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Document Preview Agreement and Plan of Merger |
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Title: |
Agreement and Plan of Merger |
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Entities: |
Citibank, NA; Citigroup Global Markets Inc.; M-Systems Flash Disk Pioneers Ltd; Morgan Stanley & Co. Inc.; Bank of New York; O’Melveny & Myers; Weil, Gotshal & Manges LLP |
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Date: |
2006 |
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Size: |
Preview shows 15KB of 315KB total |
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Price: |
$86 |
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ID: |
#2279155 |
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SANDISK CORPORATION,
PROJECT DESERT, LTD.
AND
MSYSTEMS LTD.
DATED AS OF JULY 30, 2006
================================================================================
{PAGE}
ARTICLE 1 THE MERGER..............................................2
Section 1.1 The Merger........................................2
Section 1.2 Closing Date......................................2
Section 1.3 Effect on Capital Stock...........................2
Section 1.4 Surrender of Certificates.........................4
Section 1.5 The Company's Transfer Books Closed; No Further
Ownership Rights in the Company Shares............6
Section 1.6 Lost, Stolen, Destroyed or Unissued Certificates..6
Section 1.7 Taking of Necessary Action; Further Action........6
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY...........7
Section 2.1 Organization and Qualification; Subsidiaries......7
Section 2.2 Memorandum of Association; Articles of Association8
Section 2.3 Capitalization....................................8
Section 2.4 Authority........................................10
Section 2.5 No Conflict; Required Filings and Consents.......10
Section 2.6 Compliance with Laws; Environmental Matters;
Permits..........................................11
Section 2.7 SEC Filings; Financial Statements................12
Section 2.8 No Undisclosed Liabilities.......................15
Section 2.9 Absence of Certain Changes or Events.............15
Section 2.10 Litigation.......................................15
Section 2.11 Employee Matters and Benefit Plans...............16
Section 2.12 Information Supplied.............................19
Section 2.13 Property.........................................20
Section 2.14 Taxes............................................20
Section 2.15 Brokers..........................................23
Section 2.16 Intellectual Property............................23
Section 2.17 Contracts........................................28
Section 2.18 Opinion of Financial Advisor.....................30
Section 2.19 Board Approval...................................30
Section 2.20 Inapplicability of Certain Statutes..............30
Section 2.21 Grants, Incentives and Subsidies.................30
{PAGE}
Section 2.22 Encryption and Other Restricted Technology.......31
Section 2.23 Tax Matters......................................31
Section 2.24 Insider Interests................................31
Section 2.25 Effect of Transaction............................31
ARTICLE 3 REPRESENTATIONS OF THE PARENT AND MERGER SUB...........31
Section 3.1 Organization and Qualification...................32
Section 3.2 Capitalization...................................32
Section 3.3 Authority........................................33
Section 3.4 No Conflict; Required Filings and Consents.......33
Section 3.5 Issuance of Parent Common Stock..................34
Section 3.6 Compliance with Laws.............................34
Section 3.7 SEC Filings; Financial Statements................34
Section 3.8 No Undisclosed Liabilities.......................36
Section 3.9 Absence of Certain Changes or Events.............36
Section 3.10 Litigation.......................................37
Section 3.11 Information Supplied.............................37
Section 3.12 Brokers..........................................37
Section 3.13 Merger Sub Board Approval........................37
Section 3.14 Tax Matters......................................37
Section 3.15 Merger Sub.......................................38
ARTICLE 4 CONDUCT PRIOR TO THE EFFECTIVE TIME....................38
Section 4.1 Conduct of Business by the Company...............38
Section 4.2 Specific Activities..............................38
Section 4.3 Parties' Cooperation.............................42
Section 4.4 Conduct of Business by the Parent................42
Section 4.5 No Control of Other Party's Business.............43
ARTICLE 5 ADDITIONAL AGREEMENTS..................................43
Section 5.1 Parent Common Stock; Disclosure Documents........43
Section 5.2 Court Approval...................................43
Section 5.3 Cooperation......................................47
Section 5.4 Israeli Approvals................................47
Section 5.5 Confidentiality; Access to Information...........49
{PAGE}
Section 5.6 No Solicitation..................................50
Section 5.7 Public Disclosure................................52
Section 5.8 Reasonable Best Efforts; Regulatory Filings......52
Section 5.9 Third Party Consents.............................55
Section 5.10 Share Options, SARs and Employee Benefits........55
Section 5.11 Convertible Notes................................57
Section 5.12 Form S-8.........................................58
Section 5.13 Notification.....................................58
Section 5.14 Indemnification, Exculpation and Insurance.......58
Section 5.15 Listing of the Parent Common Stock...............60
Section 5.16 Company Affiliates; Restrictive Legend...........60
Section 5.17 Tax Treatment....................................60
ARTICLE 6 CONDITIONS PRECEDENT...................................61
Section 6.1 Conditions to Each Party's Obligation To Effect
the Merger.......................................61
Section 6.2 Conditions to Obligations of the Company.........62
Section 6.3 Conditions to Obligations of the Parent and Merger
Sub..............................................63
ARTICLE 7 TERMINATION............................................64
Section 7.1 Termination......................................64
