Ninety Day Period or the Second Ninety Day Period, as the
case may be, the Major Holders' first offer rights and first refusal
rights and the Co-Sale Holders' co-sale rights shall continue to be
applicable to any subsequent disposition of the Offered Shares by
such Selling Shareholder until such right lapses in accordance with
the terms of this Agreement.
6.5 SALE OF SHARES UNDER RULE 144. Notwithstanding the provisions of
Sections 4, 5 and 6, in the event of a Public Sale effected after the
expiration of the Initial Restricted Period, the Selling Shareholder
shall be permitted to effect the Public Sale subject to and in
accordance with Rule 144 (including, without limitation, the volume
limitations included therein), and such Public Sale shall not be
subject to the rights of first offer, first refusal and co-sale set
forth in Sections 4, 5 and 6.
6.6 LIMITATIONS TO RIGHTS OF FIRST OFFER, FIRST REFUSAL AND CO-SALE.
Notwithstanding the provisions of Sections 3, 4, 5 and 6 of this
Agreement, any Shareholder may sell or otherwise assign, with or
without consideration, Equity Securities to any Permitted Transferee,
provided, however, that any Permitted Transferee shall, prior to
receiving any such Equity Securities and as a condition to the
effectiveness of any such sale or assignation, become a party to this
Agreement and undertake to return such Equity Securities to its
transferor in the event that the Permitted Transferee ceases to be a
Permitted Transferee in relation to its transferor.
7. TERM AND TERMINATION
ThisAgreement shall be in effect from the date hereof and until the earlier
of (i) twelve (12) years from the Closing; or (ii) with respect to each of
SanDisk, Alliance and Macronix, upon the termination of their respective
share purchase agreement with the Company. In addition, this Agreement
shall not have any further force and effect to any party of this Agreement
from the date that such party holds less than 1,000,000 Ordinary Shares of
the Company. Section 5 shall terminate five years following the end of the
Restriction Period.
8. GENERAL PROVISIONS
8.1 EXPENSES. Each party to this Agreement will bear its respective
expenses incurred in connection with the preparation, execution, and
performance of this Agreement, including all fees and expenses of
agents, representatives, counsel, and accountants.
8.2 CONFIDENTIALITY. The parties to this agreement will maintain in
confidence, and will cause the directors, officers, employees,
agents, and advisors to maintain in confidence, this Agreement and
any written information furnished by another party in connection with
this Agreement, unless (a) such information is already known to such
party or to others not bound by a duty of confidentiality or such
information becomes publicly available through no fault of such
party, (b) the use of such information is necessary or appropriate in
making any filing or obtaining any consent or approval required for
the consummation of this Agreement, or (c) the furnishing or use of
such information is required by any U.S., Israeli or other federal,
state, local or administrative order, law, ordinance, or regulation
or by the applicable rules of any stock exchange.
8.3 NOTICES. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have
been duly given when (a) delivered by hand (with written confirmation
of receipt), (b) sent by telecopier (with written confirmation of
receipt), provided that a copy is mailed by registered mail, return
receipt requested, or (c) when received by the addressee, if sent by
a recognized overnight delivery service (receipt requested), in each
case to the appropriate addresses and telecopier numbers set forth
below (or to such other addresses and telecopier numbers as a party
may designate by notice to the other parties):
SanDisk:
Attention: Frank A. Calderoni
Facsimile No.: (408) 542-0600
with a copy to: Charles Van Orden, Esq.
Attention: Vice President and General
Counsel
Facsimile No.: (408) 548-0385
TIC:
Attention: Udi Hillman
Facsimile No.: 972-3-695-3631
with a copy to: Zvi Ephrat, Adv.
6 Ramat Yam
Herzliya 46851
Facsimile No.: (972) 9-958-9594
Alliance:
Attention: David Eichler
Facsimile No.: (408) 855-4999
with a copy to: Alliance Semiconductor
Corporation
Attention: Bradley A. Perkins, Esq.
Facsimile No.: (408) 855-4981
Macronix:
Attention: CEO
Facsimile No.: 886-2-2716-925-
with a copy to: Macronix International Co.,
Ltd.
Attention: Stacey G. M. Lee, Esq.
