EXHIBIT 4
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.
(together with its affiliates referred to as "Macronix").
RECITALS
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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
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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
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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
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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.
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.
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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.
3.1.1 Notwithstanding 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.
3.1.2 From 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.
3.1.3 In 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").
3.2.1 From 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.
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4.1 Transfer Notice. Subject to the provisions of Sections 3 and 5,
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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
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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.
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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
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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
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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
--------------------
This Agreement 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: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, Esq.
Attention: Vice President and General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
TIC:
Attention: ▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: 972-3-695-3631
with a copy to: ▇▇▇ ▇▇▇▇▇▇, Adv.
▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ No.: (▇▇▇) ▇-▇▇▇-▇▇▇▇
Alliance:
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Alliance Semiconductor Corporation
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Macronix:
Attention: CEO
Facsimile No.: 886-2-2716-925-
with a copy to: Macronix International Co., Ltd.
Attention: ▇▇▇▇▇▇ ▇. ▇. ▇▇▇, 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: The Israel Corporation Ltd.:
By: /s/ ▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇
_____________________ ______________________
Alliance Semiconductor Corporation: Macronix International Co. Ltd.:
By: /s/ N. ▇▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇
_____________________ ______________________