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).
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.
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
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