Section 7.2 Notice of Termination; Effect of Termination.....69
ARTICLE 8 GENERAL PROVISIONS.....................................69
Section 8.1 Nonsurvival of Representations and Warranties....69
Section 8.2 Fees and Expenses................................69
Section 8.3 Amendment........................................69
Section 8.4 Extension; Waiver................................69
Section 8.5 Notices..........................................70
Section 8.6 Interpretation...................................71
Section 8.7 Definitions......................................71
Section 8.8 Counterparts.....................................74
Section 8.9 Entire Agreement; Third-Party Beneficiaries......74
Section 8.10 Severability.....................................74
Section 8.11 Other Remedies; Specific Performance.............74
Section 8.12 GOVERNING LAW....................................75
{PAGE}
Section 8.13 Venue; Waiver of Jury Trial......................75
Section 8.14 Assignment.......................................76
ANNEXES, EXHIBITS AND SCHEDULES
Annex I Defined Terms Index.......................................I-1
Exhibit A Form of Voting Undertaking................................A-1
Exhibit B Form of Affiliate Agreement...............................B-1
Exhibit C Form of Lock-Up Agreement ................................C-1
Exhibit D Form of Director Resignation..............................D-1
Exhibit E Letter Agreement .........................................E-1
Exhibit F Form of Company Tax Certificate...........................F-1
Exhibit G Form of Parent Tax Certificate............................G-1
Exhibit H Form of Company Israeli Counsel Tax Opinion...............H-1
Exhibit I Form of Parent Israeli Counsel Tax Opinion................I-1
Schedule A List of Persons signing Voting Undertakings..............SA-1
Schedule B List of Persons signing Affiliates Agreements ...........SB-1
Schedule C Directors of the Company and its Subsidiaries ...........SC-1
{PAGE}
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 30, 2006 (this
"Agreement"), by and among SanDisk Corporation, a Delaware corporation (the
"Parent"), Project Desert Ltd., an Israeli company and a direct wholly owned
subsidiary of the Parent ("Merger Sub"), and msystems Ltd., an Israeli company
(the "Company").
RECITALS
A. The Parent and the Company intend to enter into a transaction
whereby Merger Sub will merge (the "Merger") with and into the Company by way of
a court approved arrangement between the Company and its shareholders and (if
applicable) creditors, in accordance with Sections 350 and 351 of the Companies
Law 5759-1999 of the State of Israel (the "Companies Law"), following which
Merger Sub will cease to exist and the Company will become a direct wholly owned
Subsidiary (as defined in Section 8.7(g)) of the Parent, and the Company Shares
(as defined in Section 1.3(b)) will be exchanged for shares of Parent Common
Stock (as defined in Section 1.3(b)), all in accordance with this Agreement and
the Companies Law.
B. The board of directors of the Company has: (i) determined that this
Agreement, the Merger and the other transactions contemplated by this Agreement
(collectively, the "Transactions") are fair to, and in the best interests of,
the Company and its shareholders, and that, considering the financial position
of the merging companies, no reasonable concern exists that the Surviving
Company will be unable to fulfill the obligations of the Company to its
creditors; (ii) approved this Agreement, the Merger and the other Transactions;
and (iii) determined to recommend to the shareholders of the Company the
approval of this Agreement, the Merger and the other Transactions.
C. The board of directors of each of the Parent and Merger Sub has
approved this Agreement, the Merger and the other Transactions, and the board of
directors of Merger Sub has determined that, considering the financial position
of the merging companies, no reasonable concern exists that the Surviving
Company will be unable to fulfill the obligations of Merger Sub to its
creditors.
D. Concurrently with the execution of this Agreement and as a condition
to and inducement of the Parent's willingness to enter into this Agreement: (i)
the directors, officers and shareholders of the Company set forth on Schedule A
are entering into voting undertakings in substantially the form attached as
Exhibit A (the "Voting Undertakings"); (ii) the Chief Executive Officer of the
Company is entering into a noncompetition agreement with the Parent (the
"Noncompetition Agreement"); (iii) all directors, executive officers and those
shareholders of the Company set forth on Schedule B who may be deemed to be
affiliates of the Company within the meaning of Rule 145 promulgated under the
United States Securities Act of 1933 (the "Securities Act") are entering into
affiliate agreements in substantially the form attached as Exhibit B (the
"Affiliate Agreements"); (iv) the Chief Executive Officer of the Company is
entering into a market stand-off agreement in substantially the form attached as
Exhibit C (the "Lock-Up Agreement"); and (v) the directors of the Company and
its Subsidiaries set forth on Schedule C hereto are executing resignation
1
{PAGE}
letters in substantially the form attached as Exhibit D (the "Director
Resignations").
E. For U.S. federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and this Agreement
constitutes and hereby is adopted as a plan of reorganization.
F. Concurrently with the execution of this Agreement, Mr. Dov Moran,
the Company's Chief Executive Officer, is entering into a letter agreement with
the Parent and the Company in the form attached as Exhibit E hereto.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein the parties, intending to be legally bound,
agree as follows:
ARTICLE 1
THE MERGER
Section 1.1 The Merger. Subject to the satisfaction or waiver (where
permissible) of the conditions set forth in Article 6, at the Effective Time,
(a) Merger Sub shall be merged with and into the Company, the separate corporate
existence of Merger Sub shall cease and the Company shall continue as the
surviving corporation (sometimes referred to as the "Surviving Company") and
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