Facsimile No.: 886-3-564-1561
8.4 JURISDICTION; SERVICE OF PROCESS. Any action or proceeding seeking to
enforce any provision of, or based on any right arising out of, this
Agreement may be brought against any of the parties solely in the
courts of the State of California, and each of the parties consents
to the jurisdiction of such courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection to
venue laid therein. Process in any action or proceeding referred to
in the preceding sentence may be served on any party anywhere in the
world.
8.5 FURTHER ASSURANCES. The parties agree (a) to furnish upon request to
each other such further information, (b) to execute and deliver to
each other such other documents, and (c) to do such other acts and
things, all as the other party may reasonably request for the purpose
of carrying out the intent of this Agreement and the documents
referred to in this Agreement.
8.6 WAIVER. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by
any party in exercising any right, power, or privilege under this
Agreement or the documents referred to in this Agreement will operate
as a waiver of such right, power, or privilege, and no single or
partial exercise of any such right, power, or privilege will preclude
any other or further exercise of such right, power, or privilege or
the exercise of any other right, power, or privilege. To the maximum
extent permitted by applicable law, (a) no claim or right arising out
of this Agreement or the documents referred to in this Agreement can
be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the
other party; (b) no waiver that may be given by a party will be
applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver
of any obligation of such party or of the right of the party giving
such notice or demand to take further action without notice or demand
as provided in this Agreement or the documents referred to in this
Agreement.
8.7 ENTIRE AGREEMENT. This Agreement supersedes all prior shareholders
agreements between the parties, including the Shareholders Agreement
between TIC and SanDisk dated August 13, 2000 and the Shareholders
Agreement between TIC and Alliance dated August 29, 2000 with respect
to its subject matter and constitutes (along with the documents
referred to in this Agreement) a complete and exclusive statement of
the terms of the agreement between the parties with respect to its
subject matter.
8.8 MODIFICATION. This Agreement may not be amended except by a written
agreement executed only by the parties hereto (or their Permitted
Transferees).
8.9 Adjustment. In each case in which this Agreement specifies a number
of Shares such number will be subject to the appropriate adjustment
in accordance with applicable law for any reorganization,
recapitalization, share split, share dividend and securities at any
time issued by the Company in exchange for such shares or in
connection with any distribution, merger, sale of assets,
consolidation or other action by the Company.
8.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. Neither party may
assign any of its rights under this Agreement, except for such
assignments made to Permitted Transferees along with the transfer of
Shares to such Permitted Transferees, without the prior consent of
the other parties. Subject to the preceding sentence, this Agreement
will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed
to give any person or entity other than the parties to this Agreement
any legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement. Subject to the
above, this Agreement and all of its provisions and conditions are
for the sole and exclusive benefit of the parties to this Agreement
and their successors and assigns.
8.11 SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect.
Any provision of this Agreement held invalid or unenforceable only in
part or degree will remain in full force and effect to the extent not
held invalid or unenforceable.
8.12 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this
Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to "Section" or
"Sections" refer to the corresponding Section or Sections of this
Agreement. All words used in this Agreement will be construed to be
of such gender or number as the circumstances require. Unless
otherwise expressly provided, the word "including" does not limit the
preceding words or terms.
8.13 TIME OF ESSENCE. With regard to all dates and time periods set forth
or referred to in this Agreement, time is of the essence.
8.14 GOVERNING LAW. Subject to such provisions of the Israeli Companies
Law which are applicable to this Agreement and which may not be
stipulated, this Agreement will be governed by the laws of the State
of California without regard to conflicts of law principles.
8.15 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of
this Agreement and all of which, when taken together, will be deemed
to constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first written above.
SanDisk Corporation
By: /s/ Eli Harari
----------------------
Name: Eli Harari
Title: CEO
The Israel Corporation Ltd.
By: /s/ Yossi Rose
----------------------
Name: Yossi Rose
Title: President and CEO
Alliance Semiconductor Corp.
By: /s/ N. Damodar Reddy
----------------------
Name: N. Damodar Reddy
Title: President and CEO
Macronix International Co.,
Ltd., on behalf of itself and
its affiliates
By: /s/ Miin Wu
----------------------
Name: Miin Wu
Title: President